Have you ever been in a situation where you relied on Google Maps and ended up getting lost? Even Google Maps is not without flaws. Especially when moving through flyovers or underpasses, or even in rural areas. Although we have no choice except to rely on Google Maps, despite the fact that it occasionally provides confusing signals. Anyway, it's at least 90% accurate, and we're good to go with a 10% margin of error.
When it comes to investing, however, we listen to and blindly follow experts and people. We are all biased in some way. We become overconfident when we receive the same information from multiple sources. But we never do back-testing what the margin of error was and how much it would have cost us financially if something went wrong.
We sometimes sell equities at market highs because we believe the market cannot go up from here. We buy stocks in anticipation of a market bottom since we believe the market cannot fall further from here. At times we do just the opposite. We don't sell with the expectation of the market rising further, and we don't buy with the expectation of the market falling further.
In any case, we believe we are well-informed and confident in what we do. But, do these strategies really work? By attempting to time the market, we are wasting our time and making ourselves look foolish.
Consider that a map error of 10% wastes a significant amount of time; what if the error rate is 50% or higher? How much money are you going to lose? Every time we entered the market blindly, we lost a lot of money. Remember, investing is not a casino game!
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