Timing Risk

Trading can be tricky. Sometimes we sell too early, sometimes we buy too late. This is what’s known as “timing risk,” and it’s an inherent part of the whole investment process. It means we might not make the right decision at the right time. If we ever figure out how to accurately predict the actions of the stock market 100% of the time, this won’t be an issue. (And we’ll be rich.) But until that day comes, we’re just going to have to live with the possibility that we might mis-time market moves and end up spending too much or making too little.

Of course, the more research we do and the more knowledgeable we are, the more we’ll be able to minimize timing risk, but we’ll probably never be able to get rid of it altogether.