So you think you can time the market?

We’ve seen the enemy of good investing, and it is us, so when a member mentioned that he reverts to a “trader mentality during times like this”, I immediately replied,

If you think you can time it, go for it. But then again, if you can time gold, you can time anything, so the logic would dictate you quit diversification as protection against ignorance, no?

Humans are a strange lot. We seem to have the most conviction at the worst possible moments. Three cases in point:
Why E.T.F.’s Won’t Solve Our Behavioral Problems

4) E.T.F.’s allow your adviser to place you in the right fund at the right time.
This is code for something that virtually no one can successfully do: time the market. Claiming that exchange-traded funds allow an adviser to add value by placing a client in the right fund at the right time is not only wrong, it’s dangerous. Any adviser who claims to be able to time the market is an adviser you should run from. Advisers are valuable if they can help you avoid the costly behavioral mistakes we all tend to make, not because they claim to be able to outperform the market.
All the hype about E.T.F.’s is just throwing more fuel on the behavioral fire (see intraday trading, market timing). Ultimately, E.T.F.’s are just another tool that should be evaluated alongside all of the other tools available to help you reach your goals. To be clear, I’m not saying that all E.T.F.’s are bad. What I am saying is E.T.F.’s alone won’t solve our most vexing investing problem: our own behavior. In fact, they might just make it easier to behave badly.

Why ‘buying the dips’ is easier said than done

You can’t predict dips.
The problem is that dips are essentially random events – impossible to predict the start of them and just as difficult to predict the end, making them a futile exercise in market-timing.

Paulson Gold Bet Loses Almost $1 Billion

Paulson is sticking with his thesis that gold is the best hedge against inflation and currency debasement as countries pump money into their economies, according to the New York-based firm, which manages about $18 billion. The metal entered a bear market last week after falling more than 20 percent since August 2011, bringing more bad news for 57-year-old Paulson, who has struggled with poor returns for the past two years.

Don’t cry for John Paulson. Fund managers are incentivized to gamble because one giant lucky bet means fund inflow for YEARS. Paulson has probably collected more in fees than the original trade by now.