You are currently viewing Terrible Timing Tim

Terrible Timing Tim

Tim is a responsible fellow but has terrible timing. Although Tim is a diligent saver and investor, Tim’s investor behavior leaves much to be desired. However, Tim has still achieved great investing results over the years despite his weak stomach and poor decisions.

Tim graduated from college in 1972 and secured his first job. He decided to take $2,000 a year and invest it in the stock market through thick and thin. His nice family also pooled their resources and gave him $10,000 as a graduation gift. Tim was ecstatic and very excited to begin his successful investing career. Because of the great performance that he had seen in the stock market over the past decade, Tim decided to jump in an invest his $10,000 in early 1973. Wow Tim, what bad timing.

The equity market peaked in 1973 and proceeded to lose 30 percent over the next two years. Tim was scarred by the market crash, but he did not sell his investments, and continued to invest regularly from his paycheck. Tim told himself that a roller coaster goes up and down, but one can only get in trouble if he tries to jump off in the middle.

A long downturn through the 1970s followed, but Tim continued to make his monthly investment to stocks from his paycheck. But due to his poor timing in 1973, Tim did not get the courage to invest any other money again until the summer of 1987. Tim got a $10,000 bonus that summer and decided to try his luck again in the stock market, so he invested the whole amount. Ouch, bad timing, Tim. The market crashed in October of 1987, and he lost 20 percent that year. However, Tim also got a raise that summer, so he upped his monthly contribution to $4,000 annually.

But Tim was again scarred by the experience, and only got the courage to invest a lump sum again in March of 2000. His grandmother died that month and left lucky Tim $10,000. Tim invested the entire amount in the stock market, right at the peak of the technology stock craze. The market lost 32 percent over the next two years. But Tim’s career was going very well, so Tim decided to increase his payroll contributions to the stock market to $6,000 a year.

Tim could not believe his poor timing. He did not invest again in the market again until 2007. He invested another $10,000 and the market proceeded to crash in the Great Recession of 2008. Tim was not to be phased however and increased his annual contributions to $8,000. Tim decided to retire to a cabin in the mountains in 2018 after a long life of responsible investing but with terrible timing. How nice of a cabin could he retire to with such terrible timing though? Actually, a very nice one.

By consistently investing in the market all of those years, Tim retired with more than $1 million in his retirement account, and together with his social security payments he could afford quite a nice cabin in the mountains and a nice lifestyle also. No one will ever have such terrible market timing as Tim, but the point is that even with absolutely terrible timing, a steadfast stock market investor can still do pretty well over a long period of time, if he ties his money’s growth to the U.S. economy and does not sell and move to the sidelines based on his own gut instinct. You can do far better than Tim with your investments, but only if you never attempt to jump off the roller coaster because you think you would feel better with your feet on the ground.

Leave a Reply