Unless they've been living under a rock, most ASX investors would be aware that the markets have been on a bit of a tear of late. Spare a thought for the bears out there! Since the start of 2023, the S&P/ASX 200 Index (ASX: XJO) has risen by more than 8%.
That would be around the average return for an ASX 200 index fund over an entire year, not a month. So this has been an absolutely cracking start to the year for the ASX 200:
In fact, we are now just around 1.5% away from the ASX 200's all-time record high of 7,632.8 points that we saw back in August 2021 last year.
But this might make some investors nervous. After all, we are drilled with the maxim 'buy low, sell high' from all sides when it comes to investing. And buying ASX shares now would arguably be the definition of 'buying high'.
So we should sell the ASX 200 high, right?
So is sitting on our cash the wise thing to do? Or perhaps we should go a step further and start 'selling high'? Grow our pile of cash while we wait for the opportunity to 'buy low' again?
Well, here's my problem with this line of thinking. When we decide to sell out and wait for a better buying opportunity, we are effectively trying to time the market. I myself much prefer the saying' time in the market beats timing the market'.
The fact is that no one, whether that be you, I, Warren Buffett or Elon Musk, knows what the markets will do next. If the ASX 200 peaks tomorrow, and spends the next six months in freefall, selling out today would look like genius.
But if the opposite occurs and the ASX 200 continues to rocket higher in the coming months, then selling out today would look like idiocy.
Overall, we know that ASX shares go up more often than they go down. That's why we're inches away from a new all-time high right now. I'd much rather just keep investing, no matter the weather.
That way, we'll look smarter most of the time, and sillier only sometimes. If you try to time the market, it is almost certain that you'll look silly most of the time, and maybe smart once or twice.
