Opportunity Cost in stocks
On the stock market , one of the most famous investment advice is to never try to time the market.
That’s true if you have a long-term investment strategy on stocks , ETF , etc.
However what I see often nowadays , it’s stock only go up or that kind of quote.
The main idea behind never try to time the market is the idea that you will not be able to successfully doing it in the long term. You will earn more money in just staying invest . But to do that , you need to have a solid long-term investment thesis.
People confuse trying to time the market with never sell. That’s absolutely not the same thing. For the first , you are just trying to speculate on the price direction. While on the second you had a thesis , the thesis work now it’s time to take your cash and start looking for other investments.
Not trying to time the market protects you against yourself . Often your main enemy on the stock market is the fact that you are not rational and that you often fall into fear of missing out ( FOMO). If you jump to investment to investment , you will most likely overtrade and that will affect badly your overall performance. In the stock market, you need to be patient . To do so , you have to accept not to be 100% invest.
My Solution
I think that one of the best opportunities today to earn money are the meme stocks. You could easily do a 5 x on them often a lot more. Even if that’s only a small part of your portfolio like 5% 5x will mean 25% on your global performance. To trade them well , you will need to be early , the volatility is scary. So, if you have a low-cost basis you will trade more freely. There will be few opportunity investment in a year as big . So you need to track every day and jump on it as soon as you saw it. And hold until the news is spread and everybody knows it. When there is information parity you sell it.
I recommend being in a configuration where you will be like 80% invest , 20 % cash. The 80% are long-term investment. The 20% are your security and your fund to invest when you see a big opportunity. Always keep 10% in cash. The remaining 10% can be used to trade.