Proper positioning, not perfect timing, results in long-term gains

Investment timing is undoubtedly one of the main success factors. But is the ability to capture the right moment most important in building a long-term investment portfolio?

Missed chances are a common occurrence among investors trying to survive the right moment in the market. Fear and greed often lead non-professional investors in emotional traps, as most are followers who respond to the current state of the market rather than anticipate its future movements.

According to the scientific works of the Nobel laureate William Sharp since 1975 – the one who tries to buy at the bottom and sell at the top will have to be accurate 74% of the time to beat a passive portfolio. The benefits of good positioning can most easily be traced to the investment strategy of Warren Buffett, who builds his wealth precisely because of his proper movements, buying shares from good companies with major market adjustments.

Proper market positioning requires three key elements:

1) A well-defined strategy for when to enter and exit the market

2) The ability to respond quickly and accurately to strategy

3) The ability to be completely devoid of emotion in decision making and to trust your strategy, regardless of the current market environment.

No matter what happens on the stock market today, the likelihood of good companies costing more in 10 years is high. Holding the original positions and averaging them downwards helps build the investment portfolio in the long run. It is common knowledge that Warren Buffett uses this strategy, often continuing to buy stocks at significant market sales, most often driving down his holdings at certain price levels.

Active trading for short-term profits by monitoring market flows should be distinguished from long-term investment decisions, where risk assessment is far more important than perfect timing.