The Retirement Pyramid 2.0

To kick off the holiday weekend, I am always in search of cool concise little infograms that neatly sum up financial concepts in a way any layperson can understand.  I found a doozy tonight with this very nice graphic that in one eye-shot gives a complete course on investments.

The one part of this graphic that some of you may take issue with is the top of the pyramid warning against timing the market with a big "NO!" attached to it.  In my studies for the CFP, the one thing that has most been impressed upon me is that financial media and advisers have an ethical (perhaps even a fiduciary) duty not to encourage timing since, as there is accountability to watchdog agencies for professionals, timing is something that amateurs should never do as it almost always leads to catastrophic losses unless you're very careful and know exactly what you're doing.

Yet there can be no doubt that timing does work since virtually every professional fund and money manager uses it.  But what is timing anyway?  Is it trying to find an absolute top or bottom, which is impossible, and which nobody can do, and nobody who knows what they're doing even tries?  Or is timing using well-tested mathematical models to detect trends in price movements, not to be exacting but just accurate enough to be on the plus-side more often than not?  Is timing buying in the morning and selling in the afternoon?  Or is it doing something closer to what we do in FastTrack where we can build a successful portfolio doing as few as two or three trades a year?

What is timing?  Where does reckless hunch playing end and astute investing begin?  If I can ever find an article that offers insight into this aspect of it, I'll be sure to share it.  Meanwhile, enjoy this graphic.  Print out a copy and tape it to the wall next to your trading computer.


Sat 5-26-18 Retirement Pyramid 2.0 - The Big Picture