Timing the Market

In September 2009, I sold some stock that I purchased in January 2009.  The stock had more than doubled, because I bought it at approximately $20 a share and sold it for approximately $43 a share.  My return over an eight month period was over 100% making my annual rate of return over 150%.

However, six weeks after I bought it at $20 that same stock hit a low in mid-March of around $14 per share.  If I had bought it around $14 a share, I could have tripled my money instead of having more than doubled it.  "IF" however, is the biggest word in the dictionary because "IF" I had not bought the stock at $20 I probably would not have bought it at $14 either.

I decided to sell the stock for two reasons:

1. I was happy with the annual rate of return;
2. A comment I remembered from one of my extremely successful clients.

Early in my career I happened to ask this particular client if he had any words of wisdom for a young person, since I was just starting my career 37 years ago.  His response was that his guiding rules of investing were the following:

1. Buy land when he felt it represented a good investment without worrying whether the market is at the bottom of a cycle;
2. Sell the land when he could make his target rate of return;
3. Always try to leave something on the table in hopes that the next person would enjoy making a profit as well.

It took me years to understand the depth of his philosophy... if you wait for the perfect time to do something, you never do it.  It makes no difference whether you're buying or selling.

Buying something when you think it's a good investment means that you may be out of sync with the herd because the herd wants to "time" the market bottom.  Likewise, selling when you have made your target profit will also have you out of step with the herd, because the herd will be focused on "timing" the market to hit the peak.

Leaving something on the table for the next person in hopes that they make a profit requires that you are not frozen by fear whether the value might go up more.  Rather, you are focused on achieving your target rate of return on your investment.

It is impossible to "time" the market.  No one can absolutely tell the cyclical peak or trough until either is in the rear view mirror.  In fact, those people who try to "time" the market never get in it and they also hold onto their assets too long.  So what has this got to do with the land market today?

In a normal market, July and August are dead, but in July our market indices measuring the level of interest in the land market lit up to levels that we have never seen.  Since mid-July we have been running hard in order to meet with everyone who wants to talk with us about selling a piece of land or buying a piece of land.  The activity level is high.

But most folks we talk with about land act like they are waiting for somebody to give them permission to buy.  In many ways it reflects the stock market where there is over $7 Trillion in assets earning less than 0.25% annual return because the herd is afraid to buy an investment.

Yet, while we have no expertise in buying and selling stocks, we made one investment this year that earned an annual rate of return equal to 150%.  Our secret, we did not try to "time" the market.  Close was okay.

Today, there are great opportunities to buy great tracts of land.  We believe in a few years, those who buy today will be rewarded and that everyone else will look back fondly, remember today's prices, and talk about the land tract that someone else bought that they could have bought.

Our perspective on the land market is this:

1. The economy is bouncing on the bottom and so is the land market;
2. This is a great time to buy a good piece of land at a price you may never see again in your life;
3. If you own land or if all of your assets are tied up in land, you need some liquidity in order to fully benefit from the economic cycle we are in and will be in for several years.

Call us, we welcome the opportunity to talk with you about your land portfolio and the land market.  There is no obligation for us to meet.  Let us help you get your land portfolio in sync with the market, so you can prosper.