Buffett's Answer to How to Time the Market

Timing the stock market means that you buy stocks when they’re at an all-time low and sell again when they’re at an all-time high. And in the recent shareholder meeting in Omaha, Buffett explained some of his amazing timings.

I recently went to the Berkshire Hathaway Annual Meeting for Shareholders in Omaha Nebraska, which was an extraordinary experience. At the annual meeting it’s possible for shareholders to ask questions to Buffett and his business partner Charlie Munger and one shareholder stood up and had an interesting question about timing the market.

“You’ve always said that it’s impossible to time the market, yet if you look at your track record you’ve had amazing timings with some of your key decisions”, the shareholder said and continued: “You got out of the stock market in 1969-70 and you bought back in in 1972-74, when the markets were really cheap. And you did the same thing in 1987, 1999, 2000, and in 2003. You're sitting on a significant amount of cash when the markets are going down.”
“How do you time the big market moves so well?”, the shareholder asked.

Buffett laughed and offered the shareholder a job at Berkshire Hathaway (Buffett’s company), and then continued in all seriousness:

“I don’t think we’ve ever made a decision on where either one of us said or was thinking we should buy or sell based on what the market is going to do”, Buffett said at looked at Charlie Munger who agreed.

“We don’t have the faintest idea of what the stock market will do, when it opens on Monday, and we never have had”, explained Buffett. On several occasions Buffett has mentioned how no one has a crystal ball and is able to foresee the future, and that’s not how he grew his investments with 20% on average per year.

“We’ve never timed anything; we’ve never figured out insights into the economy,” he explained and like many times before referred to the fact, that he is not buying on the basis of what is going on in the macro economy. He zooms in on one great company and waits patiently until something in the economy makes this wonderful business go on sale. “You could learn that in 4th grade, but that’s not what’s taught in school”.

Many people (and I used to be one of them) think that the stock market is about predicting what is going up in the future. But it really isn't. Investing is about buying quality businesses and buying them at a time, where the stock of this quality business is trading at a great price.

“We’ve not been good at timing, we’ve been reasonably good at figuring out when we would get enough for our money” 

Warren Buffett

If you want to know how to invest like Buffett and know your “strike”-price – at what price to buy a stock, I’d love to teach you in my investing course. 

You can also get eduction from my articles on the blog for example I’ve written an article about how to value a stock: How to find a stock price? A company’s intrinsic value.