My quest to get my timing right began early. Almost as soon as I was born, my parents left me in no doubt: “You should have appeared earlier.” This experience was often repeated at school. To this day, I still lack an hour of valuable general knowledge because a teacher threw me out of a class when I didn’t turn up on time. Later in life, I missed out on promising dates because I’d somehow got the time mixed up …
But nowhere has wrong timing cost me as dearly as on the stock market. And all from strictly following the advice of US cult investor Warren Buffett: “Buy low, sell never!” I thought I could tell from a few key figures – a low price-earnings ratio or a high dividend return, for example – whether or not a share was “low.” For a long while, my timing seemed to work, until the Petroplus case gave me a wake-up call. In 2006, the oil refiner went public on the Swiss stock exchange. The issue price of the share: 63 francs. Barely six years later, the firm went bust.
The rest is history – and an expensive lesson for me. First, I learned that share prices can sometimes go down faster than you can act. Second, that you can only identify the “right” time to make an investment afterwards. Who knew in advance that the National Bank would scrap the minimum euro exchange rate on January 15, 2015? In a single day the Swiss equity market slumped by almost 9 percent and companies saw billions of francs wiped off their market value. Even getting it wrong by just a few hours can prove costly.
7.6 percent annual return
Nevertheless, there’s hope. Numerous studies show it’s the length of time for which you invest, rather than when you invest, that’s crucial to investment success. Swiss equities have posted an average annual real return of 7.6 percent during the last nine decades. However, a large part of this return is lost to investors because they buy or sell their securities at the wrong time. Put bluntly: “Too much trend chasing leads to the poorhouse.”
To make sure at least that I’d no longer pop up at the wrong moment in the wrong place on the stock exchange, I decided to outsmart myself. That’s why I now have a UBS Investment Fund account that I invest the same amount in every month – 200 francs. If share prices soar, my money can buy fewer securities. When prices fall, I acquire more securities. Because it’s automatic, this approach leads to countercyclical buying behavior and gets me the best possible price. And it saves me time that I can use elsewhere – catching up with the gaps in my knowledge, for example.