The worst market timer can still be a good investor

MARKET pummelling resumed after a brief hiatus in the stomach-churning month of October. Historically, October is a positive month for investment returns but it is also known as the "jinx" month with October 2008 and 1987 pretty hard to forget. Nasdaq has now officially entered correction territory, wiping out its gains for the year, with volatility spiking, and Chinese stocks are trading near a four-year low.

All these could be due to escalating trade war spats or concerns about peaking earnings, or a rotation out of growth into value. The truth is, there is really no knowing of the cause. Markets are humbling, and they chew and spit out savvy and experienced traders every day. But perhaps it's okay to admit that we can't time the markets.

Meet Lee - the investor we all try not to be. He's the worst market timer in the world, and only invests right before the market crashes. Lee wanted to start investing - but only after he was confident in the market's upward trend - which in his case meant a big market run-up. After saving for several years, he decided to start investing with $100,000 at the end of 1972, right before the market, in this case the MSCI World Index, fell almost 40 per cent over the next year. He was too nervous to invest for the next 15 years, and instead continued to save diligently every month. He finally decided it was time to try his luck again after a bull market run and invested $100,000 in 1987. Unfortunately this was right before Black Monday, and the market subsequently lost 20 per cent in the following three months.