Perfection Truly is the Enemy of the Good
Jun 14, 2025
One of the constants in investing is the need to understand that there is no such thing as perfection.
When it comes to investing the lines are always fuzzy. Is this stock cheap enough? Will it get cheaper? Will I miss out if I don't but it now?
All sorts of emotional problems arise from our need for perfection.
If you see time as the critical component, you will be able to take a more relaxed position in regards to managing your portfolio.
If you are investing for the long term then you must understand that you will never get the correct entry and exit points perfect over 5, 10, or 30 years. It is simply silly to think you can time every zig and zag perfectly.
When it comes to understanding market movements, then looking at the cycle can greatly assist you in your entry and exit points. So long as you get somewhere close to the bottom (using the CAPE for example) you will be fine. Buying an ETF in late 2008 or early 2009 led to great returns even though you didn't get it bang on March 9, 2009.
The same applies to selling and rebalancing. It doesn't matter if the stock rises after you sell a portion. You just need to focus on building the portfolio and avoiding the large losses. And if you know markets cycles, then large losses come from high CAPE valuations.
So while the US is extremely unattractive at a CAPE of 37, there are plenty of emerging markets that are seriously cheap and present a great opportunity for superior gains over the next decade.
So don't fret too much about entry and exit prices. Just stay focussed on investing systematically and using simple valuation tools to build wealth.
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