Summary

The article reflects on the importance of long-term investment strategies, using the author's personal experience of missing out on significant profits by selling Avis stock too early, emphasizing that "time in the market beats timing the market."

Abstract

The author shares a personal anecdote about the financial lessons learned from selling Avis stock prematurely, which could have yielded a $55K profit. The narrative underscores the investment adage that maintaining a long-term position in the market typically outperforms attempts to time the market for short-term gains. Despite buying Avis shares at a low point during the market downturn in early 2020, the author sold too soon, missing out on a substantial increase in the stock's value. The article emphasizes the value of patience and a long-term investment horizon, acknowledging the role of market momentum and the ease of modern trading, which can lead to overvaluation and short-term speculation.

Opinions

The author believes in the wisdom of investing for the long haul, as evidenced by the quote, "time in the market beats timing the market."
Dollar-cost averaging is favored as a strategy to mitigate the risks of market timing.
The author admits to a mistake in selling Avis stock too early, despite understanding the importance of time in the market.
There is a recognition that although the author was fortunate to buy at a market low, selling within a short timeframe was a naive move.
The article suggests that while Avis's current stock price is overvalued, market momentum and factors like short squeezes can lead to irrational price movements.
The author points out that the current market dynamics are influenced by increased accessibility to trading, real-time market information, and a shift in societal attitudes towards investing and trading.

Another Story on Why Time in the Market Is Important

Lessons learned from missing out on $55K

One of my favorite quotes related to investing is that “time in the market beats timing the market.”

And this is true. Over the long term, you are better off letting your money grow instead of trying to buy low and sell high.

I’ve learned my lesson about buying stocks. Dollar-cost averaging is a great way to set yourself up for success. It took many lessons until the lightbulb finally went off in my head for that one.

But as I scrolled through market news yesterday, I saw Avis’ stock was at record highs. Not just slightly above record highs, but astronomically high.

Although I shouldn’t have, I calculated how much I would have in Avis stock if I didn’t sell. My curiosity turned to disgust when I saw it would have been $58,933.05.

The Background

When the market started crashing in February 2020, I slowly started buying in. As prices kept dropping, I kept buying. It wasn’t until late March I started putting money into industries hit the hardest from travel restrictions — Avis, Carnival Cruise, and United Airlines.

My first purchase of Avis shares was on March 24th, 2020 and I sold my last shares on May 15th, 2020.

Over that time I bought 165 shares at an average cost of $12.77. My total cost was $2,107.30.

Avis closed Tuesday (11/2) at $357.17. If I kept all my shares I would currently own $58,933.05 worth of Avis stock.

$56k profits in a year and a half on a cost of $2k would've been nice.

The Lesson

Time is important.

I was extremely lucky to buy in at the low point. It was a risky move. But I was naive to sell in such a short time.

The most important thing for your investments is time. Whether your time horizon is two, ten, or forty years — most assets appreciate in the long term. It's easy to get caught up in the short terms profits others post on social media or brag about in person. But steady, consistent long-term profits are just as important.

Realistically, even if I didn’t sell when I did, I would have sold before this explosion in price yesterday. I would have taken the profits and been happy.

The should’ve, could’ve, would’ve for this is irrelevant. If we all counted the mistakes we made in the market, we’d all be millionaires. I had a plan, stuck to it, and made some money. The number one goal is to not lose money.

Why Avis is up

Avis has been up big the past month. On Tuesday it had a record day after reporting earnings in the morning.

They blow away the earnings expectations
Authorized share buybacks
Planning to increase purchases of electric cars for its fleet

Somehow all this was enough for the stock to be up 200% in one day.

Oh, and 20.5% of the float of Avis Budget’s stock was sold short. So buyers are trying to force a short squeeze. Similar to GameStop earlier this year.

On a related note, Avis’ stock should not be at the price it currently is. It is overvalued (in my unprofessional opinion.) But the market is wilder now than ever before. Momentum is something that can’t be measured in a valuation, and it has such a huge impact on prices these days.

Never before have people had so much money available, time in front of a computer, and easy access to trading.

People are still working from home and can easily watch market news and place an order without their boss scolding them. Some people have left corporate America to trade full time — if they could make good money trading on their own time, why not. Twenty years ago people did not act like this in the stock market.

Brokers fees no longer exist, I can buy/sell from my cell phone, and market information is readily available and easily comprehensible to anyone.

Momentum is now a significant part of the market that needs to be considered. Just ask Citadel and Melvin Capital.