September 07, 2022

You often hear that “timing matters”. It helps to think about this as two related concepts: time and timing.

For some things, time is more important than timing:

• Investing (long term). Investing for the long term is all about holding a diverse set of assets for as long as possible. It doesn’t matter if you invest at discounted price, because (a) most of your gains come from the long-term effects of compounding, not from the price you bought at, and (b) you’ll probably time it wrong anyway.
• Learning. It’s never too late to learn a new skill or expertise. But the earlier you start, the more you will be rewarded with better opportunities, improved decision making, and higher job satisfaction. Like an investment, your knowledge will compound to improve all the choices you make and things you do throughout life.
• Relationships. Building your social network will give you access to opportunities and friends/partners you wouldn’t have had otherwise. The longer you do this, the more you’ll benefit yourself and others.

For other things, timing is more important than time:

• Investing (short term). I once sold my three best Pokemon cards on eBay for $0.99 plus shipping; today, those cards would have fetched at least 100x that. Short-term investing is about timing the market to sell at a peak, buy at a trough, or exploit an inefficiency before everyone else catches on.
• Starting a business. Many good business ideas failed because they were tried at the wrong time – either the market wasn’t ready for them, or the tech wasn’t ready. Successful businesses don’t just have a great idea and execute it well, but they need to do it at just the right time.
• Genes. For a mutated gene to take off in a population, it has to give its carriers a reproductive advantage in the environment at the time. A drought resistance gene isn’t useful in a year with heavy rain.

What’s the difference between these two classes of phenomena? Things that compound are all about time; the longer you do them, the faster the benefits build on each other. Things that are about exploiting a new opportunity are about timing; if you don’t do them at the right time, you won’t be rewarded. Try not to confuse the two.