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The Folly Of Trying To Time The Market | yvajotefihy.web.fc2.com

Please upgrade your browser to improve your experience. If you want to make money in the stock market, you have to be in—all the time. Market timing for fun and profit!

Now that sounds good, right?

The folly of trying to time the stock market - The Globe and Mail

The World's Greatest Stocks. As a consequence, there is an overwhelming temptation to follow the guru who promises to help you avoid bear markets by trying to ride market updrafts and avoid drops. That approach of beating the market is an overwhelming temptation for many investors.

Assuming returns based on the concept of flipping a coin can be very misleading. What matters is the actual annual sequence of returns. Remember, a market timer has to be right twice — when to get out AND when to get back in. Consider the following example:. The timer correctly called the bull markets in years 1 and 2 but missed the first bad market in year 3. Unfortunately, while waiting for confirmation that the market had turned, he missed the dramatic bull markets in years 6 and 7 remember, you have to decide when to get back in as well as when to get out.

How likely is it that this will happen to a market timer? Consider the grand recession. The subsequent one-year return was Now, let me ask you, name the top 10 market timers of all time? How about the top 5? How about the top 1? My point is, if anyone had successfully timed the market over an extended period of time we would know his or her name as they would be one of the richest people in the world.

And that assumes instantaneous switching from stock to cash and back. The real world doesn't work that way. If you want to make money in the market, you have to be in the market — all of the time. He holds degrees from Cornell University.

Evensky served on the national IAFP Board, Chair of the TIAA-CREF Institute Advisor Board, Chair of the CFP Board of Governors and the International CFP Council. Evensky is author of The New Wealth Management and co-editor of The Investment Think Tank and Retirement Income Redesigned. Comments are suppressed in compliance with industry guidelines.

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INVESTING - SKEPTICISM ABOUT THE MARKET TIMERS - yvajotefihy.web.fc2.com

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SLIDE SHOW Best Index Funds for Every Investor. QUIZ Will It Sink Your Credit Score? SLIDE SHOW Best Credit Unions Anyone Can Join, The World's Greatest Stocks As a consequence, there is an overwhelming temptation to follow the guru who promises to help you avoid bear markets by trying to ride market updrafts and avoid drops.

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