Market timers dream of makin’ a killin’ on a trend, but buyin’ and holdin’ wins out in the end.
– The Speculation Blues
with coining the phrase, “There’s a sucker born every minute.” History buffs argue the famed circus founder instead stated, “There’s a customer born every minute.” However, for investors subscribing to markettiming services, the words “sucker” and “customer” are virtually interchangeable. Time Pickers or market timers claim the ability to predict the future movement of the stock market, moving into the market before it goes up and getting out before it goes down. However, numerous studies from industry and academic experts demonstrate market timers have no such ability to beat the market, and they should be avoided just like the lion’s cage at Barnum’s circus. According to Eugene Fama, “Market timing is a flimsy, dangerous occupation.”60 arnum is often credited
Problems Gurus Are Inaccurate Too Often How often does a market-timing guru need to be right to beat an index? Nobel Laureate William Sharpe set out to answer that very question in his 1975 study titled, “Likely Gains from Market Timing.”61 Sharpe wanted to identify the percentage of time a market timer would need to be accurate to break even relative to a benchmark portfolio. He concluded a market timer must
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...