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The Old Ideas on Saving & Investing Don't Work -- Here's What Does

Valuation-Informed Indexing #666: If There Are Times When Market Timing Does Not Work As Well As It Usually Does, There Are Also Times When It Works Better Than It Usually Does

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I’ve posted Entry #666 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called If There Are Times When Market Timing Does Not Work As Well As it Usually Does, There Are Also Times When It Works Better Than It Usually Does.

Juicy Excerpt: There’s no question that market timing has not worked as well in the post-1996 time-period as it did in all the years prior to 1996. I see that reality as being a little scary for the Buy-and-Holders.

Comments

  1. So what you are saying is that your timing scheme hasn’t worked since 1996. I see that scary for market timers that are over the age of 60 and broke.

  2. I say that long-term market timing works on the day that the investor engages in it. The purpose of long-term timing is to restore the risk profile that the investor determined was best for him. The Bennett/Pfau research shows that keeping one’s risk profile constant over time has been providing far better long-term results (less risk, higher returns) than Buy-and -Hold for as far back as we have records of stock prices.

    We haven’t seen prices return to fair-value levels (except for a brief period in the wake of the 2008 Buy-and-Hold Crsis) since 1996. But, in the event that stocks continue to perform in the future anything at all as they always have in the past, they eventually will.

    Rob

  3. We have yet to see even one successful outcome with market timing and you are broke. Who wants that? No one.

  4. The Bennett/Pfau research shows that every experience with long-term timing going as far back as we have records of stock prices has been successful on a risk-adjusted basis. That’s hardly surprising. Keeping one’s risk profile constant is obviously a good thing. How could that ever not be successful?

    The hostitlity to market timing felt by some Buy-and-Holders is rooted in their reluctance to acknowledge having made a mistake back when Shiller’s Nobel-prize-winning research was not available and they had to take a shot in the dark on the timing question (they were right to conclude that short-term timing, which is just a guessing game, never works, but they did not engage in any serious analysis of long-term timing [indexing was not a widespread practice at the time]).

    If we had all been thinking clearly, we would have launched a national debate on the far-reaching how-to implications of Shiller’s Nobel-prize-winning research on the day it was published and we would now be 42 years ahead of where we are in our understanding of how stock investing works. The best thing to do when a mistake is discovered is to acknowledge it promptly and move on to better things.

    My sincere take.

    Rob

  5. First, you have never conducted any research, so stop with your fraudulent representations. Secondly, as stated thousands of times, there have never been any successful outcomes with your silly market timing scheme. You are broke. Your scheme hasn’t worked. No one wants your outcome.

  6. Okay, Anonymous.

    I do wish you all the best that this life has to offer a person regardless of what investing strategy you elect to follow, in any event, Anonymous.

    My best wishes.

    Rob