Investors Spooked by the Market Tumble Should “Buy and Hold”

Highlighting the fact that future stock market movements are “unknowable” and that trying to predict them can be “dangerous,” a recent Wall Street Journal article quotes the legendary investor Peter Lynch: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” The article says research data shows how individual investors lose over a “percentage point a year through timing errors,” and adds… Read More

You Can’t Time The Market – But Many People Should

By Jack Forehand, CFA (@practicalquant) — There are few topics that are more controversial in the stock market than market timing. Most long-term investors will tell you that market timing is impossible. Given that in order to time the market, you not only need to know when to get out, but also when to get back in, you can see why they think that. And on top of that, many market declines are just corrections… Read More

Questions to Answer Before Dashing into Cash

Keeping some cash on hand might be a good idea if you’re going to need it soon, say many financial experts, but it could be a bad strategy for long-term investors reacting to fear of a market correction. This according to a recent article in The Wall Street Journal. The question is, the article points out, how much cash to reserve and where to put it? A move to cash, the article argues, should be… Read More

Market Timing, Even by Experts, Pays Off Only Modestly

The advice typically given to investors is to “ignore the level of the stock market and never attempt to time it. Meanwhile, “writes Bloomberg columnist Nir Kaissar, “the industry’s brightest lights are doing just the opposite.” Kaissar cites participants in the recent CNBC Institutional Investor Delivering Alpha Conference who argue that a market correction is in the offing. These include Paul Tudor Jones, Jeffrey Gundlach, and Howard Marks, to name a few. “So, which is… Read More

Investing Lessons from 2016 that Ben Graham May Give a Nod To

It’s the time of year when holiday party-goers lament their seasonal overindulgences and commit to “turning over a new leaf” on January 1st— promises to hit the gym every day, clear the pantry of junk food and turn off devices during family time are among the hopeful resolutions traded over hors d’oeuvres and prosecco. It’s also a time for reflection on the year that’s passed and setting in place a plan for the year ahead.… Read More

The Trump Rally, Market Timing and Picks

The post-election surge in stocks underscores the risk inherent in trying to time the market. In a recent article for TheStreet, Validea CEO John Reese discusses how investors, by “falling victim to elections, emotions or headlines” can miss out on returns. The goal, he argues, should be to invest in fundamentally sound businesses and avoid “jumping in and out of the market due to knee-jerk, emotional reactions.” Using his guru-based stock screening models, Reese identifies… Read More

Avoid Investing Inertia

When investors sit on the sidelines in fear of “missing out,” that may be precisely what they end up doing, says Allen Roth in last month’s Wall Street Journal. Roth, founder of the financial planning firm WealthLogic, says “over the past several years, many people have come to me with cash-heavy portfolios,” citing a host of reasons including the pending election, global turmoil, and interest rates. According to Roth, however, this mindset is really a… Read More

Market Timing Indicator Kicks off Rare Buy Signal

Most would agree that valuations in the current mature bull market make buying equities a bit less alluring than they were, say, when the U.S. was emerging from the 2008 global financial crisis. However, according to a MarketWatch article by Mark Hulbert, an indicator referred to as the Coppock Guide is suggesting that the potential still exists for “significant returns.” Edwin Coppock was a technical analyst who proposed his market-timing model in an article for Barron’s in… Read More

The Risk of Market Timing

Again and again, investors are advised against trying to time the market, but it somehow fails to keep them from “doing dumb things with their savings.” At least that’s the opinion of Spencer Jakab, who writes on the subject and much more in his new book entitled “Heads I Win, Tails I Win”. Earlier this month, The Wall Street Journal published an excerpt of the book in which Jakab spins an elaborate metaphor of failed… Read More

Asness and Arnott Talk Market Timing, Smart Beta and Behavioral Biases

Maybe not always. At least that was the upshot of a debate between Cliff Asness of AQR and Rob Arnott of Research Affiliates, panelists at the recent Morningstar conference in Chicago. Although they debated various topics, they seemed to agree that value stocks deserve attention when they’re cheap. According to Asness, founder and managing principal at AQR, “Timing the market is hard and we call it a sin, but we recommend that investors sin a… Read More