Ken Fisher Says Time, Not Timing, is Key to Investment Success

In a recent article for USA Today, investment guru Ken Fisher warns that it’s impossible to miss market downturns and that “even the greatest investors are wrong maybe a third of the time.” But there’s good news, he adds: “You don’t need perfect timing to achieve marvelous returns. Time in the market beats timing the market—almost always.” He offers the example of three hypothetical investors placing $10,000 in U.S. stocks each year between 1977 and… Read More

Beware of Binary Market Indicators

By Jack Forehand (@practicalquant) —   Whenever the market declines, the news is filled with information that can lead investors to panic. That is no surprise since doom and gloom sells. Even with the small pullback we have recently had (we can’t even call it a correction since the market hasn’t declined 10%), there has been no shortage of negative headlines and calls for impending doom. I have previously written about the dangers of letting these headlines… Read More

Mark Hulbert Offers Stock Trading Secret

In a recent article for MarketWatch, financial analyst and journalist Mark Hulbert describes what he calls the “market-timing industry’s dirty little secret: bear markets and increased volatility are good for business.” The explanation, according to Hulbert, is that it’s difficult to add value when the market is going straight up. “Who needs a market timer during conditions like those?” he queries. But when volatility kicks in and investors get nervous, subscriptions to advisory services tend… Read More

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