Well, that's certainly a colorful way to put it. But I remain hopeful that one can at least get an idea of the risk/reward ratio in the long term if one takes fundamental factors into account and does not bet everything on any one theory of what the market will do. One of my favorite posts on the old Brinker board was the one in which Gregory Kent made the case that Benjamin Graham did a pretty creditable job of long-term market timing:
To: Rande Spiegelman (103127)
Date: Mar 21 2000 8:31AM
From: Gregory Kent Msg #: 103219
--------------------------------------------------------------------------------
Rande,
You miss my point. Sure Graham made that quote, but he also forecasted market direction in each edition and did a very good job of it.
Read page 35 of the Fourth Revised Edition:
After describing reasons why the market (as measured by the DJIA) was overvalued in 1964, he said the following of the conditions at that time (the Third Edition):
"Speaking bluntly, if the 1964 price level is not too high how could we say that *any* price level is too high."
Then he made his recommendations for the period following 1964:
"1. No borrowing to buy or hold securities.
"2. No increase in the proportion of funds held in common stocks.
"3. A reduction in common-stock holdings where needed to bring down to a maximum of 50 per cent of the total portfolio. The capital-gains tax must be paid with as good grace as possible, and the proceeds invested in first-quality bonds or held as a savings deposit.
"Investor who for some time have been following a bona fide dollar-cost averaging plan can in logic elect either to continue their periodic purchases unchanged or to suspend them until they feel the market level is no longer dangerous. We should advise rather strongly against the initiation of a new dollar-cost averaging plan at the late 1964 levels, since many investors would not have the stamina to pursue such a scheme if the results soon after initiation should appear highly unfavorable."
This was just before the beginning of the last secular bear market. Graham did forecast what was likely to happen next and gave advice very similar to BB's current advice.
I'm sorry Rande, but Graham was a long-term market timer and so advised his readers in each new edition of his book. Your quote was taken out of context. Graham certainly did not believe in short-term timing, but it is inescapable that he practiced and advocated long-term adjustments to one's allocation based on the long-term market outlook. The range he gave was 25-75 stocks and 75-25 bond based on market outlook going foreward from each edition of his work.
I'm sure glad I saved that one.
Then we have this from Liberty Pilgrim:
Author: LibertyPi
Date: January 6, 2001 11:55 AM
Subject: Market Timing
The following was extracted from pka.org
Malcolm S. Forbes Jr. picked up on Buffett’s timing tendencies. “We know Buffett as a value investor but I think he’s a market timer, too ... We interviewed him (for Forbes magazine) in 1969 when he was a virtual unknown and he said the market was too high and that he was selling everything. We said, gosh, he sure called that one right. We interviewed him again in 1974 when the market had declined two-thirds in value in real terms, after inflation. He said it was time to buy and that he felt like a sex-starved man in a harem.”
suite101.com
I don't know if those gentlemen fit your rather colorful description or not, but it certainly seems that long-term market timing is not as disreputable as we have been led to believe. |
