"This tells you how bankrupt the idea is that anyone can time the markets if the best timers are this bad."
The surprising thing is that market timing doesn't have to be all that good to beat the market. For example, even though Brinker's timing has turned out to be hit or miss, he beat the S&P 500 for the twenty year period ending 12/31/2008 even when a worst case commitment to the QQQQ blunder is taken into account.
Here is what I base that statement on:
I previously showed that the effect of using the worst-case end of his recommended QQQQ range was to reduce the balance for P1 by 29.5%.
Message 23948811
Brinker's P1 shows twenty year performance of 756% as of 12/31/2008, vs. 388% for the S&P 500 Index (VFINX).
bobbrinker.com
That means that the gain was 7.56 times the starting balance. For example, if the starting balance were $100,000, the ending balance would be $756,000. To get the ending balance, you add the starting balance to the gain, for a total of $856,000.
29.5% of that is $253,000, so you subtract that.
$856,000
-$253,000
$603,000
To get the gain, you subtract the starting balance.
$603,000 - $100,000 = $503,000.
The percentage gain is 100% x $503,000 / $100,000 = 503%.
So the gain for the twenty year period, with a worst case commitment to QQQQ considered, was 503%, which still significantly outperformed the 388% of the S&P 500 Index.
Thus it would appear that a market timing strategy does not have to consistently avoid bear markets to outperform the market over a long time period. |
