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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: nosmo_king who wrote (16846)	1/31/2000 1:30:00 PM
From: StockHawk	Respond to of 54805

>>I was impressed by the examples O'Shaunessey, not a GG'er, puts forth in his book, How to Retire Rich...if one invests 10K each year in an index fund at the exact moment when it's the highest, one would still end up doing quite well over the long term.<< O'Shaunessey, who has done much research on the historical performance of markets and stocks, operates a small family of mutual funds and has also written other books including What Works on Wall Street. He has two favorite examples that address the timing issue. One is that which you reference above. As I recall he takes two people, one who buys at the high every year for 20 years, and another, more cautious, who waits 10 years to do anything, but they buys with impeccable accuracy, at the low in each of the next 10 years. Both invest the same amount and the one buying at the tops ends up with much more. The moral of the story is invest now and let compounding work for you. The second set of stats he likes to cite revolve around the idea that markets (and stocks) often spend much time basing and then move up rather quickly. He has shown that even in long periods of rising prices if an investor was out of the market on a handful of the best days their performance would be much worse than the averages. The moral here is that if you wait on the sidelines for something to happen, it will usually happen without you. O'Shaunessey also argues against trading, advocating a buy and hold philosophy. As you said he is not a gorilla gamer, he uses value metrics, some of which are somewhat similar to the dogs of the Dow theories. StockHawk