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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Jim O'Hare who wrote (3914)	3/8/1998 2:36:00 PM
From: David Bogdanoff	Read Replies (1) \| Respond to of 42834

JH: Many economists and financial experts (such as Malik) have concluded for years that the market cannot be timed or predicted consistently and advocate an index approach for reason. I believe that Buffet easily outperforms an index fund, but it is interesting to note that he does not try to time the market or the economy. BB takes a very different approach to investing. David

To: Jim O'Hare who wrote (3914)	3/9/1998 1:31:00 AM
From: sea_biscuit	Read Replies (1) \| Respond to of 42834

I am just wondering if it is "smart" to try to time the market. I don't think it is. Take the following example from history : Investor A has a "perfect" market timing model (if there indeed is one!). He gets out of the market and into CDs (or treasuries) without losing a cent in the brutal 1973-74 bear market, and stays out of the market until Jan 1, 1982. During those years of high inflation, the CDs did give good returns, and he averaged 11.7% every year for a total gain of about 117%. Investor B on the other hand, stayed on and lost 40% of his investment in the ensuing bear market. Then he decided to do something about his portfolio. He didn't completely jump out of the market but decided on a 60/40 stock/bond approach on Jan 1, 1975 according to the indexed portfolio developed in the series of articles at the following : text.morningstar.net The result? By Jan 1, 1982, Investor B had averaged 12.1% every year and was up nearly 123%! And keep in mind -- *this scenario assumes that Investor A was absolutely perfect* in his timing!**. As we deviate from this "perfect scenario", Investor A starts looking progressively worse in comparison to Investor B. So what can we say? -- may The Force be with all market timers! Dipy.