Скачать или смотреть Breaking the Crystal Ball: The Truth About Market Timing

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To win what I call, the great game of investing, investors must learn a fundamental truth; you don't win by doing what everyone else is doing. I'll admit that it took me a while to understand this concept, which is a little surprising given all the supporting evidence.

Think about it, if what everyone else is doing works so well, would 80% of investors with assets of over $500,000 say they're disgusted with their advisor? If investors were satisfied, would financial services be vying with tobacco as the least loved industry? Would trade publications like Investment News continue to run articles with headlines like Financial advisers face a crisis of confidence and Crisis challenges long held investing truths?

For many years, everyone else has been more or less following the exact same strategy of buy and hold. But after being so soundly beaten by the latest bear market, even the staunchest buy and hold defenders are finally singing a different tune. Few still believe that buying and holding a diversified portfolio is a sound decision when other alternatives are available. Unfortunately, too many people are peddling investment vehicles and concepts that are as bad as (and oftentimes worse) than buy and hold. Among these is the idea of market timing. This concept of market timing is not only being hawked as a supposed cure for the buy and hold blues, but as a panacea for all investment woes.

Market timing requires using some means, maybe a formula, pattern or gut instinct, to try to predict the future direction of the market. In its purest form, market timing is switching between cash and stocks based on a price prediction. The promise is so seductive. After all, you simply put your money in the stock market when its about to rise, take it out before it goes down and you're sure to receive a huge profit, right? The bad news is that market timing is a lie.

The good news is that the data surrounding market timing doesn't lie. The data from study after study says that no one can predict market direction consistently over long periods of time. The truth is that an occasional market call is easy, but to do it consistently is impossible. Of course, the laws of chance allow all of us to get it right once in a while.

The truth is that an occasional market call is easy, but to do it consistently is impossible. If someone tries to sell you their market timing ability, ask them for proof of their market calls, published contemporaneously, not after the fact, over a period of years. Then review their track record and measure its success.

Both logic and evidence tell us its impossible to time the market over long periods with any inconsistency. So why do so many financial advisors claim they can do the impossible, especially in light of the fact that the data proves trying to time the market actually does more harm than good?

The answer is simple and obvious. Salespeople have very different objectives than academicians. Academicians analyze facts in an effort to reveal the truth - and salespeople, well lets just say that too many are less concerned with the truth than with their own financial bottom line.

There are only two reasons someone would try to convince you that you can make money by timing the market. They are either delusional and have convinced themselves they can do what no one else can - or they're willing to sacrifice your security for their own greed. Admittedly, this is a strong statement, but the data doesn't lie.