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Strategies
There’s new evidence that market timing doesn’t work. Your odds of success are better if you just hang on and aim for average returns, our columnist says.
By Jeff Sommer
Jeff Sommer writes Strategies, a weekly column on markets, finance and the economy.
Selling all of your stock just before the market falls, and buying shares just before the market rises, is a brilliant strategy.
If you could really do it, you would have bragging rights among your friends. And if you could repeat the feat over and over again, you would be fabulously rich — a true stock market wizard.
But the ability to trade like that is rare, if it exists at all. Without question, it’s so hard that the vast majority of professional traders can’t do it, as countless studies have shown.
I certainly can’t. Most of us are better off living with the reality that the stock market moves down as well as up, and that we can’t beat it. A new study provides fresh evidence of why it makes sense to strive for an absolutely middling return. And the study implies that a simple, unspectacular strategy — buying and holding the entire market through low-cost index funds — is probably the best bet for most people.
The Study
A blog about the new research begins provocatively. Its title is suggestive: “We Found 30 Timing Strategies That ‘Worked’ — and 690 That Didn’t.”
Most strategies didn’t work: That’s not surprising. But what about those that did? I wanted to find out. Perhaps they contained the secret to future riches and I could share it with the world.
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