Taylor Larimore, a well-respected Bogleheads, compiled a list of what experts say about market timing vs. staying the course. Market timing is essentially making portfolio changes based on market forecasts. Read the list below to educate yourself about the danger of market timing.
What Experts Say About Market Timing
“The stock market will fluctuate, but you can’t pinpoint when it will tumble or shoot up. If you have allocated your assets properly and have sufficient emergency money, you shouldn’t need to worry.” (AAII Guide to Mutual Funds)
“Endless tinkering is unlikely to improve performance, and chasing last period’s stellar achiever is a losing strategy.” (Frank Armstrong, author and adviser)
“It must be apparent to intelligent investors–if anyone possessed the ability to do so (market time) he would become a billionaire quickly.” (David Babson, author, adviser)
“What it really takes to improve your returns and diminish your risks is a willingness to stop focusing exclusively on the movement of the markets.” (Baer & Ginsler, The Great Mutual Fund Trap)
“If we haven’t said it enough, we’ll say it again: Market timing is dangerous.” (Barron’s Guide to Making Investment Decisions.)
“Only liars manage to always be ‘out’ during bad times and ‘in’ during good times. (Bernard Baruch, famed investor)
“Market timing recommendations have an impressive track record of being harmful to an investor’s financial health.” (Peter Bernstein, author, researcher)
“There are two kinds of investors, be thay large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know.” (Wm Bernstein, author and adviser)
“If you’re determined to succeed at investing, make it your first priority to become a buy-and-hold investor.” (Jack Brennan in Straight Talk on Investing)
“When you give up teh hope that some advisor, some system, some source f of inside tips is going to give you a shortcut to wealth, you’ll finally begin to gain control over your financial future.” (Harry Browne, author)
“For the 12 years ending 1997, while the S&P rose 734% on a total return basis, the average return for 186 tactical asset-allocation mutual funds was a mere 384%.” (Buckingham Financial Services)
“We have long felt that the only value of stock forecasters is to make fortune-tellers look good.” (Warren Buffet)
“Market timing is an ineffective strategy for mutual fund investors.” (CDA/Wiesenberger)
“Any investment method that relies on predicting the future is doomed to fail.” (Chandan & Sengupta, financial authors)
“A successful investor has a good knowledge base, a well-defined investment plan, and nerves of steel to stick with it.” (Andrew Clarke, financial author)
“Most investors are unable to profitably time the market and are left with equity fund returns lower than inflation.” (2003 Dalber Study)
“Take my word on it. Buy-and-hold is still your best long-run strategy.” (Jonathan Clements, author & journalist)
“The buy and hold equity investor (S&P 500) would have earned a return of 8.35% for the 20 years ending 12/08, while the market-timer would have earned just 1.87%.” (Dalbar research)
“Market-timing is bunk.” (Pat Dorsey, M* Director of Fund Analysis.”
“The performance of 185 tactical asset allocation mutual funds was compared with buy-and-hold strategies and equity mutual funds over the years 1985-97. Over this period the S&P 500 Index increased 734%, average equity funds increased 598%, and tactical asset allocation funds increased 384%.” (David Dreman, author)
“Market timing is a wicked idea. Don’t try it-ever.” (Charles Ellis, author of The Loser’s Game)
“Do nothing. I think all of this market timing is statistically unfounded. I don’t trust it. You may avoid a downturn, but you may also miss the rise. Choose the risk tolerance you’re OK with and hold tight.” (Professor Eugene Fama)
“Forget market timing in any form.” (Paul Farrell, (CBS Marketwatch.com)
“The best practice for investors is to design a long-term globally diversified asset allocation based on present and future financial needs. Then follow that plan religiously, through all markets good and bad.” (Rick Ferri, author and adviser)
“Benjamin Graham spent much of his career trying to devise a good formula for when to get into–and out of–the stock market. All formulas, he concluded, failed.” (Forbes, 12-27-99)
“Buy and hold. Diversify. Put your money in index funds. Pay attention to to the one thing you can control–costs.” (Fortune Investor’s Guide 2003)
“Dont’ sell out of fear or buy out of greed. Just keep making investments, and let the market take its course over the long-term.” (Norman Fosback, author, researcher)
“We have two classes of forecasters: those who don’t know-and those who don’t know they don’t know.” (John Kenneth Galbraith, Economist)
“I’ve learned that market timing can ruin you.” (Elaine Garzarelli, a once famed market-timer)
“A review of both the empirical evidence and the research work done on the subject suggests that attempts to improve investment performance through market timing will most likely fail.” (Roger Gibson, author of Asset Allocation)
“Staying on course may be just as difficult in bull markets as in bear markets.” (Good & Hermansen, Index Your Way to Investment Success)
“For most investors the odds favor a buy-and-hold strategy.” (Carol Gould, author & financial columnist)
“If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting that’s going to happen to the stock market.” (Benjamin Graham)
“From June 1980 through December 1992, 94.5% of 237 market timing investment newsletters had gone out of business.” (Graham/Campbell Study)
“Your very refusal to be active, and your renunciation of any pretended ability to predict the future, can become your most powerful weapon.” (Graham & Zweig, The Intelligent Investor)
“The best advice: buy and hold.” (John Haslem, author and researcher)
“Even in a bear market, market-timing and actively managed mutual funds generally hurt investment performance more than they help it.” (Mark Hulbert, N.Y.Times columnist)
“After receiving the Nobel Prize, Daniel Kahneman, was asked by a CNBC anchorman what investment tips he had for viewers. His answer: “Buy and hold.”
“I am not a trader, and don’t believe in trying to time the market or outguess the short-term fluctuations.” (Lawrence Kudlow, CNBC)
“Timing the market is for losers. Time IN the market will get you to the winner’s circle, and you’ll sleep better at night.” (Michael Leboeuf, author)
“No one is smart enough to time the market’s ups and downs.” (Arthur Levitt, former SEC chairman)
“Markets will go up and they’ll go down over your investing lifetime, but it’s time in the market that counts, not market timing.” (Mel Lindauer, author and Forbes columnist)
“It never was my thinking that made the big money for me. It always was my sitting.” (Jesse Livermore, author & famed investor)
“Nobody can predict interest rates, the future direction of the economy or the stock market.” (Peter Lynch)
“Buying-and-holding a broad-based market index fund is still the only game in town.” (Burton Malkiel, author of classic Random Walk Down Wall Street)
“At the peak of the bull market in March of 2000 only 0.7% of all recommendations on stocks issued by Wall Street brokerages and investment banks were to “Sell.” (Miami Herald, 1-26-03)
“If you can’t handle the short term, if the uncertainty is stressful and the headlines are unbearable, then the markets are too hot for you: get out of the kitchen.” (Moshe Milevsky, author & researcher)
“Timing is public enemy number one in investing.” (Mutual fund manager)
“We’re not keen on market-timing. It just doesn’t work.” (Morningstar Course 106)
“We’ve yet to find anyone who can accurately and consistently predict the market’s short-term moves.” (Motley Fools)
“In 1999, 70% of day traders sustained losses that wiped out their accounts.” (North American Securities Administrators Association)
“The most active traders earned 7% less annually than buy-and-hold investors.” (Odean & Barber study of 66,400 investors)
“Forget trying to time the market and do something productive instead.” (Gerald Perritt, financial author)
“The market timer’s Hall of Fame is an empty room.” (Jane Bryant Quinn)
“Setting a plan to take some risk and sticking to it isn’t always comfortable, but I can tell you that it works a lot better than the alternative.” — Pat Regnier, Assistant Managing Editor, Money magazine
“Countless studies have proved that no one is able to time the market effectively.” (Mary Roland, author & journalist)
“Trading is based on the rather arrogant belief that the trader knows more than the buyers and sellers with whom he is trading.” (Ron Ross, The Unbeatable Market)
“In the long run it doesn’t matter much whether your timing is great or lousy. What matters is that you stay invested.” (Louis Rukeyser, TV host)
“For the 10 years that ended 12-31-2000, only one newsletter out of the 112 that Timers Digest follows managed to beat the S&P 500 Benchmark.” (Jim Schmidt, editor)
“What do I really think is going to happen? — I have absolutely no idea. (John Schoen, senior producer for msnbc.com)
“I have learned the hard way that market timing and trying to pick a fund that will out-perform the market are both losing strategies.” (Bill Schultheis, author and advisor)
“I’m a strong advocate of buying and holding.” (Charles Schwab)
“It turns out that I should have just bought them (securities), and thereafter I should have just sat on them like a fat, stupid peasant.” (Fred Schwed Jr., Where Are the Customers’ Yachts?)
“If you are not going to stick to your chosen investment method through thick and thin, there is almost no chance of your succeeding as an investor. (Chandan Sengupta, financial author)
“Investors should look with a jaundiced eye at any market timing system being peddled by its guru-creator.” (W. Scott Simon, financial author)
“Investors desperately want to believe they can time the markets, but the statistics tell an entirely different story.” (Liz Ann Sonders, Schwab Chief Investment Strategist)
“Buying and holding a few broad market index funds is perhaps the most important move ordinary investors can make to supercharge their portfolios.” (Stein & DeMuth, (authors & advisor)
“It’s my belief that it’s a waste of time to try to time any market decline, or try to pinpoint a market bottom.” (James Stewart, Smart Money columnist)
“Trying to time the market based on your belief that you’re a better judge of the data is a loser’s game, just like the games in Las Vegas—it’s possible to win, but it’s so unlikely that the surest way to win is to not play.” Larry Swedroe, author and adviser.
“People should stop chasing performance and just put together a sensible portfolio regardless of the ups and downs of the market.” (David Swensen, Yale Investments)
“Trust in time and forget market-timing. Allow time to work its compounding magic for you. Let market-timing inflict its miseries on someone else.” (Tweddell & Pierce, financial authors)
“Stay invested. Not only does buy-and-hold investing offer better returns, but it’s also less work.” (Eric Tyson, author of Mutual Funds for Dummies)”
“Few if any investors manage to be consistently successful in timing markets.” (Wall Street Journal Lifetime Guide to Money)
“If you’re considering doing your own market timing, the best advice is this: Don’t.” (John Waggoner, USA Today financial columnist)
“From 1963-1993 stocks returned an annual average of 11.83% for time in the market. Conversely timing the market or trading returned an average of 3.28%.” (University of Michigan survey)
“We Believe market-timing and performance-chasing are losing strategies.” Vanguard link
“If you buy, and then hold a total-stock-market index fund, it is mathematically certain that you will outperform the vast majority of all other investors in the long run.” (Jason Zweig, author and Wall Street Journal columnist)
“I do not know of anybody who has done it (market timing) successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.” (Jack Bogle)
