Mar

4

 One of the mantras of those who would convince us individual investors to buy and hold is "you can't time the market". The slogan seems to mean that you can't precisely time the exact bottom and exact top of any given market cycle. But that's a strawman: you don't need to buy on the very day that the market bottoms and sell on the very day that the market tops. Instead you only need to avoid buying when the market is overbought, overbullish, and overvalued, when cyclically adjusted P/E ratios are high, when the Q ratio is high, etc.; and similarly for selling.

Other than broker marketing materials, does anyone here have a good citation for the source of this old bit of market "wisdom"?

George Parkanyi writes: 

It's the mantra of the mutual fund industry (a) they want you to stay put so they can keep the fee stream going (they make money whether you win or lose), and (b) don't like you moving the money around from fund to fund because then they have the hassle of redemptions/re-balancing and/or parking your money in lower MER funds such as money-market for extended periods of time.

Ralph Vince writes: 

I've met people who can time the market.

And I would also say that it isn't necessary to do so.

There are many ways to be successful at this. It's a matter of finding what works for the individual, to find his groove. And it is precisely THAT which is the hard part.


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