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Market Timing "We love owning common stocks -- if they can be purchased at attractive prices. In my 61 years of investing, 50 or so years have offered that kind of opportunity.... But occasionally successful investing requires inactivity"-- Warren Buffett In Yes,
You Can Time the Market, Ben Stein and I describe
how valuing the stock market dramatically improves your returns
from S&P 500 index investing.This approach has nothing to do
with short-term market timing, an approach demolished by Nobel prize
winner William Sharpe back in 1975. But look what a difference long-term
timing made to investment returns across the past century:
However, there are many asset classes besides the S&P 500. Our proprietary database also tracks small cap stocks, value stocks, foreign stocks, emerging market stocks, real estate investment trusts, T-bills, bonds, and commodities. Starting with our model allocation, we systematically over- and under-weight each asset class according to how under- or over-valued it appears at the time of investment. We don't rebalance accounts annually (a process that generally subtracts from your returns and generates needless commisions and taxes), but only when your allocation moves significantly out of alignment from the underlying valuation model. The goal: buy low, sell high. Our unique niche is combining passive index or asset class investing with a portfolio allocation derived from long-term fundamental valuations. However, capital appreciation isn't the only game in town. There is also... |
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