Long-Term
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 asset class investing
with a portfolio allocation derived from long-term fundamental
valuations.
