Market Timing Quotes
What the Investment Experts Recommend
© Kirk Lindstrom
Mar 22, 2006
My favorite quotes from experts about trying to time the stock market.
Summary: Most respected financial experts strongly recommend against market timing. They say, if you want to try to time the market, then you should only do it with a small "explore" portion of your otherwise well diversified "core and explore" portfolio.
This article is a compilation of the quotes I have been able to find on the subject. Please use the attached discussion forum to add any new quotes you find so I can add them to my list.
Quotes
- Paul Samuelson, "Journal of Portfolio Management," Fall 1994 ....there are confident ones; they move from ninety-ten (90:10) in stocks-bonds to five-ninety-five (5:95) in stocks-bonds. That implies a degree of self-confidence bordering on hubris and self-deception. Over the decades, when both groups...have equal limited ability to "time," the cautious chaps who alternate between sixty-five-thirty-five in stocks-bonds and sixty-forty are likely to end up with a superior risk-corrected total return score.
- John C. Bogle in Common Sense on Mutual Funds The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike.
- Benjamin Graham in The Intelligent Investor "We are convinced that the intelligent investor can derive satisfactory results from pricing of either type (market timing or fundamental analysis via price). We are equally sure that if he places his emphasis on timing, in the sense of forecasting, he will end up as a speculator and with a speculator's financial results." And "The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices."
- John Maynard Keynes, "The General Theory of Employment, Interest, and Money " Speculation: The activity of forecasting the psychology of the market. Speculative motive: The object of securing profit from knowing better than the market what the future will bring forth.
- John Manynard Keynes "We have not proved able to take much advantage of a general systematic movement out of and into ordinary shares as a whole at different phases of the trade cycle....As a result of those experiences I am clear that the idea of wholesale shifts is for various reasons impracticable and indeed undesirable. Most of those who attempt it sell too late and buy too late, and do both too often, incurring heavy expenses and developing too unsettled and speculative a state of mind, which, if it is widespread, has besides the grave social disadvantages of aggravating the scale of fluctuations.
- Burton G. Malkiel in "How Much Higher Can the Market Go" from The Wall Street Journal (9/22/99) As I have often argued: Even the Almighty cannot determine a single correct value for the market as a whole.
- Paul Samuelson, "The Ultimate Guide to Indexing" There's something in people, you might even call it a little bit of a gambling instinct . . . I tell people [investing] should be dull. It shouldn't be exciting. Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.
Discuss this article
Discussion Forum: Do you have any favorite quotes? Post them in our discussion forum Market Timing Quotes. Make sure you click "Next 10" to read newer posts.
KIRK'S INVESTMENT NEWSLETTER
Through 3/15/06 the Total Return for "Kirk's Newsletter Explore Portfolio" since 12/31/98 is Up 213% while the S&P500 only up 17%!!! & NASDAQ only up 6%!!!
My newsletter offers quite a bit of useful information including two recommended core portfolios composed of index funds or ETFs, tables, discussion of interest rates, The Fed Model, etc. that many say are worth the price of the subscription before accounting for the fantastic returns in my explore portfolio.
DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
The copyright of the article Market Timing Quotes in Investment is owned by Kirk Lindstrom. Permission to republish Market Timing Quotes in print or online must be granted by the author in writing.
Comments
Mar 22, 2006 12:55 PM
bob90245 :
<a href=http://socialize.morningstar.com/NewSocialize/asp/FullConv.asp?forumId=F100000015&lastConvSeq=38042>Morningstar</a> has a good collection.
"Nobody, but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." (AAII Guide to Mutual Funds)
"Let go of the mistaken belief that the secret to a successful portfolio is to accurately forecast bull and bear markets. (Bill Schultheis in The Coffeehouse Investor)
"After nearly 50 years in this business, I do not know anybody who has done it (market timing) successfully and consistently." (Jack Bogle in Common Sense)
"No one--not the pundits from the big brokerage firms, not the newsletter writers, not the mutual fund mangers, and certainly not your broker--can predict where the market will go tomorrow or next year." (Wm Bernstein in The Four Pillars of Investing)
"Market timing is a failed concept. Asset allocation is an important concept. Don't confuse them." (Gensler and Baer in The Great Mutual Fund Trap)
"Some people in the popular press talk about 'getting into' a bull market and 'getting out of' a bear market, but it is all marketing hype. No one knows when the next bull market will begin, how long it will last, and when it will end." (Rick Ferri in All About Index Funds.)
"Don't let your choice of portfolios be influenced by current market forecasts, recent market experience or a choice by someone else." (Goode & Hermansen in Index Your Way to Investment Success.)
"Discipline is the key to success for the long-term investor. He or she must not fall into the trap of managing holdings by newspaper headline, sound bites, mindless predictions, gut feeling or the last time period results." (Frank Armstrong in The Informed Investor)
"The knowledge of how little you can know about the future, coupled with the acceptance of your ignorance, is an investor's most powerful weapon." (Graham/Zweig in The Intelligent Investor)
"The market is totally random, irrational, and unpredictable--and it loves humbling the mighty. Try to beat it and you'll lose money." (Paul Farrell in Lazy Persons Guide to Investing)
"Timing the market is for losers. Time IN the market will get you to the winner's circle, and you'll sleep a lot better at night." (Michael LeBoeuf in The Millionaire in You)
"Any investment method that relies on predicting the future is doomed to fail." (Chandan Sengupta in The Only Proven Road to Investment Success)
"
Mar 25, 2006 1:06 PM
:
<b>Hard versus paper assets</b>
"From now until 2016 or 2018 hard assets should do better than financial assets, theoretically. But commodity cyclical stocks are very volatile."
--Walter Deemer
Apr 11, 2006 5:35 PM
Steve Thompson :
"Market Timing is a wicked idea. Don't try it --- ever."
Charles D. Ellis, author of Winning the Loser's Game
"... folks at the top of the greasy pole -- regular columnists for the major national periodicals -- are usually well informed and smart enough to understand the futility of market timing ... they do have one slight problem: They like to eat on a regular basis..."
William Bernstein, 4 Pillars of Investing
Apr 18, 2006 11:28 AM
Jeremy77 :
Just follow LONG TERM Advice. Better odds.
May 21, 2006 5:25 AM
Steve Thompson :
In late August 2003 Joe Battipaglia appeared on Lou Rukeyser's show and said.
"It turns out that market timing individual securities is a dangerous bet. However, modifying a balanced portfolio with diversification to take advantage of near term trends is a very good idea. In fact Long-term Treasury, short-term rate Treasuries have averaged 7% a year. We don’t see that in the current next 12 months. So that’s an area to de-emphasize. So when you look at it that way a fully diversified effort here with moderation based on economic conditions is the best bet. Not market timing."
5 Comments
|
