It's Time in, Not Timing, the Market that Counts

Abstract

The author revisits the issue of market timing and concludes that it may prove to be an exercise that does more harm than good to long-term investment performance. Though it may seem easy to understand market returns with the benefit of hindsight, this short articles argues that market timing done in hindsight provides investors with little help in making solid long-term investment decisions. Trachtenberg suggests that, in any given year, there will be both perfectly good as well as perfectly bad reasons for not investing. In the same way, in any given year, one witnesses ups and downs in the market and in one's own portfolio return. Thus, using the data from 1985 onwards, Trachtenberg shows that the critical decision is not when to invest, but how much to invest.