Chapter 5

Market Timing

The evidence on investment managers’ success with market timing is impressive—and overwhelmingly negative.

—Charles D. Ellis (1937–), Investment Policy, 1985

He that cannot abide a bad market, deserves not a good one.

—John Ray (1627–1705), English Proverbs, 1678

Put all your eggs in one basket and—WATCH THAT BASKET.

—Mark Twain (1835–1910), Pudd’nhead Wilson, 1894

The nightingale which cannot bear the thorn

It is best that it should never speak of the rose.

—Anwar-i-Suhaili, The Lights of Canopus

Common stocks have volatile returns. One consequence of this volatility is that investors historically have suffered negative annual returns approximately 28 percent of the time. Obviously, if there were a way to avoid ...

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