Rick Kahler: Even Experts Can’t Successfully Time the Market | Financial Awakenings
Theoretically, timing the market could give you a huge payoff. At a recent conference I attended sponsored by Dimensional Fund Advisors, Walton Wellington, Vice President of Investment Strategies, gave the following numbers.
Suppose, 70 years ago, you put $1000 in a savings account. It would have grown to $16,000. If you had invested in the S&P Index and left it alone, you would have $1.8 million. If your holdings included an index with over 3,000 companies, you would have $13.4 million.
However, had you perfectly timed the market, buying at the start of every bull market and selling at the top, you would have $7.2 billion. Conversely, had you sold before every bull market and bought at the top, you would have $3.40, enough for a cup of coffee at Starbucks.
No one can reliably predict the market. That includes the experts who are supposed to be able to do so. The stock-picking hall of shame is a crowded place.