- The Big Picture - http://www.ritholtz.com/blog -

Time — Not Timing — is Key to Investing Success

Posted By Barry Ritholtz On August 24, 2014 @ 9:30 am In Apprenticed Investor,Asset Allocation,Investing | 4 Comments

[1]

>

My Sunday Washington Post Business Section column [2] is out. As a follow up to our previous discussion of the World’s Greatest Trader®, this  morning, we look at the Worlds Greatest (and Worst) Market Timer®.

As we did last time out, we assumed magical powers for our theoretical trader, giving him the ability to bottom tick the market. Surprises aplenty follow.

Here’s an excerpt from the column:

“Over the past month, we looked at how you would have fared if you were an uncanny stock picker who consistently beat the market by 30 percent or so (What if You Were the World’s Greatest Trader® ? [3] and World’s Greatest Trader Revisited [4]).  As it turns out, capital gains taxes and other expenses take a giant bite. Even a very successful active trader barely keeps up with the long-term passive indexer.

This week, we consider: What if you were the World’s Greatest Market Timer?
Imagine: You, the individual investor, have an uncanny skill at timing markets and picking the lows. Your prescience allows you to buy near the bottom of every major crash. Anytime the market has a substantial drop, you manage to make a purchase of broad indexes at advantageous prices. Similar to the World’s Greatest Trader, you set up an online account, and then you are off to the races, timing markets with the best of them.

How would you imagine a trader with these skills would do?”

The answer turns out to be rather surprising . . .

 

Source:
Time, not timing, is key to investing success [5]
Barry Ritholtz
Washington Post, August 24, 2014  
http://wapo.st/1rt1jI8


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2014/08/time-not-timing-is-key/

URLs in this post:

[1] Image: http://www.ritholtz.com/blogwww.washingtonpost.com/barry-ritholtz/2011/03/31/AFWBwIBC_viewAll.html

[2] column: http://www.washingtonpost.com/barry-ritholtz/2011/03/31/AFWBwIBC_viewAll.html

[3] What if You Were the World’s Greatest Trader® ?: http://www.washingtonpost.com/business/so-youre-the-worlds-greatest-trader-taxes-will-fix-that/2014/07/25/7d358bde-1105-11e4-98ee-daea85133bc9_story.html

[4] World’s Greatest Trader Revisited: http://www.washingtonpost.com/business/no-matter-what-the-long-term-investor-comes-out-ahead-of-the-short-term-trader/2014/08/07/aad83bce-1e64-11e4-ab7b-696c295ddfd1_story.html

[5] Time, not timing, is key to investing success: http://www.washingtonpost.com/business/barry-ritholtz-time-not-timing-is-key-to-investing-success/2014/08/21/b3443d9a-27d2-11e4-86ca-6f03cbd15c1a_story.html

Copyright © 2008 The Big Picture. All rights reserved.