actio-et-reactio: for every action there is a reaction. In the background is a sketch by Leonardo da Vinci-teeter-totter- a symbol of how tenuous is the balance between extremes

actio-et-reactio

Balance is but a brief transition between extremes.

My Pages

Trading Friends

News & Reference

Credits

Content: amg
Basis: glish & bluerobot
Powered by blogger
Web Host: lunarpages
Powered by Blogger

Search

Archives


Saturday, February 02, 2002

Market Timing - It Does Work

On one of the "Fox Business Block" shows this morning, a viewer asked if the market can be timed. Dagen-whats-her-name, the smug one, predictably said "No" and gave the usual There is no proof, it doesn't work story. On the other hand, Jonathan Hoeing pretty much scoffed at that idea and said that even if one were to set aside short-cycle timing, there are times when investors with long horizons if nothing else, should just stay out.

Here's a treat for you, again from Alan Newman at cross-currents.net. Newman makes an extremely convincing case for a Buy November/Sell April seasonality:
For more than a half century, one need only buy stocks on the last day of October and sell them the last of April to average a 15.5% return ex-dividends. On the other hand, Holding stocks from the first day of May to the last day of October has brought virtually no gain over the course of 51 years!!! Glassman notes, "The reason for the failure of market timing can be summed up in two words: 'random walk.' The phrase, made popular 30 years ago by Burton Malkiel, a Princeton economist, describes the pattern that stock prices take in the short term. It's random: You can't guess it; no one can." If the pattern shown in our picture below left is random, I will eat my website.

Those interested in the "picture" (graph) showing this should read the November 01 archive article at cross-currents.net

The question is, now that it is February, and it's been a slide since December, now what? Will this 50 year trend continue or like go the way of so many of the other things that are now in 2-signma territory?

Labels:

posted by Ana Maria @ 6:17 PM :: permalink




moon phases
 

At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows

recent comments