On Market timing From A random Walk down Wallstreet (Malkiel) A definition: The strategy of moving money from cash to equities or long term bond funds based on a forecast of fundamental economic conditions a.k.a.: market timing or asset allocators

John Boggle (founder of Vanguard fund) “In thirty years in this business, I do not know anybody who has done it successfully and consistently….. Indeed my impression is that trying to do market timing is likely to be counterproductive

Some data Mutual fund managers have been incorrect in their allocation of assets into cash in essential every market cycle during the 70s and 80s High cash allocations coincides almost perfectly with market troughs during 1970, 74, 83, & 87

More data During 80s Market provided a return of 16.7% But If you missed the best 10 days of the decade (2528 trading days) the return was 12.6%

Malkiel’s Conclusion Obviously, being out of the market during a period of sharp decline…saved you grief and money But Unless those timers got back in the market right after lows were hit, they were not more successful than investors who buy and hold (and they had more investment costs!)

My conclusion We are wasting our time trying to predict major moves in the market. It would be a better use of our time to try to be fully invested buy and sell to get the best companies in our portfolio Accept that we will be riding on the back of market trends

P.S. Malkiel was and is a stock picker So, What do you think? P.S. Malkiel was and is a stock picker

Ten Questions to ask before Selling a Stock Is the stocks future is fading fast? Are you being rash, emotional or reactive? Will the sale effect diversification? What are the tax ramifications? Are you selling because of the market--or the industry? Is the stock overvalued or undervalued? Are you cutting your flowers and letting the weeds grow? Are you selling just because the stock’s price has gone up? Do you have a better use for the money after you sell? When selling to pay off a member withdrawal, have you considered all the options? Investment Clubs for Dummies

Don’t sell because: The price hasn’t moved A paper loss A paper profit Temporary bad news Just to take action Don’t sell if the market has fallen so far you have little downside risk

Deciding to sell First, consider costs (commissions, etc.) Adverse management change Declining profit margins Deteriorating financial condition Competition is effecting profits Dependence on a single product Economic circumstances change It is a cyclical and the economy has peaked To maintain balance by company size (or category)