Time in the market vs. timing the market

This latest issue provides a reminder of the challenges of trying to time the market.

We run an experiment using a basic 'on a roll' momentum style strategy and a basic 'contrarian' style strategy compared to a buy-hold-rebalance 50/50 split between bonds and equities. Neither timing strategy delivers a material return difference, but both are materially more volatile than the buy-hold-rebalance approach over the period reviewed. There are a couple of great quotes from Bogle and Buffett too, and some evidence that market timing skill in professional fund managers is extremely rare.

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