AVOID MARKET TIMING
- Historical evidence shows market timing leads to significantly lower returns than buy and hold strategy
- Market timing also leads to increased volatility
- “…the volatility of investor returns is higher than the corresponding volatility in nearly all specifications.”
- “Specifications’’ considered: individual stocks, stock mutual funds and stock indexes in U.S. and major international markets
- Increase in volatility with trading is significant: 10-75% higher.
Source: “The Volatility of Stock Investor Returns” Ilia D. Dichev, Emory University, Xin Zheng, University of British Columbia