AVOID MARKET TIMING

February 12, 2021

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

Watch the related WEALTHTRACK episode.


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