IFA.tv – Step 4: Time Pickers – Podcast Series

ifa.com – ifarcs.com – http – Step 4: Mark Hebner Interview with Video. Time pickers, also known as market timers, mistakenly think they can predict the future direction of the market. In their effort to time the market, they attempt to be invested in stocks when the markets going up, and shelter investments in safe cash, treasury bills or bonds when the markets going down. Nobel Laureate Robert Merton wanted to estimate what a clairvoyant time picker would earn, so he calculated the value of being invested in the market at the right time and escaping the market declines by hiding in Treasury Bills. If an investor were to stay invested in T-Bills from 1927 through 1978, 00 would have grown to 00. In the broad market of the New York Stock Exchange Index, 00 would have been worth 500. However, a time picker with the vision to forecast all the months that the NYSE outperformed T-Bills during the 52-year period would naturally invest in the market at the beginning of each of these months. According to this timing system, 00 would have grown to .36 billion. Now that is a real incentive to figure out how to pick the right times to invest. It also tells you that if timers really had these psychic powers to see next month’s market trends, they would be all over the cover of Forbes, Fortune, BusinessWeek and the Wall Street Journal. But they are not. Is it possible that there might be a few visionary timers out there? Sorry, but they just don’t exist. In 1978, the

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