A lot of people – even some smart ones – believe trying to time the market is a fool’s errand. They argue that the best you can do is simply plow your savings, year after year, into a mutual fund or index fund. These folks make a whole range of arguments and back them up with plenty of “facts.” They’ll cite academic studies and average investor results. They will say, again and again, that “no one” can beat the market, so why should anyone try? I disagree... completely. Let’s start here. Let’s say they’re right. If the market is really efficient, it shouldn’t matter when you invest or what you buy. If that’s really the case, then why not try to do better? As long as you’re investing in something, you should do alright, according to these folks. So what’s the harm in trying to beat the market? And here’s another way to look at it. The efficient-market folks love to argue that it’s impossible for the average investor to beat the market because it’s impossible for most people to beat the average result. At some point, it is a mathematical certainty that not everyone can beat the market. But just because something is “true” on average or across a population doesn’t necessarily mean it must be true for you. For example, I might argue on average, everyone who marries will end up with a marginally attractive spouse of normal intelligence. Therefore, you’re probably wasting your time trying to find a beautiful and intelligent person to marry you. In theory, that might be good advice. But was that your dating strategy? If you had dated any dog that would have you, would you have married the spouse you wanted? In short... when it comes to a lot of important things in our lives, getting better-than-average results is a worthy goal. Luckily for investors, I don’t believe beating the market is nearly as hard as trying to date a supermodel. I’m 100% convinced that anyone with normal intelligence and a modicum of emotional stability can do it. There are a few simple and logical reasons why...
174
Made with FlippingBook - Online Brochure Maker