The reasons come fromWall Street’s irrational focus on short-term “earnings” and most investors’ total lack of discipline. In this chapter, I’m going to give you my four steps to timing the market. If you use my strategy, I guarantee you can double your average investment results over 10 years... or maybe even do a lot better . But listen... there’s an entire army of people out there whose careers depend on you never doubting the idea that the markets are perfectly efficient and you can’t beat the market. If you speak to any of these millions of people in the financial services industry about my ideas, they will tell you I’m a fool, liar, or fraud. So get ready for an argument. Listen carefully. You’ll notice these folks won’t ever discuss the merits of my actual strategy. You see, the financial industry can only survive and prosper if you’re willing to give it your assets to manage. The industry needs you to believe that it’s always a good time to put your money in the market. And it needs you to believe that you can’t do it yourself. That’s why when I write things like this essay, folks in or supported by the financial industry go bananas. As far as who is right and wrong... listen to what one of the wisest newsletter writers ever, the late Richard Russell, said about market timing in his classic essay, Rich Man, Poor Man ... In the investment world, the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that he doesn’t need the markets... The wealthy investor doesn’t need the markets because he already has all the income he needs... The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the “give away” table, he buys art or diamonds or gold. In other words, the wealthy
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