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Ben-
Thank you for posting this VERY important piece of information. Talk about
figures don't lie but liers figure, eh?
chas
----- Original Message -----
From: profitok <profitok@xxxxxxxxxxxxx>
To: Dorothy Carter <dorothy.carter@xxxxxxxx>; <realtraders@xxxxxxxxxxxxxxx>
Cc: Vincent DONOVAN <vdonovan@xxxxxxxxxxxxx>; <gannsghost@xxxxxxxxxxxxxxx>
Sent: Wednesday, July 24, 2002 10:27 AM
Subject: [RT] Fw: U of Michigan study on Market Timing.
> this is VERY important
> the writer is a PhD in MIT university
> read carefully
> Ben
> ----- Original Message -----
> From: "Bob Fulks" <bfulks@xxxxxxxxxxxx>
> To: "'Lucky Bastard'" <hadrada@xxxxxxxxxxx>; <omega-list@xxxxxxxxxx>
> Sent: Tuesday, July 23, 2002 7:29 PM
> Subject: Re: U of Michigan study on Market Timing.
>
>
> > At 6:32 PM -0400 7/22/02, 'Lucky Bastard' wrote:
> >
> > >Can someone point me to the URL that leads to the University of
Michigan
> > >study on Market Timing? Or the title of that study? The one where all
the
> > >mutual fund pundits use to say that Market Timing doesn't work...that
if
> you
> > >miss the 10 best days, your return doesn't beat buy-n-hold (the
> > >bag)....leaving out that if you miss the 10 worst days, you'd beat
> > >buy-n-hold (the bag)....and if you sell an X % from the top and buy X%
> above
> > >the bottom, you'd still beat buy-n-hold (the bag).
> >
> > This study is widely quoted by brokerage companies as the reason people
> > should stay in the market no matter what. Hogwash...
> >
> > I duplicated the study several years ago:
> >
> > > Invest $1000 in the S&P 500 index fund in 1/5/70
> >
> > > On 4/1/01 (7902 trading days later) it would be worth $11,839
> > (Average 8.2%/yr over 30+ years)
> >
> > > Missing the best 1% (79) days would reduce value on 4/1/01 to
$894 -
> > a loss of $106 over 30+ years. So missing the best 1% of days
erases
> > all profits so you need to stay in the market - right? WRONG!
> >
> > > Missing the worst 1% (79) days would increase value on 4/1/01 to
> > $206,445 (Average 17.8%/yr over 30+ years).
> >
> > > What would the account be worth if we avoided all the down days
> > over the 30+ years? $1,894,433,971,569,410
> >
> > The attached figure shows the result of sorting the 7902 days such
> > that the biggest gains occur first and the biggest losses occur last.
> > The reinvested profits build up to $1,894,433,971,569,410 then
> > decrease back to $11,839.
> >
> > Conclusion: Market timing is incredibly effective but hard to do
> > without a good trading system...
> >
> > Bob Fulks
> >
> >
> >
> >
>
>
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>
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