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A Fruitful or Futile Endeavor?
[By Dr. David Edward Marcinko MBA CMP™
Some medical professionals, or their financial advisors, believe they are “smarter than the market” and can time when to jump in and buy stocks or sell everything and go to cash.
A Tale of Two Physician Investors
Wouldn’t it be nice to have the clairvoyance to be out of stocks on the market’s worst days and in on the best days? Consider these two doctors.
The Good Stats
Using the S&P 500 Index, our agile imaginary MD investor managed to steer clear of the worst 12.42% annualized return (including reinvestment of dividends and capital gains) during a recent 20+ years time frame, sufficient to compound a $10,000 investment into $107,100.
The Bad Stats
But, what about another unfortunate DO investor that had the wonderful mistiming to be out of the market on the best day of each year. This ill-fated investor’s portfolio returned only 4.31% annualized from Jan. 1992-March 2012, increasing the $10,000 portfolio value to just $23,500 during the 20 years.
Assessment
The design of timing markets may sound easy, but for most all investors it is a losing strategy: http://www.CertifiedMedicalPlanner.org
Conclusion
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Filed under: CMP Program, Investing | Tagged: CMP™ Course, David E. Marcinko, market timing | 3 Comments »
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