Studies Prove Time Picking Doesn't Work

A study by University of Utah Professor John Graham and Duke University Professor Campbell Harvey is titled, "Market Timing Ability and Volatility Implied in Investment Newsletters' Asset Allocation Recommendations."1 The massive 51-page study tracked 15,000 predictions made by 237 market-timing newsletters from June 1980 to December 1992. By the end of the period, 94.5% of the timing newsletters had gone out of business with an average life span of just four years. "There is no evidence that newsletters can time the market," the study concluded. "Consistent with mutual fund studies, 'winners' rarely win again and 'losers' often lose again."

"Sure, it'd be great to get out of stocks at the high and jump back in at the low," observed John Bogle in an interview with Money2 Magazine. "[But] in 55 years in the business, I not only have never met anybody who knew how to do it, I've never met anybody who had met anybody who knew how to do it."

    -1 John Graham and Campbell Harvey, "Market Timing Ability and Volatility Implied in Investment Newsletters' Asset Allocation Recommendations," Journal of Financial Economics, vol. 42, no. 3 (1996).
    -2 "Calming Words for Troubled Times," money.cnn.com, last modified April 28, 2008, http://money.cnn.com/galleries/2008/pf/0804/gallery.expert_opinions.moneymag/12.html.
Step 4John Grahammarket-timing newslettersJohn BogleMoney Magazine