Skip to search.

Don't Try to Time the Market, Either

Posted Nov 14, 2008 01:27pm EST by Henry Blodget in Investing, Recession
Related: ^gspc, ^dji, ^ixic

We asked finance professor Kenneth French whether he had softened his stance on the wisdom of investing in index funds given that global stock markets have plummeted 40% this year (taking index funds with them). Wouldn't market timing be a better strategy?

Of course not, says French, who is the Carl E. and Catherine M. Heidt Professor of Finance at the Tuck School of Business at Dartmouth. The only thing you can be sure of about market-timing is that most people who try it lose. French is also the director of investment strategy at the phenomenally successful Dimensional Fund Advisors.

If you can't handle the current volatility (and who would blame you if you can't), the smart answer is to shift your portfolio allocation more toward cash and bonds and less toward equities... and keep it there. Just don't try to leap in and out of stocks to catch the latest market moves, because it's a mug's game.

Click here for part one of my discussion with French about why it's not a stock picker's market.

Go to Tech Ticker

There are no comments yet

Post a comment

Sign in to post a comment, or Sign up for a free account.
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.