The Difficutly of Timing the Market
This year's markets have show just how difficult market timing is.
Written by Patryk Dyjecinski

IFA and Founder of Clara Wealth

If the markets have taught us anything this year, it is just how difficult, if not impossible, it is to time the markets. Despite claims to the contrary by many, we argue that to do this consistently in the longer term is not possible.

“Forecasts are difficult to make—particularly those about the future.”

Burton G. Malkiel, “A Random Walk Down Wall Street: The Time Tested Strategy for Succussful Investing”

Active fund managers are certainly a group that claim that successful market timing is possible. There are also some financial advisers that will engage in market timing. At clara Wealth Management we believe in passive investing. By passive investing we mean a buy-and-hold portfolio strategy with a long-term investment horizon and minimal trading in the market. Markets are hard to beat consistently and there is a mounting body of evidence showing that active investing underperforms passive investing. Winning fund managers don’t tend to repeat their performance year to year, and the very few who do tend to capture their additional returns by charging higher fees rather than passing the performance to investors.

Professor Ken French, a highly regarded finance academic explains the argument against market timing in the following video:

“Most people who try to time the market are just fooling themselves” – Professor Ken French

Please contact me at Clara Wealth Management at contact@clarawealth.co.uk or on 0207 097 4968 if you want to find out more or have any comments.

Past performance is not a reliable indicator of future performance. The value of investments may go down as well as up and you may get back less than you invest.