The Cost of a Perfect Market Timing Strategy

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A common misconception about financial advisors is that they know how to predict the market or at least know when to get in and when to get out. The latter is known as perfect market timing. I think it is safe to say that no one can time the market with absolute certainty, however, if there was a strategy that can achieve a reasonably similar result, would clients pay to participate?

PDFThe article in pdf format illustrates an engineered perfect market timing strategy along with its cost. Conclusion: over the specified time range, the costs reduce the return to less than the return of a broad-based market index (S&P500). Therefore, a more cost-effective strategy to capture market returns is to avoid market timing and instead own the market.

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