“An interesting and thoughtful analysis.”
– Milton Friedman, Nobel Prize Winner in Economics

Yes, You Can Time the Market

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If there is no such thing as market timing, then it is always an equally good or bad time to buy stocks. That is to say, the price of stocks is irrelevant. But if price means something in real estate or oil futures or bonds or cars or shirts, how can it be meaningless in terms of stocks?

Never make a “bold” investment decision.

Don’t think big.

Do not put off the day when you finally understand and take charge of your finances.

Do not invest in things you do not understand; do not put a penny in a gumball machine unless you can actually see a gumball in the machine.

Do not pay high sales loads, fees and commissions.

Do not assume that anyone you see on TV or read in the paper who is giving investment advice has the slightest idea what he is talking about, including us. Believe what data say is believable.

Ignore all stock tips and ignore everything your neighbor says, even if he drives a Mercedes.

The financial media are starved for content and so will give a platform to anyone. Pay no attention to analysts, fund managers, or the latest whiz kids.

Those gleaming office towers along Wall Street? Those million-dollar year-end bonuses? Those weekend beach houses in the Hamptons we see profiled in Architectural Digest? Guess who paid for them? A: We did, the investing public. There is a clue here: where are the customer’s yachts?

When you come to the inevitable lists of the best performing stocks and mutual funds, turn the page…invariably. Remember our discussion of regression to the mean? How what goes up comes down?

Charlatans are everywhere, and if you have money to invest, they will find you.

Are you by chance wealthy? A “high net worth” individual? That special handling everyone is giving you is merely the anesthetic that precedes the surgical removal of your wallet. When done skillfully, you will hardly notice the missing money.

Always be aware of the financial motives and conflicts of interest of anyone who wants to get within a mile of your money, no matter how friendly and confident and well connected they seem.

Do not even think of doing anything the I.R.S. might question. Overpay your taxes rather than risk having G-Men come to your house at 4:00 A.M., haul you to jail, and seize all your assets.

Never accept any unsolicited financial advice or take cold calls from brokers.

Do not invest a large part of your 401(k) in your company stock or even in the same industry if you can help it. If hard times hit your company, you may be out of a job and simultaneously find your portfolio decimated (and if you live in a company town, the value of your home may be adversely affected as well).

Do not invest in a store because you see a lot of customers there at the mall or because you like the coffee or blue jeans or jelly beans. Sales do not equal profits.

If you have a brilliant idea that will require all of your capital to start but promises to make you a multi-millionaire within five years, call us up and for a mere 10% of your money we will be glad to talk you out of it. It will be the smartest phone call you ever made.

Take a long walk through the park before tying up your money in illiquid investments. That money you do not need for five years? What if you need it next week?

Does the word ‘synergy’ appear in the prospectus? “Black box”? “Vertical Integration”? “Paradigm”? Run!

Before making an investment, try explaining the rationale to your wife. Does she look at you the way Alice Cramden looks at Ralph on The Honeymooners when he is describing his latest get rich quick scheme? That look may be telling you something.