Mutual fund manager extraordinaire, Peter Lynch, he of Fidelity Magellan fame, is one of the most successful and celebrated professional portfolio managers of all time, so it makes loads of sense to listen when he speaks, especially when its about the myth of market timing.

“People spend all this time trying to figure out ‘What time of the year should I make an investment? When should I invest?’ And it’s such a waste of time. It’s so futile. I did a great study, it’s an amazing exercise. In the 30 years, 1965 to 1995, if you had invested a thousand dollars, you had incredible good luck, you invested at the low of the year, you picked the low day of the year, you put your thousand dollars in, your return would have been 11.7% compounded.”
 
“Now some poor unlucky soul, the Jackie Gleason of the world, put in the high of the year. He or she picked the high of the year; put their thousand dollars in at the peak every single time, miserable record, 30 years in a row, picked the high of the year. Their return was 10.6%. That’s the only difference between the high of the year and the low of the year.”

“Some other person put in the first day of the year, their return was 11%. I mean the odds of that are very little, but people spend an unbelievable amount of mental energy trying to pick what the market’s going to do, what time of the year to buy it. It’s just not worth it.”

  • Lucky Timer: 11.7%
  • Jackie Gleason: 10.6%
  • Happy New Year Investor: 11%

Nobody, but nobody, is that smart or that lucky to find all the market tops and bottoms. Does not happen. Lucky Timer exists only in stories like this and cocktail party lies.

So, if there is a moral to the story it’s this:  DO NOT worry about timing. Its not about timING. Its about time IN. Be the Happy New Year Investor. Be the Market.


 

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