Last visit was: 18 Nov 2025, 18:04 It is currently 18 Nov 2025, 18:04
Home
GMAT
Messages
Tests
Schools
Events
Rewards
Chat
My Profile
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel
User avatar
isa
User avatar
Current Student
Joined: 04 Dec 2007
Last visit: 21 Jan 2010
Posts: 1,687
Own Kudos:
224
Given Kudos: 31
Concentration: Healthcare, Strategy, MC
Schools:Kellogg '11
Posts: 1,687
Kudos: 224
maybe index funds are better? (article) 23 Feb 2009, 13:57
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Interesting article: https://www.nytimes.com/2009/02/22/your-money/stocks-and-bonds/22stra.html?em
User avatar
refurb
User avatar
Current Student
Joined: 28 Feb 2008
Last visit: 30 Oct 2013
Posts: 1,321
Own Kudos:
160
Given Kudos: 6
Schools:Tuck
Posts: 1,321
Kudos: 160
maybe index funds are better? (article) 23 Feb 2009, 14:12
Kudos
Add Kudos
Bookmarks
Bookmark this Post
If you read Bernstein's "Four Pillars of Investing" or, for the more mathematically inclined, "Intelligent Asset Allocation", he makes a very compelling argument for index funds.

I've been organizing my portfolio around his ideas only because it seems to make a lot more sense than trying to time the market.

RF
User avatar
isa
User avatar
Current Student
Joined: 04 Dec 2007
Last visit: 21 Jan 2010
Posts: 1,687
Own Kudos:
224
Given Kudos: 31
Concentration: Healthcare, Strategy, MC
Schools:Kellogg '11
Posts: 1,687
Kudos: 224
maybe index funds are better? (article) 23 Feb 2009, 14:18
Kudos
Add Kudos
Bookmarks
Bookmark this Post
refurb
If you read Bernstein's "Four Pillars of Investing" or, for the more mathematically inclined, "Intelligent Asset Allocation", he makes a very compelling argument for index funds.

I've been organizing my portfolio around his ideas only because it seems to make a lot more sense than trying to time the market.

RF
Show more

Silly question: what does it mean to "time the market"?
User avatar
solaris1
User avatar
Joined: 05 Aug 2007
Last visit: 09 Aug 2011
Posts: 1,431
Own Kudos:
223
 [1]
Given Kudos: 22
Concentration: General Management
Schools:NYU Stern '11
Posts: 1,431
Kudos: 223
 [1]
maybe index funds are better? (article) 23 Feb 2009, 15:15
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Buying into an investment because you think it's going to do well in the short-term. So, let's say buying a lot of bank stock now because it's fallen as low as it could possibly fall, and can only go up from here on would be "timing the market."

You're essentially trying to buy before the market rises, or conversely sell before it falls.

Index funds on the other hand, are "buy and hold" investments which are sensible if you're saving with a longer time horizon in mind.

isa
Silly question: what does it mean to "time the market"?
Show more
User avatar
refurb
User avatar
Current Student
Joined: 28 Feb 2008
Last visit: 30 Oct 2013
Posts: 1,321
Own Kudos:
160
 [1]
Given Kudos: 6
Schools:Tuck
Posts: 1,321
Kudos: 160
 [1]
maybe index funds are better? (article) 23 Feb 2009, 15:16
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Quote:

Silly question: what does it mean to "time the market"?
Show more

It's when someone tries to buy and sell their investments at the optimum time (buy it when it's at the bottom and sell at the top).

For example, a lot of people have decided they've had enough of stocks right now and have sold either all their stocks or most of them. They think "I'll just hold my money as cash for right now, but as soon as the market starts to go up, I'll reinvest."

The problem is, very few people are any good at figuring out when the right time is. There are always people that guess right, but the problem is, it's just a guess.

There are people who are very successful investors who successfully time the market. Often these people invest in a very specific market (say oil) and spend an extraordinary amount of time doing market research. And even then, they often guess wrong.

Warren Buffet is often held up as a guy who knows what to buy and when. He's not the best example because he often buys enough stock so that he has a say in how the company is run as well. It kinda makes his bets a little more solid.

William Bernstein is of the mind that you should never try and time the market. Simply buy a mix of assets that historically gives you the best return for the least amount of risk. The only buying and selling that you do is to periodically "rebalance" your portfolio so that you maintain the same mix of assets. The logic is you won't always beat the market, but you'll always at least match the market (which historically has been 4-8% annually, depending on the asset mix).

RF
User avatar
isa
User avatar
Current Student
Joined: 04 Dec 2007
Last visit: 21 Jan 2010
Posts: 1,687
Own Kudos:
224
Given Kudos: 31
Concentration: Healthcare, Strategy, MC
Schools:Kellogg '11
Posts: 1,687
Kudos: 224
maybe index funds are better? (article) 23 Feb 2009, 16:48
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Thank you refurb and solaris1 - that makes a lot of sense. :)