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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Saturday, August 12, 2006

More Dangers of Market Timing

Examining the period from 1980 to 2000 you can see that market timing can be detrimental to your portfolio value. Take $1 at December 31, 1980 and by December 31, 2000 that $1 would be $18.43--pretty good, right? However, when you take that $1 over the same period it would be worth $4.73 if you missed the best 15 months of the stock market returns. $1 invested in Treasury bills would be worth $3.61. So if you were unsuccessful in your market timing your performance would be just above the return for Treasury bills.


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