rebalancing / crown ratings

bowlhead99

kidmugsy wrote: »

Can it be true? His caveat "without reinvesting dividends" is important, of course, but I repeat: can it be true?

If you keep the returns of the bad years without keeping all the returns of the good years that allow you afford those bad years, and then every year good and bad you go in and pull cash out of those companies without allowing it to be reinvested, it wouldn't surprise me that you could make the "result" say anything you fancy, and create a result that causes people to doubt the merits of equities investing if they don't dig deeper into the headline.

It's not something that I would care to back test. An observation is that if it were true, you probably wouldn't still have had anyone investing in the markets by 1982, to kick off the great boom!

It's certainly true that if you exclude the x number of best or worst individual days or weeks over the course of the last century, you get starkly different results, supporting the argument that trying to time the market is very difficult and therefore remaining invested for the long term is a sensible thing to do. I've read that in loads of places. Although of course that is not without its biases because investment books or blogs or investment companies' websites are inevitably written more by people who like investing or have a vested interest in you remaining invested.

kidmugsy

I suspect that the American guru's point might matter to any codgers who are investing "for income" and hope to draw and spend their dividends. On the other hand, perhaps they'll be relaxed about the ups and downs of share prices if they are not interested in selling anyway.