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URL:  http://boards.fool.com/well-in-the-first-place-joe-it-is-not-a-matter-21678122.aspx

Subject:  Re: newbie Date:  11/30/2004  10:41 PM
Author:  joelxwil Number:  43364 of 76394

Well, in the first place, Joe, it is not a matter of inefficiency in the market. It is only a matter of catching the trend. The market, as a whole, may be extremely efficient. It may just reflect the fact that things are going to hell in a handbasket (as March 2000) and you should get out. Nothing particularly inefficient there. The people who stayed in were dolts.

So far as the amateur investors are concerned, they do not need much sophistication to go to a place like TimingCube to see the results of decent, although not perfect market timing. There are other alternatives, such as the timing algorithms on my site, not written by me, which do quite well.

But the fact is that when somebody asks what they can do, I will say what I believe. And one of the things I believe in is common sense. It should be obvious to anybody that there are times to be out of the market, or perhaps short. So then it is a problem to be solved as to which state you should be in: long, short, or cash. There are solutions to that problem that are not perfect, but they sure beat an index fund.

But so far as the so-called amateur investor is concerned, it is not an easy task. Every now and then somebody asks if he should pay off his mortgage or "invest in the market." Now paying off the mortgage is easy: just send money. But investing in the market, if you want good returns, is not easy. It requires discipline and training. The idea that you should go into the market without discipline and training is a really bad idea.

If you are not willing to go through the discipline and training, then just pay off the mortgage.

I am not worried about many people catching on to any timing scheme. So many people are just plain lazy. They don't pay attention, like my neighbor who has owned SUNW since 1999. It never occurred to him to sell. Then there are others who believe this efficient market stuff. They are just sheep, and their convictions, based on bad mathematics which they probably never understood, will keep them in the market and make it easy for those of us who know better.


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