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You've probably heard the saying "Sell in May and Go Away" and did nothing about it. Research suggests you should think again. Many researchers and investors have found that over the long term, investing in stocks is one of the best strategies for accumulating wealth. Your parent's have no doubt told you how their free hot stock picks have soared since they first acquired them. If you had bought the S&P500 index at the start of 1995 and kept it until the end of 2006 you would have gained 119%. Maybe you could have made even more with your own free hot stock picks or ten top stock picks recommendations. Unfortunately, this strategy doesn't come without sleep-less nights and some significant set-backs. Considering that the S&P500 is still trading lower than it's high in 2000 a lot of perseverance can be required. Your results and risk could be improved by using a market timing tool to help decide when to get in and out of the market.
I recently came across a market timing model, based on that saying "Sell in May and Go Away, while hunting for some free hot stock picks and ten top stock picks recommendations. I couldn't believe the results I found, which showed a clear relationship for the last 56 years between a month of the year and its' chance of being profitable. Fortunately, the most profitable months form a group together, ideal to use as a market timing model.
Using this information we can derive a simple market timing method based on 56 years of historical data. (significantly more back-testing than any ten top stock picks service out there)
By buying the index at the start of our run of historically proven 'good' months and selling at the end we would have gained 126%, a small 7% more than simply buying and holding. We would have avoided most of the large drops experienced by the market, providing us with a much smoother curve of returns. Beating the market by 7% doesn't sound that exciting, the real surprise comes when we see that our re-invested account would have returned 20% more than the market. It achieved this by avoiding some of those significant market drops and providing us with a more consistent rate of return.
So, not only have we performed better than the index by 20% by investing in the 'good' months, we have achieved it in only 7 months. The final 5 months of the year %our money can be safely stashed aside%. At the very least for those 5 months that are historically 'bad' we could be a little more vigilant with our free hot stock picks or ten top stock picks recommendations.
An option to think about then, when our first 'good' month comes around and it is time to invest in the market, could be to find some free hot stock picks recommendations or do some internet investigating on ten top stock picks to gives us some tips to make even more from our 7 months in the market.
Next time you are looking at your free hot stock picks, or considering subscribing to a ten top stock picks service think about this simple market timing model to boost your portfolio's return.
Category: InvestingStock market timing strategy increases portfolio performance was written by:Author:Jon ProvencherAdded: Thu, 03 Jan 2008 11:52:02 -0500 This Article Has Been Read 201 times View all Jon Provencher's articlesAbout the Author: http://www.iblogforex.com is an excellent resource for those interested in Foreign currency trading and contains many Forex training articles. |
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