STREET DOGS
MICHEL PIREU: Are market-timing strategies an illusion?
The only sensible way to invest for individual investors is to have a balanced portfolio that rebalances mechanically
Are market-timing strategies an illusion? Alex Gurevich, chief investment officer at HonTe Advisors, thinks so. "Chances are even the ‘correct’ calls are correct only by luck," he says, "and even though some gurus have accurately pinpointed market tops, their long-term performance has not been all that great, because there are only a few of these calls you can make over your professional career." Where do market-callers focus their attention? Some tap fundamentals, many rely on chart know-how. Some combine both, while others insist on never using both at the same time. When it comes to fundamentals, price-to-earnings ratios are one of the more commonly used metrics for valuation. Historically, peak valuations have coincided with market tops, but their predictive power is near zero. According to Gurevich, "The only thing extreme PE [price-to-earnings] ratios can tell us is that there is a higher chance that markets would underperform over the following five to 10 years." Mike Harris,...
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