Episode 13 asks whether time-in the market beats timing the market. We test a simple trading simulator that times entry by buying when Market Cycle Timing is high and times exit by selling when MCT normalises. The simulator includes all entry and exit costs.
Trading is then compared with holding long-term. Across SA3 regions and multiple eras, trading beat holding long-term, with a success rate between 80 and 95 percent depending on the period.
It works because growth tends to arrive in bursts and long holds converge toward the...
Episode 13 asks whether time-in the market beats timing the market. We test a simple trading simulator that times entry by buying when Market Cycle Timing is high and times exit by selling when MCT normalises. The simulator includes all entry and exit costs.
Trading is then compared with holding long-term. Across SA3 regions and multiple eras, trading beat holding long-term, with a success rate between 80 and 95 percent depending on the period.
It works because growth tends to arrive in bursts and long holds converge toward the average.
The takeaway is to use data to time entry and exit rather than wait. Only default to long-term holds when you cannot forecast growth.
Episode Highlights
00:00 - Introduction
00:49 - Timing vs Time-in the market
02:27 - Holding long term
03:38 - Trading property
06:47 - Trading property, works!
08:40 - Simulator
10:27 - Buying and selling rules
14:56 - Reallocating equity
16:12 - Caveats
18:59 - Simulation run 1
28:31 - Simulation run 2
29:47 - 35 year performance
44:31 - 25 year performance
45:19 - 20 year performance
46:27 - 15 year performance
46:53 - Conclusion
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