Hello Reader,

If you wake up tomorrow morning and for some reason you want to blow up your portfolio, here’s the easiest way to do it: try and time the market.

Timing the market is something that should only be attempted by a handful of people. Trust me on this.

Actually, trust the math on this:

• The S&P 500 has delivered a 5.6% compounded annual growth rate over the past 20 years, but
• The average investor’s gains were just 1.96%, which is worse than a 100% bond portfolio (not that I’m recommending a 100% bond portfolio but I like being able to say out loud that the average investor’s gains over the last 20 years were much lower than a 100% bond portfolio).

Why are average investor returns so terrible versus the S&P 500? Because market timing is impossible and people who try to time the market by getting in or out at the right time almost always get it wrong. Spectacularly wrong.

So, what you’re meant to do is average into positions, even if you think the market is turning, because you’re probably wrong that the market is turning.

Trends Go On Longer than You Think

Your market timing instincts are probably off because trends go on much longer than you think.

People thought tech stocks were overvalued in 1996. The crash came four long years later.

So tell me now that bond prices can’t go any higher because interest rates can’t go any lower and that the rally is definitely over.

Interest rates have been falling for 30 years, you think they can’t go down any further?

The Point

The point of this email is to clear up this cognitive dissonance people have when they see a giant 30-year trend and think somehow that they can accurately pinpoint the end of that trend to the day.

You’ve probably heard me talking about my Bond Masterclass lately and to be clear, the point of it isn’t to get you into that 100% portfolio of bonds at historic highs.

The point of the Bond Masterclass is to help you understand the bond market… so that you can then deploy that knowledge into bond investing decisions that don’t rely on an ill-informed roll-the-dice attempt at timing the market.

One final point: You can still join thousands of others who want to become knowledgeable bond investors by getting the Bond Masterclass. It’s only $99 (but not for much longer).

Jared Dillian