"Success is 10% inspiration, 90% last-minute changes"
From a billboard advertisement

A quick note- I have received several e-mails from readers asking me why I insist on being a 100% invested at all times. Doesn't safety of cash offer a valuable protection against the declines in the bear market? The answer is quite frankly a very simple "NO" in my skeptical mind - moving large portion of your portfolio into cash amounts to nothing more than a "timing bet".

And as I found, attempts to time the market tend to be useful only if you trying to underperform the market over the long haul. Don't forget, that even if you think that your ability to predict the market's next move is higher than 50%/50%, the odds are still not in your favor, as you not only have to time when to sell, but also when to jump back in, which means you need to make two concurrent predictions of where the prices are heading, with each prediction likely being around 50%... You don't need an MBA to realize that your odds are stacked up heavily against you...

I don't want to bore you with exact calculations, but depending on several assumptions, you need to have an average predictive ability of 70% to 85% to actually beat the fully invested average market portfolio! How does that sound? You can find a quick quantitative primer with exact calculations and formulas here

My recipe for dealing with market timing is very simple -good investors should keep their portfolios fully invested at all times. When at cross roads- it's ok to protect the downside with short positions or invest in low cost ETFs if you are not exactly sure which stocks to buy. Don't waste money on commissions -those damn brokers make too much money from me as at is.

Anyway, feel free to e-mail me your questions at skepticalcapitalist@gmail.com. By the way, for anyone interested, you will be able to ask me questions in person at MSN Strategy Lab Panel and/or MSN's Booth at Money Show in Vegas, Vad

Stay safe, Vad