For a finance nerd like myself, it doesn’t get much better than listening to two investment icons debate about the best way to invest
money. I got the chance to do just that yesterday between the “old school” Yale professor Roger Ibbotson and the “new school”
researcher Robert Arnott. The title of the debate “Can Markets be Timed?” did not actually stir much arguing. Both agreed that it is
impossible to time the markets by knowing when to buy and sell at the exact right times. They also agreed that investors should avoid
the most “popular” stocks in the media because they are often too expensive.
However, while Ibbotson prefers a more “static” buy and hold approach to owning investments, Arnott disagrees. He argued that it is
possible to know when markets as a whole are cheap or expensive. He said that while the timing will never be perfect, investors can win
in the long run by gradually selling when markets are expensive and gradually buying more when markets are cheap.
We tend to agree with Arnott and prefer a more “dynamic” approach that pays attention to how expensive the markets are. After all, the
simple truth is that buying low and selling high is the key to successful investing!
Jason with Founder of Research Affiliates, LLC, Robert Arnott.
Jason took James to his first professional basketball game to cheer on the Boston Celtics!