Do You Believe In Fairy Tales?

“The market is smarter than we are and no matter how smart we get, the market will always be smarter than we are.” –Kenneth French


Have you ever fascinated about getting tomorrow’s newspaper today? Imagine knowing tomorrow’s news and all the money you could make in the stock market with that info.

Ok, then let me present you with the following facts at the beginning of this year….a highly infectious and deadly virus that cannot be contained will spread around the world in a few months. This virus will infect millions of people and kill hundreds of thousands of people. This virus would essentially close down global economies for months. People will be asked to stay at home. Entire segments of the economy come to a full stop. Forty million Americans file for unemployment benefits. Congress passes a $2 trillion stimulus bill to try and keep the economy on life support.

Remember, you know all this info before it happens. How much do you think the market is going to go down? Most people would probably say at least 50%, maybe even has high as 75% down. Now is your time to cash in big time on the info that only you know.

Well, before you get too greedy, the market had different ideas. Year to date, the S&P 500 is essentially flat. It’s up 43% from its lows at the end of March. As of last Friday, it’s only 5.1% off all-time highs. Small caps and international stocks haven’t faired quite as well but they are also well off their lows for the year.

So even with perfect knowledge of what was going to happen in this crazy year, no one would have predicted what we are seeing now in the stock market. If this doesn’t prove that market timing doesn’t work and is a losing proposition then I guess you can continue to believe in fairy tales.