NYU Study Indicates Timing Beats Buy and Hold

By on November 13, 2009

Marcin Kacperczyk, a finance professor at the New York University Stern School of Business and one of the study’s three authors, said, “given that we are currently in a recession, our work suggests that individuals should be looking for a different type of investment manager; one that invests based on macro information.”

By analyzing data from January 1980 through December 2005, the study identified the top 25% of actively managed equity mutual funds based on their ability to select stocks during expansionary economic periods. The report noted that this same group showed proficiency at market timing during recessions as well.

This group outperformed other funds in both risk-adjusted terms and after expenses, according to the study.

SMA Comment: Bottom-up investors (focusing on individual stocks and tending to ignore economic trends) such as Mohnish Pabrai, Bill Nygren, and Bill Miller were hammered during the bear market because they chose to ignore economic warning signs. This study would indicate this is a mistake even well-schooled investors make.



One Comment

  1. Anonymous

    December 27, 2009 at 1:02 am

    Opulently I agree but I dream the brief should secure more info then it has.

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