You Can’t Time the Market

Fortune senior editor Brian O’Keefe asks the question Is buy-and-hold dead and gone? and comes up with three reasons not to abandon the market.

One reason is that you can’t time the market – as John Bogle points out, timing the market means you have to be right twice – once when you get out and again when you get back in.

To prove the point, O’Keefe quotes a study that finds that over 20 years through the end of 2007, the average equity-fund investor earned an annualized return of just 4.5% vs. the S&P 100′s 11.8%.

The SPDR S&P 500 ETF (SPY) tracks the S&P 500, yields 3% and has a low expense ratio of 0.10%.

O’Keefe also quotes Mohamed El-Erian, co-CEO of bond giant Pimco, who likes fixed income returns and recommends investors protect their portfolio with inflation hedges such as Treasury inflation-protected securities (TIPS).

See the ETF Directory for a complete listing of fixed income TIPs ETFs.

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