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Dear Readers:
We were curious about how our
Market Timing approach had fared since the end of the data presented in
the book (which covers 1900-2001), so we have updated it below. We followed
the familiar formula: the dollar cost averager invests $100 in the S&P
500 on the first day of every month come rain or shine, while the Market
Timer avoids investing on those months when all the metrics show the market
is overpriced, but puts $200 into the S&P 500 on the first day of
any month otherwise.
Here are the results from January
1, 2002 through June 30, 2004. The dollar cost averager has a total return
of 17%, compared to the Market Timer's total return of 23%, for an improvement
of 35% in total returns over the 2 1/2 year period.
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