The Perils of Market Timing
This is an example of a report I was asked to prepare for a client who was interested in the oil market. It was written on the 27th March 2015 when the oil price was less than $50 per barrel. Post this report, the oil price rose relentlessly, reaching $64 within a month. It clearly demonstrates the limits of using “fundamental analysis” to gauge future market movements. The fact that it was almost completely wrong, despite the wealth of data to support it, reminds one that trying to foretell markets’ behaviour is a fool’s errand. Markets are designed to wrong-foot the majority, and so it is much more sensible to just take what the market gives you. That is what Index Investing is all about. The Oil Market: How to Profit from Price Moves There are several ways to gain exposure to a rise in oil prices: Buy low cost oil producers Buy oil service companies…