Step 4: Time Pickers in Under a Minute

Mark Hebner explains how time pickers, also known as market timers, mistakenly believe they can predict the future of the stock market. Such decisions are based on the fallacy that the direction of future prices can be predicted. An investor can only know the current price and past prices. Market timers don't understand that the market continuously sets prices in response to news, and that news is random and unpredictable. In a study titled, "Likely Gains from Market Timing," Nobel Laureate William Sharpe concluded that a market timer must have an accuracy of their forecast that exceeds 74% to outperform the market.

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