Time in the Market Vs. Market Timing
May 27, 2015
The annual returns on the Johannesburg Stock Exchange (JSE) All Share Index (ALSI) for the period 1960 – 2013 are shown in the graph below. The ALSI has been negative for 13 of the 54 years (26%), and therefore it has been positive 76% of the time. The fact that the market returns fluctuate suggests that there may be a “best time” and a “worst time” to invest on the JSE. The “worst time” should theoretically be when the market has had a positive return and is entering a negative phase e.g. in 1960 the return on the ALSI was – 11.9% (including dividends), so the “worst time” to invest was at the beginning of 1960.