Friday, January 20, 2012

Money Matters with Ken Moraif - Wrong Again!

Ken Moraif has admitted that his market timing system doesn't always work.  Of course, that's not a big shock to anyone who actually understands capital market behavior.  In a video post, he explained why he was wrong in 2010.  But, of course, he also slid right into sales mode and explained why you should continue to believe in his market timing system - because it's going to protect you even though it's not perfect.

He blew it again in 2011!  He got his clients out on August 5 and told everyone to expect "financial Armageddon", which was an incredibly irresponsible prediction.  The S&P 500 started the year at 1257.64.  It closed on August 5 at 1199.38.  Getting out locked in a loss of about 4.6%.  Today, the S&P 500 closed at 1315.38.  An investor who simply held an S&P 500 index fund has had a return of about 5.3% since the beginning of 2011 and they haven't incurred trading costs, paid high fees, or realized taxable capital gains on a sale.  As far as I can tell, Ken still hasn't advised clients to get back in.  You see, that's part of the problem with this absurd idea - it requires two decisions and both are statistically unlikely to be correct.

Moraif charges high fees for a strategy that's dubious, at best - and then uses those fees to purchase airtime for his infomercials to drive more suckers to his seminars.  Don't be one of them!  All that garbage about being a CFP with many years of experience doesn't have any correlation whatsoever to being able to manage a portfolio.  In fact, the CFP curriculum has one very basic section on investing that doesn't qualify anyone to do anything.  It's just another way that charlatans like Moraif can attempt to build credibility with their target audience.

What do some actual experts have to say about a market timing strategy?

"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." - Warren Buffet

"If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market." - Benjamin Graham, Author and "the father of securities analysis"

"Market-timing is bunk." - Pat Dorsey, Director of Morningstar Fund Analysis

"The market timer’s Hall of Fame is an empty room." - Jane Bryant Quinn, Author, Columnist - Newsweek

"Market timing is a poor substitute for a long-term investment plan." - Jonathan Clements, The Wall Street Journal

"No, I don’t believe in market timing. I’ve been around this business darn near a half-century, and I know I can’t do it successfully. In fact, I don’t even know anyone who knows anyone who has ever successfully timed the market over the long term." - John Bogle, Founder of The Vanguard Group

"Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." - John Markese, President, AAII Journal

"There is absolutely no evidence that anyone can time the market." - Bill Bernstein, Author

"Only liars manage to always be ‘out’ during bad times and ‘in’ during good times." - Bernard Baruch, Presidential Economic Advisor

"There is an overwhelming body of evidence to support the view that believing in the ability of market timers is the equivalent of believing astrologers can predict the future." - Larry Swedroe, Author

So, it's no surprise that this strategy doesn't work.  The only surprise is that people continue to fall for the sales pitch.  Maybe the cookies are laced with some sort of mind altering drug.


  1. Ah, the power of advertising and the herding instinct! Sheep must love chocolate chip cookies.

  2. Check out the new website:

  3. Great review. When you account for the compounding returns from those missed gains it's a lot more. Maybe update the page to reflect those lost returns.Since 2010 stocks are up like 90%.

  4. KM called to sell at COB 21 Aug 2015. What are the thoughts now?

  5. Great write-up, I am a big believer in commenting on blogs to inform the blog writers know that they’ve added something worthwhile to the world wide web!..