Jason Hartman has always claimed that trying to eke out a profit on Wall Street, unless you happen to be the broker or fund manager and can cash in on administrative or transaction fees, makes about as much sense as rearranging deck chairs on the Titanic. A recent story posted at Marketwatch.com tells an extraordinary tale that supports this view. Let’s say that, way back in early 2000, a hypothetical investor decided to put 80% of his or her money in a Vanguard index fund (covering the entire US stock market) and 20% in a high-grade bond fund.

Leap ahead 13 years and this insipid two-fund portfolio has returned an anemic 3.7%. Not too impressive, right? The surprising news is that it beat the average returns of those who try to time the market, jumping in and out at what they deem to be the right time. Over the same period, these market timers earned 2.1%. If our example portfolio is paltry, which it clearly is, then trying to time the market might be evidence of brain damage.

All this yapping comes in the face of a nearly four-year long bull run which leaves stocks poised near all-time high levels. The tricky thing is that there have been three corrections of more than 10% since March 2009. This whipsaw action has chewed through more than a few portfolios, but there are still a disconcertingly large number of investors who remain convinced they can time the market. Like the ocean, the market never loses. The best they can hope for is to be still standing at the end of the day, and with Wall Street, many aren’t.

What style of investing does that leave? We thought you’d never ask. Over that same period, investing in real estate in the form of a long-term, fixed-rate mortgage tied to a piece of income producing property has returned Jason and many of his network subscribers anywhere from 20% to 40% annually. We’ve said it before and we’ll repeat it now. Real estate has proved itself over the long haul to be history’s best investment. We need the stock market as an organized way for companies to raise capital but don’t make the mistake of assuming that automatically makes it a decent deal for the small to medium investor.

Income property investing is better! (Top image: Flickr | casey.marshall)

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The AIPIS Team