Most of us aren’t investment geniuses, so a passive “buy-and-hold” strategy will beat “active” investing hands down most of the time. But we are restless creatures; buy-and-hold sounds like a boring cop-out.

Active investment is about market timing and stock selection. It is the stuff that mutual fund and hedge fund managers do for the fat fees they charge. Legions of ordinary investors also try to pick stocks and predict markets on their own.  How these individual and professional investors actually perform has piqued the curiosity of academic researches for decades. Fortunately, we do have a trove of hard evidence on the usefulness or otherwise of active investing from studies of mutual funds, and to a lesser extent, of individual investors. What evidence there is shows one thing – it is hard to consistently beat a buy-and-hold strategy once you factor the costs. My focus today is on market timing.

Market …