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Yes, You Can Time the Market!

ISBN: 978-0-471-43016-2
208 pages
April 2003
Yes, You Can Time the Market! (0471430161) cover image
Economist, actor, author, and former quiz show host Ben Stein teamed up with investment psychologist Phil DeMuth to examine a century of stock market data and discovered a profound and original investment truth: Yes, you can time the market! In their instant investment classic Yes, You Can Time the Market!, Stein and DeMuth show investors simple, readily available measurements that tell them when it's time to invest in stocks, bonds, real estate, or cash. Written for the investor who wants to preserve capital and build wealth steadily, this book offers prudent, bedrock advice for anyone who can no longer afford to play games with their money.
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Chapter One
The Impossibility of Market Timing 1

Chapter Two
The Power of Price 9

Chapter Three
The Price/Earnings Ratio 29

Chapter Four
Dividend Yields and Market Timing 51

Chapter Five
Fundamental Value 69

Chapter Six
Bonds, Price-to-Cash Flow, Price-to-Sales 87

Chapter Seven
Combining Factors for Superior Returns 103

Chapter Eight
Using Market Timing 135

Chapter Nine
Looking Forward: A Note of Caution 165

Appendix 179

Bibliography 183

Index 187

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BEN STEIN, host of Comedy Central’s Emmy Award—winning game show Win Ben Stein’s Money, is a Renaissance man for the new millennium. An economist and humorist, investor, lawyer, and actor, Stein has successfully balanced a professional life that encompasses his many diverse interests. He is the author of several books on finance and his essays and columns have appeared in such publications as The Wall Street Journal, Barron’s, Forbes, the American Spectator, Los Angeles magazine, New York magazine, and the Washington Post.

PHIL DeMUTH is an investment advisor and PhD psychologist who has a longstanding interest in the stock market and has written for The Wall Street Journal and Barron’s, as well as Human Behavior and Psychology Today. His opinions have been quoted on TheStreet.com and in Fortune magazine.

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Arriving a few years too late to slap some reality into the legions of day traders suckered by the stock market gold rush, TV game show host Stein's latest is still a smart, commonsense guide to investing. Stein and DeMuth's primary dispute is with the old adage that one can never tell when the market is going to go up or down, something they attempt to disprove with a wealth of charts showing how to buy stocks cheaply over the long term (as in decades). This is no get-rich-quick scheme, merely a case being made to, in essence, treat the Street like many fans treat baseball: work the numbers. In between the sizable chunks of data, Stein and DeMuth drop in bits of advice, e.g., pay more attention to the S&P 500's trends than frequently slippery P/E ratios; invest in bonds before stocks-they're more stable; and always, always buy low. Best of all is a three-page cautionary list that should be required reading for anyone even thinking of investing. Some of the better nuggets: "Does the word 'synergy' appear in the prospectus?...Run!"; "Never accept any unsolicited financial advice"; and "Do not invest in a store because you see a lot of customers there at the mall or because you like the coffee or blue jeans or jelly beans. Sales do not equal profits." Again, where was this book when we needed it? (Apr.) (Publishers Weekly, March 24, 2003)

Stein may be known for the droll sense of humor he exhibits on his Comedy Central show, Win Ben Stein's Money, but it is hardly evident in this straightforward investment guide. Writing with coauthor DeMuth, an investment adviser, the former Nixon speechwriter counters the "conventional wisdom" that investors cannot time (or predict) their investment decisions to maximize profits. The authors cite a number of technical factors - e.g., Tobin's Q, price/earnings, dividend yield, price to cash flow, and price to sale - to show that careful study of these metrics demonstrates that some times are better than others for going into the market or buying a particular stock. They also show that protestations to the contrary, the "street" frequently times the market. Eighty tables and graphs are used to buttress their case. Stein's popularity and the use of his face on the book's cover may draw readers beyond the usual investment crowd, though some may find this joke-free treatment a bit too technical. Still, it is a competently written, well-argued case for a sensible investment approach and is quite suitable for academic and larger public libraries. — Patrick J. Brunet, Western Wisconsin Technology Coll., La Crosse. (Library Journal, May 1, 2003)

"...it's readable, coherent, sensible, good-natured..." (Barron's, May 26, 2003)

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