Timing the market

I know timing the market is taboo to most investors. A fools errand it is. We simply can't predict what it's going to do day in and day out. Many professionals, and some of the best investors of all time abide by the "hold through thick and thin" rule.

Given that, for shits and giggles, I decided to do my own little (very unscientific) study to see if there was any advantage to jumping in and out of the market based on a simple benchmark. I've never read or seen any studies of such. I'll precede this by saying I did this in about 20-30 minutes using Google finance, so this is far from thorough.

That being said I think the results are pretty staggering.

Looking at the S&P 500 chart since 1974, I calculated returns of $10,000 if you were to jump in and out of the S&P when it passed it's 50 week moving average. So when it dipped below the 50 wk MA by about 5% you jumped out of the market, then jumped back in when it went above it's 50 wk MA by about 5%. I say about 5% because I waited for a substantial move past the 50 wk MA. It wasn't exactly 5%, but you get the picture.

So the returns are as follows:

Holding $10,000 through thick and thin since 1974, you would currently have about $182,400.

If you were to jump in and out at the 50 wk MA, you would currently have about $406,597.

Now I understand that this time frame includes 2 of the biggest market declines in history, which would give a big advantage to someone who jumped out before the tech and housing bubbles. But I don't think such big market declines are things of the past, and I don't think it's a stretch to assume we could see a few more over the next 40 years.

By no means am I advocating this strategy, and I'm sure I'll get bashed by some people here for even hinting at the notion. But I think the results are discussion worthy.