The long-standing debate between proponents of 'buy and hold' (ie those who believe it is important not so much the moment you enter the market but the duration of the investment) and supporters of active management (with then need to properly identify the so-called market timing) is not going to be never completely finished, probably because neither of these strategies is the best.
As some analysts try to prove, as the market environment in which investment proceeds help to estimate the potential expected returns and, therefore, adopt the strategy that is considered best
John Hussman (www.hussmanfunds.com) has developed a method to estimate the expected returns in 10 years on the S & P 500 based on its evaluation of the P / E index, which refers to profits generated in coincidence with the peak of the economic cycle. according to this method, an investor 'buy' the market can now expect, reasonably, an annual return of just over 5% over a time horizon 10 years (total return performance, ie including dividends)
A similar attempt to estimate the expected returns for an investor 'passive' based on P / E is suggested by Shiller blog www.investmentpostcards.com .
in this case it cites a study, subdividing the ten-year returns based on P / E of the market at the time of investment, clearly shows that the years with P / E have achieved the lowest yield (total return) more interesting :
similar analysis was carried out based on the Dividend Yield (or the dividend paid on shares index):
We can conclude that if the strategy 'buy and hold' can still yield important investments are characterized by very favorable market valuations (low P / E Dividend Yield and low) that the investor will enter the market constancy of unfavorable evaluations (P / E Dividend Yield above average and unattractive) certainly will draw greater benefits from more active management of its buoyancy.
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