Can you predict a good time to buy stocks? Let’s see what Jim Davis, PhD of Dimensional Fund Advisors has to say.

Using 780 simulations with data from 15 different stock markets to test the theory of using mean reversion to “predict” the timing of a stock purchase and sell, we can conclude that: “while we cannot rule out the existence of mean reversion, we just don’t see evidence that mean reversion is strong enough to permit profitable trading strategies.”

So what is?

We believe the first place to start is with identifying your tolerance for risk. Using our specific approach to discussing risk and volatility will set the stage for return expectations. These expectations must match your financial objectives. When all is aligned, we can construct a low-cost portfolio of globally diversified investments that pursue dimensions of higher expected returns.