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Can you lose your pants in a bull market? You certainly can, it turns out.

The Israeli public lost an enormous amount of money during the most prosperous era in Israeli capital market history.

From July 1996 to June 2006 the Tel Aviv Stock Exchange index rose 301%, or 14.9% a year. You'd think people would have made money.
 
But that would involve buying at the right time and holding onto the shares, which is just what the public didn't do.

Gadi Toledano, a Psagot Ofek international markets strategist, studied the public's deposits in and withdrawals from mutual funds that specialize in stocks over the last ten years, and found a consistent pattern.

Namely, the public always invested in funds when the market was rising, and sold when share prices were falling.

In capital market terms, the public consistently bought at the top, paying the most, and sold in the dip, getting back the least.

This consistency produced the following mathematical miracle: the public invested a net (deposits minus withdrawals) NIS 2.67 billion in mutual funds over a decade. Granted, compared with the public's total portfolio of more than a trillion shekels, that's peanuts. But the results are striking enough to warrant attention: after ten years, that NIS 2.67 billion had shrunk to NIS 1.12 billion.

The public managed to lose NIS 1.5 billion out of an investment of NIS 2.67 billion, while stocks rose by 301%.

How did that happen? Bad timing.

Throughout the entire period the public erred in timing its investments. The bull market gored them.

Toledano checked what would have happened if the public, instead of jumping in and out of the market at all the wrong times, and kept to the strategy of steadily buying stocks each month. Spreading the NIS 2.67 billion in 120 equal investments would have yielded NIS 5.43 billion by the end of the decade - a net profit of NIS 2.76 billion.