The answer of course is that the reason casinos are so nice is that they can afford to splurge on decorations because they make a heck of a lot of money. Plus, the nicer or more elaborate the casino, the more likely people are to visit. And casinos, above and beyond all else, want to generate foot traffic to their location.

      And why is that?

      Well, it's because visitors might gamble, and gamblers, in the long run, always lose money. And when the gamblers lose money, the casino wins.

      Yes, I realize that your Aunt Milly may have won $500 on a penny slot machine last week, and you may have had a good run at the blackjack tables last visit and gone home with an extra five grand in your pocket. Heck, sometimes casinos even get taken to the proverbial cleaners. Not that long ago, a group of high-stakes players went on a roll, and Wynn Casino in Macau lost $10 million! The loss was so large that Wynn was forced to disclose it publicly, because it had a material impact on their quarterly earnings.

      But you know what? Despite the loss, Wynn opened its doors the very next day (or to be more accurate, the doors probably never closed in the first place). And Wynn would have been more than happy to invite those very same gamblers back at any point and give them another shot at winning big.

      Why? Because while the probabilities don't mean that the casino is going to win every game, or every day, or even every month or year, they do mean that, in the long run, the casino is absolutely, 100%, guaranteed to win. There simply cannot be any other outcome.

      After all, gamblers have the following odds on casino games:

      Of course, that means that the house has the following odds on casino games:

So, if you're the casino, you stay open 24 hours a day, 365 days a year, come rain or snow or sun. Because the more you're open, the more people play, and the more you win.

The True Cost of Sitting on the Sidelines

      The same principal applies in the stock market. Historically, stocks have risen on approximately 53% of trading days. The stock market has declined on approximately 47% of trading days. Of course, no one knows in advance which days stocks will rise, and nearly half the time they fall in value. Yet despite that fact, it still makes sense to stay invested, because over time, the odds are in your favor.

      In a perfect world, an investor would participate in the market's upside while avoiding the downside. In this state of nirvana, the investor would perfectly time their moves in and out of the markets, thereby capturing the long-term upside while avoiding ulcer-inducing declines. The blissful investor would thereby meet their financial goals in a stress- and worry-free manner.

      And that is precisely the goal of market timing, whose fundamental precept is to invest when markets are rising and then move to the sidelines prior to sharp declines.

      Unfortunately, successfully timing the markets is an exceptionally difficult thing to do. After all, when markets are falling, how do you know if the decline will continue for six more months or if the rebound will start tomorrow? Similarly, although selling when markets seem overvalued might make sense on the surface, overvalued markets often continue higher for months or even years on end. And when the market does eventually decline, there is no guarantee that prices will fall below the level at which you sold in the first place.

And of course, a successful approach must be repeatable. And so, the challenge facing the market timer is not simply to move into or out of the market once or twice, but rather to do so again and again over the course of years and decades. And that ability to correctly anticipate when to buy and sell across different market environments, political regimes, and economic cycles, is very rare indeed.

      If there were no cost to mistiming moves in and out, then perhaps the endeavor would make more sense. After all, a high-reward, low-risk strategy would be appealing. The problem, however, is that if your movements are anything less than perfect, market timing is one of the riskiest tactics you can employ.

      That statement may sound odd. After all, isn't it risky to stay invested in an overpriced market that may eventually decline in value? Wouldn't prudently sitting on the sidelines make sense?

      Well, for starters let's discuss two different types of investment risk. The first, and more commonly cited, is volatility. This is the figure you might see quoted in mutual fund reports or stock analysis websites. Commonly measured as standard deviation, volatility simply describes how bumpy an investment's path has been over time. And of course, the bumpier the ride, the more uncomfortable it is to hold on. This volatility is what many market timers attempt to mitigate by moving in or out of the market.

      However, there is a second type of risk that I would argue is more dangerous than volatility. I'm referring to shortfall risk, which is simply the risk that your realized investment returns fall short of the returns you require to meet your financial goals.

      This risk, in my opinion, is the far more important one. Think about it this way: if you go to Disney World, the route you take to get there and any delays you face along the way may very well impact the quality of your vacation. But wouldn't a far greater measure of how good or bad the vacation is simply be this: Did you ever actually get to Disney World?

      Similarly, although you certainly want to minimize the bumps you face on your journey toward financial freedom, the far more important measure of success is whether you actually achieve that freedom. And that is why moving in and out of the market, with anything less than perfect timing, is so dangerous.

Consider two investors whom we'll call Jane and Tarzan. Both Jane and Tarzan started with $100,000. Both of them invested for 20 years. And most importantly, they both held exactly the same portfolio, allocated entirely to the S&P 500.

      Jane put her $100,000 to work on day one and stayed invested through thick and thin for the entirety of her two-decade time horizon.

      Tarzan did exactly the same thing, but with one important distinction. Tarzan sat out of the market for two months during that two-decade time frame.

      Unfortunately for Tarzan, his timing was awful and