What Market Timing Is ó
Market timing is supposed to be great at reducing your risk
while letting you profit in the bull moves, but is it all itís
cracked up to be? This market timer discusses the pros and
Market timing ó and market timers
ó are often treated in the
media as barely a step above
snake-oil salesmen. Itís easy to
become defensive in response.
But confession is good for the
soul. So hereís an insiderís look
at what timing is ó and isnít.
I could claim that market timing
has a big impact on long-term
returns. But it doesnít; timing
is much less important than
asset allocation. In the long run,
a broadly diversified buy-and-hold equity portfolio has pretty
high odds of achieving a 12% compound return. Timing may
improve that ó but you canít count on it. The biggest way
timing adds value is by offering a smoother ride, trying to
avoid or minimize interim losses that result from volatility.