Wednesday, March 20, 2013

Market Timers and Asset Allocators

Here's interesting blog post about the returns from market timing - the art of getting into the market before it goes up.  

While we can always show that if you can time the market, you could make great returns, the reality is that timing the market is near impossible to do - even if you pay attention to overall market fundamentals.   Case in point:  In 1996, all the fundamentals indicated that the tech market was very overheated and yet the bubble didn't burst until 4 years later.

Therefore, it is pretty safe to say that in the long run, the average returns of a market timer will always lag those of someone focusing on steady asset allocation.