Market timing refers to act(s) of investing based on the condition of the market as opposed to personal characteristics. Investopedia defines market timing as:
1. The act of attempting to predict the future direction of the market, typically through the use of technical indicators or economic data.
2. The practice of switching among mutual fund asset classes in an attempt to profit from the changes in their market outlook. Some investors, especially academics, believe it is impossible to time the market. Other investors, notably active traders, believe strongly in market timing. Thus, whether market timing is possible is really a matter of opinion. What we can say with certainty is that it's very difficult to be successful at market timing continuously over the long-run. For the average investor who doesn't have the time (or desire) to watch the market on a daily basis, there are good reasons to avoid market timing and focus on investing for the long-run.
For example, adjusting one's asset allocation toward greater fixed income holdings because the bond market has lost value recently and there is an expectation of a bond market recovery would be an act of market timing. On the other hand, adjusting one's asset allocation toward greater fixed income holdings because it is in one's asset allocation plan to do so (for example, as one ages), is not an example of market timing.
- Bogleheads® investment philosophy - Never try to time the market
- Market timing, Canada (finiki, the Canadian financial wiki)
- Tactical asset allocation
- Bogleheads forum topic: "Market Timing -- What experts say.". July 29, 2011
- Bogleheads forum topic: "Vanguard on "Market Timing" ". February 12, 2012
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