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The Power Of Market Timing Is Counterintuitive

Mar. 02, 2021 11:41 AM ET5 Comments
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  • It would make sense to avoid stocks with high valuations and to seek stocks with low valuations.
  • Everything about the world of stock investing is serious and sober and controlled.
  • Market timing works.

Original Post

By Rob Bennett

I believe in market timing. I think it would be fair to say that I am the biggest advocate of market timing alive on Planet Earth today. I have devoted the last 19 years of my life to come to an even better understanding of the benefits of market timing. Every new article that I read, both pro and con, increases my confidence in the case. I can always see weaknesses in the points made in articles arguing against market timing and that makes me more confident that I am on the right track.

The Distaste For Market Timing

Most people do not believe in market timing. Few are indifferent about it. Only a tiny number agree with me that market timing is critical. Most have a great distaste for it. They believe that market timing is a mistake.

I can't help but wonder why most people feel as they do.

I believe that the primary reason is that it is only in recent decades that index funds have attained much popularity. It would be hard to get a timing strategy to work with individual stocks. It would make sense to avoid stocks with high valuations and to seek stocks with low valuations. But, in the individual stock realm, there are often good reasons why a stock is assigned a high valuation or a low valuation. Going against the market's determination in those circumstances is dangerous.

It is much easier to predict the future returns of index funds. With index funds, all of the things that go into determining the value of a company are taken out of the picture. But one. A broad U.S. index fund is going to do well only if the U.S. economy remains a productive one. But the U.S. economy

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