market timing

Market Timing

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.

Notes:

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.

See also: 52 week High/Low, Day Trader, Efficient Market Hypothesis, Timing, Random Walk, Technical Analysis, Trend

---

market timing

The purchase and sale of securities based on short-term price patterns as well as on asset values. Some analysts use fundamental analysis to select the securities to purchase or sell; then they rely on market timing to decide when to trade those securities. Also called timing.

Is market timing best left to the experts, or can I use it when determining when to buy or sell securities?

To put it bluntly, the most important investment advice for the serious investor is that it is "time in the market," not "timing the market," that is the key to long-term successful investing.

George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA