market timing


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Related to market timing: Late trading

Market Timer

A money manager who seeks a profit for clients from his/her own ability to predict when the market will climb and fall. That is, a market timer buys securities when he/she believes that they are about to increase in price and sells when he/she believes their prices will fall. A market timer may use technical analysis to discern future price movements.

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

Market timing.

Market timing means trying to anticipate the point at which a market has hit, or is about to hit, a high or low turning point, based on historical patterns, technical analysis, or other factors.

Market timers try to buy as the market turns up and sell before the market turns down. It's the anticipated change in direction rather than the amount of time that passes between those changes that's significant for these investors.

The term is sometimes used in a negative sense to refer to a trading strategy that aims for quick profits by taking advantage of short-term changes in securities' prices.

Market timers, sometimes known as day traders, trade electronically. They try to buy low and sell high by taking advantage of second-to-second or minute-to-minute changes in the financial marketplace. They base decisions on information such as a forecast on interest rates or a sell-off in a particular market sector.

References in periodicals archive ?
Even so-called market timing experts can't consistently predict when to move in and out of the market.
There are more appropriate alternatives to curbing market timing than the proposed regulation, says the American Council of Life Insurers in a comment letter.
Stockum, 1986, "Selectivity, Market Timing, and Random Beta-Behavior of Mutual Funds--A Generalized-Model", Journal of Financial Research, 9:87-96
Prior to September 2003, SEC did not examine for market timing abuses because agency officials viewed other activities as representing higher risks and believed that companies had financial incentives to control frequent trading because it could lower fund returns.
Although very difficult to discern, more technical fund disclosures may reveal tell-tale signs of market timing.
Market timing and late trading enable traders to make a profit illegally by buying shares after the market closes and sell them the next day once the market opens.
NASD officials say market timing drives mutual fund costs up and waters down profits for those investing long term.
What takes the matter from sheer sloppiness to possible discouraging fraud is when the fund ignores its policies and actively facilitates market timing, often for a quid pro quo.
One internal memo marked "confidential" to Invesco chief executive Ray Cunningham is said to have admitted that market timing in the firm's funds was "at high levels".
At issue are charges of market timing (short-term trading to take advantage of prices on foreign markets) and late trading (allowing a trade to be processed after the day's 4 p.
The discussion will cover issues surrounding mutual funds, including market timing and after-hours trading; proposed solutions to current batch of problems; and an evaluation of the long-term prospects of the mutual funds industry.
Founded in 1970, The Cabot Market Letter is an independent newsletter of investment advice based on Lutts's own award-winning market timing stock selection system.