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Rekenthaler Report

The Case for Market-Timing

It can make sense, if done with humility.

The Devil Advocates
Two months ago, I called market-timers "circus clowns minus the funny suits." My argument: "Even when market-timers dodge the bear market, they inevitably miss the ensuring bull. Their track record is terrible, and that of their cousins, tactical asset allocators, is not much better. There is a reason 99.9% of mutual fund assets are invested in funds that don't attempt to time the market."

That column generated a polite rejoinder from Bob Desrochers: "When things get frothy I lighten up, wait a predetermined amount of time, and get back in. Works a lot better than buy and hold. Can I pick tops/bottoms? Of course not, but I can avoid much of the loss … the trick is getting back in without emotions interfering with the plan." (On that final point, we fully agree.)