The Market Timing Approach: A Guide to the Various Strategies
With technical analysis enjoying a renaissance on Wall Street, can market timing—which is firmly rooted in technical analysis—be far behind?
Over the past few years the application of market timing by individual investors, as well as registered investment advisers, has accelerated rapidly. Contributing to the growth of timing has been the proliferation of computer capabilities, the availability of data, and the growth of mutual funds.
In this article
- Market Timing Variations
- Strategy Components
- Pattern Recognition
- Artificial Intelligence
- For More Information
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Market timers believe that it is possible to identify market trends early enough at their start to successfully position investments in equity, bond, or money market funds. Buy-and-hold advocates argue against this approach, maintaining that it is not possible to successfully time the market on a continuing basis. Many articles on market timing—including those in the AAII Journal—tend to focus on the debate between market timers and buy-and-holders. What gets lost is any detailed discussion of market timing itself—what it is and what the primary strategies are.
This article skips over the debate (although I am clearly in the market timing camp) in the interests of simply explaining the market timing approach.
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