Market timing with your mutual funds

When you invest in bonds, stocks or mutual funds, investors have the opportunity to increase their return by timing the market - investing when stock markets go up and selling before returning. A good investor can either time the market carefully, choose a good investment, or a combination of both employees to increase performance. , All, try, but increase your return by timing the market brings a higher risk. Investors who actively try to time the market aware of shoulds that sometimes the unexpected happens and they could lose money or forgo comeback of the year.

Timing the market is difficult. To succeed, you must take two investment decisions correctly: one to sell and buy one. If you are either wrong, you're out of luck. In addition, recognizing that investors shoulds:

1 The stock markets are mostly down.

2 If the stock markets fall, they tend to fall very quickly. That is, short-term losses are heavier than  short-term gains.

3 The majority of the overall stock market are written in a very short time. In short, if you fail in the stock market one or two good days, you give up the bulk of the profits.

Many investors are not good timer. "The Portable Pension Fiduciary," by John H. Ilkiw, presented the results of a comprehensive study of institutional investors, investment funds and pension funds as manager. The study found that the average manager to add investment funds, develop market selection. The best fund managers Added over 2 percent per year over the selection. However, the median of the optimization manager lost in the timing market. SO, investors shoulds recognize that the timing of marketing can add value, but there are better strategies that increase returns over the long term, seizures less risk and have a higher probability of success.

One of the reasons why it is so hard, right on the difficulty of removing remove emotion from your investment decision on the basis of time. Investors, we invest emotion tend to overreact: they invest when prices are high and sell when prices are low. Professional asset managers, which can remove the emotion from their investment decisions can really add value to their investments, the majority of its target returns are always generated by the selection of security and investment strategies nec. Who wants to increase investors see their returns through market timing shoulds good fund tactical asset allocation. This means want to add values ​​by changing the investment mix mediator cash, bonds and stocks according to strict protocols and models that unfairly timing based on market emotion.