Market Volatility Is Creating The Need For Market Timing

The increasing volatility that has entered stock markets over the last decade has changed how many investors view their equity investments. The rise of new investment vehicles like leveraged and inverse ETF funds that contain derivatives has accelerated the volatility in stock market gyrations. The period between major bear markets appears to be shortening, as well as and swings from market top to bottom are getting larger. In a matter of a few weeks it is possible for the average investor to lose 50% of their portfolio value. Gone are the days of "buy and hold" investing where you could place your money in some long term funds and forget about it.

Portfolios Can Be Ruined Without A Timing Signal

Many investors have woken up to the cruel truth that buying investments and forgetting about them is a recipe for disaster and financial ruin. After taking into account transaction costs and annual fund expense costs, most investors would have more money today by simply burying their cash underground or stuffing it under the mattress. Many investors are waking up to the realization that this was a lost decade of investment returns, and are no beginning to ponder how many extra years they will have to work before they can afford to retire.

Timing Signals Work Best As A Defensive Tool

The most powerful use of a market timing signal is actually as a defensive portfolio positioning strategy. A market timing signal typically tracks and measures pricing movements and trends in the stock market, and can often give you several months advance warning of a major market turn starting to form. Those that follow a market timing strategy can act on this trend changes early and shift their investments into lower risk categories or even move to an all cash position.

If you think your portfolio could benefit from advance warning of a market top then you owe it to yourself to learn more about market timing signals and how they can be used to protect your portfolio from major losses. It might be the best financial decision to benefit your portfolio in the long run.