The Strange Lack of Timing Experts

Quick: name the world’s greatest market timer in all history. 

This is an exercise that financial advisor Harold Evensky would introduce to investors who want to act on their impulse to get out of the market at the first sign of a hiccup, or put all their money into AI stocks for fear of missing out.   

The typical reaction is a blank look.  We can debate the greatest tennis players of all time, or the pantheon of great chess players throughout history.  Everybody can cite statistics about the greatest hitters in the history of major league baseball, and you can have your opinions about the top pop stars and performers. 

But market timers?  Has anybody, anywhere, at any time in history, created an amazing track record of knowing the most propitious times to get into and out of the market?  Have you ever heard anybody debating the merits of this market timer vs. that other amazing one? 

Any activity that provides us with zero successful examples ought to be examined carefully and skeptically, and market timing might be the best example of this.  Rating the top market timers is not unlike rating the top individuals who have flapped their arms and flew away.   

The point that Evensky is making is that if the world’s top economists, hedge fund managers, Wall Street traders and TV market pundits haven’t achieved notable success in this endeavor, it’s fair to ask whether any of the rest of us are likely to outwit the psychologically-driven twists and turns of share prices.  We have seen a great example of this recently: pundits and economists were predicting smooth sailing for the markets and the economy might go up until a sudden, unexpected 3% one-day drop in the S&P 500.  Then the headlines were about how the market was headed for a bearish stretch, and the headlines continued while the market recovered its lost ground and reached new highs.  Who could have predicted that? 

The answer, based on history, is nobody.