Is Market Timing Working???

I am not a fan of market timing.  To me, market timing is for speculators and I really don't bother to be a speculator I just don't want to sit in front of computer and stare at the computer monitor at all time.  But just for my knowledge on how speculators are doing on market timing, I picked up this book.



This book, All About Market Timing, Second Edition (All About Series), consists of more than 250 pages but I finished it within two hours.  Well, to me, the first part of this book is the introduction of how the timing strategies introduced in this book are working.

As for the second part, the book explains 6 strategies on market timing.  What caught me in interest is that the author reveals the best six months strategy.  In particular, the best months for investment is between the beginning of October and the end of April.  The result is actually based on the observation on historical stock market performance in the US.  I am not sure the real reason behind but, to me, stock market is irrational at all time.  I always believe the best timing to pick up stocks is when the market is reviving from market downturn.  As a matter of fact, the Malaysian stock market has been moving up strongly soon after 2008 global financial crisis.  As most of my holdings were done in early 2009 without doing anything throughout these years, my holdings has been giving me more than 20%~30% p.a. return.  Therefore, I can't comment on the feasibility of this strategy in Malaysian stock market.

Yes, technically speak, I am adopting buy and hold strategy which is not the author advocates.  The author highlights that buy and hold strategy "can't be used for all stocks because, in practice, it only works with specific stocks during specific time period".  In other words, the author is talking about speculation of any stock instead of picking up buy and hold quality stocks at the right time.  Now, think about the richest men in this world, Bill Gate and Warren Buffett.  Their financial wealth are build on their stock holding.  How often do these richest men in the world doing in stock trading?  So, could you tell me whether buy and hold strategy is working or not?

The other strategies highlighted in this book include "combining presidential cycle years with seasonality", "the value line 4 percent strategy" and "Nasdaq composite 6 percent strategy".  By the title itself, these strategies are US centric.  Therefore, it is not so applicable to us.

There is a strategy which actually I am using all the time - Simple Moving Average (SMA).  The author is using Simple Moving Average to determine entry and exit while, as what I introduce this in my Invest Bursa Course, I am using Simple Moving Average to inform me the general market trend with combination of other technical indicators to determine whether it is the right time to enter or exit.  Of course, during my course, some other non-technical considerations are need as well instead of jumping into the conclusion indicates by technical tools solely.  In other words, the technical tools I am using is for trend detection with rational consideration but not for speculative activities.

I believe now you could understand why I could finish this more than 250-page book in less than two hours.  Yes, most of the strategies are not feasible in Malaysia while the others are working against my investment philosophy.  Therefore, I don't bother to waste my time on them.

To conclude, how many of your friends are actually making money from market timing?  I have none so far.  How about you?  If the success rate is so low, do you still believe in market timing?