Good market timing is very hard to do, though not impossible. Here are two approaches that can significantly boost your returns.
We all agree that it would be wonderful if investors could time the market accurately, thus avoiding the biggest declines, while participating in strong bull market rallies.
However, as we also all know, good market timing is darn near impossible to pull off, at least for most people. I’ve spent 23 years studying the markets, historical data, behavioral finance, and investing theory.
In that time I’ve found that two powerful and time tested market timing strategies actually work, and can make investors filthy rich, but only if applied properly and consistently.
A Disciplined Combination of Asset Allocation and Momentum Trading
There’s a famous saying that most long-term investors swear by “time in the market is more important than timing the market”. That’s because timing the market well, for most people, is all but impossible, and literally the worst thing you can do with your portfolio.
As Michael Batnick (aka “the Irrelevant Investor”) shows in this chart, missing just the best 25 single market gains since 1990 means that your portfolio would have not just underperformed the market, but even risk-free 5-year Treasury bonds.