The Navigoe Blog

The Difficulty of Timing the Market

With a bounce-back in growth and tech stocks since the huge losses early this year, is now a good time to get out of the market and sit on the sidelines? After all, there is still a great deal of uncertainty looking forward: presidential election, the timing of a vaccine and distribution concerns, the uncertainty of future federal unemployment stimulus, escalating trade tensions, etc.

The short answer is, no! Market timing is not a sound investment strategy. All the reasons just stated are known by all. What is not known, is how those issues are already priced into the overall market and individual stocks.

One of the best professors around Modern Portfolio Theory is Kenneth R. French of the Tuck School of Business at Dartmouth College. Much of the way investment risk is evaluated today is a direct result of his contributions to investment theory. This is a video of Professor French discussing market timing and its application in financial markets.