timing mutual funds?

Question

when investing in mutual funds, is it better in the long run to try and time the market i.e. buy low, sell high ?

i don't mean short-term trading but in terms of years

Answer 1

Generally speaking, most of an investor's long-term return comes from your allocation between asset classes (cash, stocks, bonds) and only about 4% of an investor's return comes from market timing. That's cause most people inadvertantly buy high and sell low - damn psychology anyway!

Once you include the short-term trading fees, market timing mutual funds is even more difficult. A better strategy is to find a core group of mutual funds and then be super aggressive with about 20% of your portfolio. Good luck!

Answer 2

You never want to "trade" or have a short term perspective in the mutual fund arena. They are not set up that way. The expenses alone are typically higher. Now there are products out there that offer this "trade" ability and do trade like stocks with easy liquidity, and that is closed-end funds. They trade intra day and have those capabilities.

Mutual funds are being priced at the end of the day and with tax implications and really no control over your tax's this makes that a bad choice. Even no load funds have these same problems. I agree with the other blogger...you have certain money in mutual funds for a longer outlook(obviously if you need to sell or think you should sell you can do it), but you should have other money you use to trade with. Alot of investors have a trading account apart of their total investments including their buy/hold strategy with mutual funds. I do believe mutual funds should be reviewed 4 times a year and rebalanced/switched if necessary.

Answer 3

For long term investing, timing the market is lost in the rounding. Just buy it. Timing the market is a day trading or swing trading tactic at best. Long term traders generally don't care that much about saving $0.50 on the stock (or mutual fund) they love.

Answer 4

Most mutual funds require that you hold for 30-90 days. This makes short term trading difficult. I'd keep a long term perspective with MFs, say it drops below the 200d MA, then consider taking some and going into fixed income or other investments.
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Answer 5

To trade the markets, you use technical analysis. Mutual funds are not well suited for trading. You could trade closed end funds which are listed like regular stocks. To trade agressively, you like to be able to take long or short positions, use options and work with a bit more leverage. Non of which is possible with mutual funds. Good traders don't even bother with stocks, they trade bonds, futures, commodities, the forex markets and use options to hedge their risk. One can do all that online and make 5% to 10% each month. You don't have to be a floor trader like they used to have.

Answer 6

Studies have shown that if you buy at the highest price in any given year, and hold for 20 years or so, you will make more than the person who buys at the lowest price, then sells and buys during the next 20 years but misses the best XX (a small number I forgot) number of days to do so.

Answer 7

If timing worked.... the Mutual Funds would be doing it. Some have tried with no success (over the long term)......................

Answer 8

despite your 2nd part timing only is for short term so don't do it. You build a diversified portfolio mostly with etfs & closed end funds (not mfs) & then let it go. ADX PEO EWA PGJ EFA GAM etc. Nothing to think about.