How To Time The Market Without The Emotional Baggage | Seeking Alpha
Investors aren’t supposed to try to time the market. There's little guarantee that a macroeconomic insight isn't already priced in. Worse, asset allocation decisions based on recent events are subject to the emotional and cognitive biases hardwired into the human brain. Don’t time the market – you’ll hurt yourself. In the long run, patience and an appropriate risk budget make winners out of most investors.
Tactical may or may not be much better than passive on a return basis, but it does a great job of addressing downside risk. The more striking divergences are in volatility and drawdown. Trend following primary objective is to reduce drawdown risk; shifting from volatile stocks into lower-returning but less volatile assets like cash or short-term T-bills is rarely going to exacerbate portfolio downside risk.
Timing the market is not complete folly; only discretionary, emotional market timing is. A systematic strategy with a long-run track record of improving portfolio drawdowns, reducing volatility, and preserving long-run expected returns to stock investment is worth a great deal of consideration.