ING - Market Timing – Does it Pay?
Buy low and sell high. Seems like common sense and certainly the dream of every investor. The problem is, without a crystal ball, it’s pretty much impossible to do. In fact, according to a landmark study, “Determinants of Portfolio Performance,” and its update in 1996, market timing contributes less than two percent of portfolio performance. Asset allocation, on the other hand, was responsible for almost 92 percent of portfolio performance. To successfully time the markets, you’d have to be able to anticipate the trends and factors that contribute to investment performance. Not react to the markets, because by the time the Dow dips or a new technology is introduced, it’s too late and the economic effects of the event are already in motion.

As an individual investor, who has time to even try to time the market? Our investment universe is so complex – and we have so many options available to us – that the body of research and information you’d need to attempt to practice market timing is beyond the scope of most folks. Investment professionals – financial analysts, economists, fund managers, etc. – devote years of study and quantities of resources to understanding the various financial markets and how they react to each other and outside events. These resources are at your disposal through mutual funds and the types of funds you’ll find in your retirement plan. By investing in these vehicles – according to your own asset allocation strategy – you’re hiring these professionals to analyze the markets for you.

Using asset allocation as a part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets. Please feel free to contact your ING representative, Meghan Doherty at 415-364-2017, if you’d like more information about investment basics and strategies. Or, visit us at


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