They say timing is everything, but investors who have applied this notion to making investment decisions have found that in the market, not everything can be timed.  The idea of market timing is certainly appealing:  Buy an investment at or near the trough, sell at or near the peak, and move on to the next one.  The problem is that only in hindsight are those peaks and troughs clearly visible.  Numerous studies over various time periods have been conducted to test the effectiveness of market timing and all of them conclude the same thing:  Markets move too sporadically and trends are too unpredictable to be consistently exploited by market timers.

Market timing is really nothing more than a guess at short-term trends that, if wrong, can have a disastrous impact on long-term investment returns.  Investors without a long-term plan or investment discipline fall prey to their own impulses and the chorus of media voices regularly telling them to do something, when it’s often better to do nothing.

Removing guesswork from the investment process is the best way to avoid the missteps which plague most investors.  Successful long-term investing is a function of persistence and patience, not timing.  A well diversified portfolio can withstand market cycles and deliver solid, long-term returns without subjecting the investor to the risk and stress of choosing entry and exit points.  Regularly rebalancing the portfolio to its asset allocation targets is also important as it establishes the discipline of buying low and selling high, counteracting the average investor’s natural tendency to chase yesterday’s winners.  This simple strategy increases returns, decreases stress and protects investors from the sirens’ call of the latest investment fad.