BAD MARKET TIMING

Hindsight makes a strong case formarket timing.Three years ago, if youcould have foreseen the market meltdown,you could have gotten out withyour profits intact. The trouble is thatmarket timing is about the future, notthe past.The most recent study on thesubject from financial services marketresearch firm Dalbar Inc (www.dalbarinc.com) shows that mutual fundshareholders tend to chase hot fundsand bail out of those that underperform.This buy-high, sell-low strategyputs them in a hole relative to theoverall market. Between 1984 and2002, the study concludes, mutualfund investors held their shares for anaverage of 30 months, achieving a2.6% average annual gain. During thesame time, the S&P 500 was gallopingto an average return of 12.2% a year.