April 2011_issue_03
Reckon you can time markets?
This graph shows that if you get it right, you could do very well. But, get it wrong and you will struggle to regain that lost upside. According to David Bayliff e from PaaC the implications are that even approximate timing is challenging, but that a large component of return is achieved over short periods. Return therefore depends critically on exposures over a small number of months. He also believes it is possible to determine when markets are particularly vulnerable to falls, or are likely to rise – and that hugging a long term asset allocation during these periods is a terrible waste. portfolio institutional reckons this is a call to arms for dynamic asset allocation, if ever there was one!
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