Professionals and Timing Securities Markets

Professionals constantly time the securities market. Yet research shows consistent data: Market timing does not work. They make their money because of their inside positions, which entail profit factors other than market timing.

Just one example: Some of the largest investment bankers and commercial banks invested very heavily in commercial real estate at their highs. Property values then fell in value in 2008. The bankers have since sold at lows to private equity firms and hedge funds at bargain prices. The latter will profit, because values have risen and will no doubt greatly increase more.

The reason? It is not only that the banks need the cash.The smart traders there tend to make money because of their inside positions, not because of their assumed timing instincts.