Why most money-managers say they don't believe in market timing?

Discussion in 'Trading' started by crgarcia, Mar 26, 2007.

  1. Why most money-managers when interviewed say they don't believe in market timing?

    Market timers believe WHEN to be buying/selling is more important that WHAT you are trading.

    During a market decline even the best companies decline, and during a uptrend even the worst stocks go up (well, almost).

    Or is just that they manage so large amounts that they can't get in/out easily and fast enough.
  2. Great, quick read on this topic is Michael Mauboussin's "More Than You Know", Chapter 7, Time Is on My Side: Myopic Loss Aversion and Portfolio Turnover

    In the world of fund managers it is empirically demonstrated that high turnover funds perform worse in the long run.

    Traders however do things quite differently than fund managers including use of leverage, more complex positions, etc. In my opinion it is apples to oranges...
  3. LOL.
    I rarely invest in a stock.
  4. MarkBrown


    i will take a stab - because most of them are looser's who can only make money by blindly investing funds in low risk low return products.

    mark brown
  5. because investor timing and redemption of funds from their accounts is not good for their mgmt % fees.

  6. ok, you tell that to them with their yale mba's and cfa's... as you reread your technical analysis book from amazon
  7. MarkBrown


    and the intention was to hurt me how?

    i am a book nut and spend lots of time buying stuff from amazon you have me there, ouch!

    but if you look i am written about in many of those trading books and magazines but then again you wouldn't be slumming at amazon would you.

    a mba and cfa means someone was able to memorize what some teacher wants long enough to regurgitate it upon test time. that does not mean anyone has a creative mind and will be successful at trading. it most likely means father has some contacts at some firm and the boy gets a job behind a desk as he figures out what muni bond to buy next.

    mark brown
  8. Market timers believe in both the WHEN and the WHAT as you put it. This should not be mistaken with security selection. This is purely allocation of capital amongst the different asset classes. Market timers believe they can forecast broad market moves and allocate capital accordingly.

    Note this does not imply that they cannot follow an active strategy (although many do not) at the individual portfolio level.

    And yes, most cannot simply load or unwind portfolios in minutes like your typical ET poster can due to the hundreds of millions involved. Accumulation and distribution can take a long time if market impact is to be minimised.
  9. duard


    No it means they can give good blow jobs to their professors.
  10. A Yale MBA is meaningless in the trading world. An MBA is a general business degree where you study marketing and organizational management and corporate finance and was meant to for those going into business.

    There is hardly anything in depth related to finance in an MBA. I have met MBAs from Wharton and Harvard and they are excellent at regurgitating CAPM and efficient frontiers and such.

    A technical analysis book from Amazon is actually more relevant to investing than an MBA except for maybe the accounting part which you would need for fundamental analysis.

    Look at the course selections for a MBA program and you will see what I mean. The MBA was not designed for people to become money managers.

    #10     Mar 27, 2007