Market Timing

Published: | Updated: October 23, 2017

Definition - What does Market Timing mean?

Market timing is the act of buying and selling securities, such as bonds or stocks, based on an active observation of financial trends. There is no consensus as to the effectiveness of this method.

It is also known as tactical asset allocation and active investing.

Insuranceopedia explains Market Timing

The goal of market timing is to buy securities at a low price and sell them for a higher price, based on the fluctuations of the stock market or the economy. A market timer is supposed to be knowledgeable of market trends, and those that don't regularly observe financial trends are generally advised not to indulge in the practice.

Experts, however, are divided about market timing. Its proponents think that a person can be capable of making informed financial predictions. Detractors, on the other hand, say that nobody can totally predict the market and recommend choosing conservative investments.

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