Unlike most investment guides, Bluegrass Portfolio Investment Research does see the benefit in successful market timing, at least in some senses. That's largely a reflection of our philosophy, and research, which has shown that there are clear points in time when it makes sense to be out of the market. Likewise, there are clear points when it makes sense to be in the market. By applying timing techniques that work - in a consistent, disciplined manner - we're able to enhance performance by a few percentage points each year. True, an extra 3 to 5 percent each year may not sound like it's worth the effort, but compound 3 to 5 percent for several years, and you'll get a surprisingly superior return.

Just the phrase 'market timing' invokes a variety of intense opinions. Most of Wall Street disregards the idea, explaining that it's ultimately detrimental to investor's returns. A smaller number of pros embrace the idea of market timing, reflecting the notion that traditional fundamental analysis is misleading. And at some point in time, almost all investors have probably had some sort of good and bad experience with a timing strategy. So, the heated debates about market timing are understandable.

We're somewhere in between. In our observation, the reason most of Wall Street hates the idea of market timing is because most so-called timing gurus do a particularly poor job with it. But there are some timers, including ourselves, who understand the realities and the risks of timing techniques. When done properly and effectively, timing can help a long-term investor a great deal, even if only to make an exit at a high point, or start buying at a low point. So to clarify what most market experts are saying, market timing isn't inherently dangerous.....bad market timing is inherently dangerous.

Our style of market timing differs a great deal from the traditional definition. Where most timers use some rather esoteric indicators and models that can rarely reproduce past results, our timing techniques are based on simple and timeless data. Specifically, our analysis is based on volume, advancers/decliners, and momentum. Those are factors that work today the same way they have over the past 30+ years. And, the data itself is simple, meaning it can't be influenced or changed by investors, institutions, or intense opinions. That's why we get consistent results - the model is accurately reproduced on an ongoing basis.

The other key difference in our timing techniques is timeframe. Most market timing techniques use an all-or-nothing approach as their creators attempt to pinpoint the precise day of the exact bottom or exact top. Unfortunately, those topes and bottoms rarely become obvious until well after they're made. If a pundit is right about a top or a bottom, then they tend to be branded as geniuses. If they're wrong, you better hold onto your wallet. One of the other key mistakes most timers make is looking at short-term data. Reversals don't become apparent in a single day. That's why we use weekly and monthly data to insure a higher degree of accuracy. Do we ultimately leave money on the table by waiting for a little more data? It depends on your perspective. We never buy or sell based on a single day, so in a sense, we do miss out on the very beginning of a new trend. However, we also have a much higher degree of consistency with our results. Over time, it's more profitable to be frequently correct in small ways, than to be occasionally correct in big ways.

If you have questions about market timing, or our methodology, please feel free to write or call.