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Professional investors do not time markets.
by wtvanhest 8y ago
Professional investors do not time markets.
- the_gastropod 8y agoSure they do! They just may or may not be any good at it.
- wtvanhest 8y agoNo they don't. There are a few exceptions, but the vast majority of assets are managed but asset managers who have mandates to stay fully invested. Only niche hedgefunds time markets.
- oillio 8y agoSector rotation is a pretty popular strategy. The manager stays fully invested, but they move the investment to different sectors, trying to time which sectors will be hotter than others. Just one example of a way to stay fully invested while also timing the market.
- tabtab 8y agoAn example: expensive products, like new cars and refrigerators, tend to slump more during general downturns. Thus, fund managers may shift out of car & fridge stocks into something with smaller consumer price tags, like soda stocks.
- wtvanhest 8y agoSector rotation is not considered timing by professional investors.
- icedchai 8y agoIt depends. Many managed funds have huge turnover percentages, tons of active trading, etc. Those asset managers are definitely attempting to time the market. This is more than just hedgefunds.
- RickJWagner 8y agoYou are actually right, many do not. See the site 'Bogleheads' for a gathering area for folks of this type. They make some strong arguments for their thinking.
- wtvanhest 8y agoI worked on two different small (sub 10 people) investment teams with over $10Bn each under management while at BlackRock. 50% of my time was dedicated to competitive research on other actively managed funds. I'm confident that the vast majority of assets are with funds that are mandated to stay fully invested. Only the smallest rando institutional investors wanted to time the market. There is no research that says timing is a valid strategy (yet!)