Market timing systems are based on patterns of activity in the past. Every system that you are llikely to hear about works well when it is applied to historical data. If it didn?t work historically, you would never hear about it. But patterns change, and the future is always the great unknown. A system developed for the market patterns of the 1970s, which included a major bear market that lasted two years, would have saved investors from a big decline. But that wasn?t what you needed in the 1980s, which were characterized by a long bull market. And a system developed to be ideal in the 1980s would not have done well if it was back-tested in the 1970s. So far in the 1990s, any defensive strategy at all has been more likely to hurt investors than help them.

If yourr emotional security depends on understanding what?s happening with your investments at any given time, market timing will be tough. The performance and direction of market timing will often defy your best efforts to understand them. And they?ll defy common sense. Without timing, the movements of the market may seem possible to understand. Every day, innumerable explanations of every blip are published and broadcast on television, radio, in magazines and newspapers and on the Internet. Economic and market trends often persist, and thus they seem at least slightly rational. But all that changes when you begin timing your investments. Unless you developed your timing models yourself and you understand them intimately, or unless you are the one crunching the numbers every day, you won?t know how those systems actually work. You?ll be asking yourself to buy and sell on faith. And the cause of your short-term results may remain a mystery, because timing performance depends on how your model