In your search for finding the best stock market timing system, market timing signal, market timing strategy or market timing service, I’d like to offer a few valuable tips. You will find hundreds of market timing sites on the internet, all of which are heavily competing for your business. That being said, some market timing signal providers use a little trickery and deception to lure you into subscribing to their timing signals. Here are some things you should be aware of:
Is the market timer’s performance being tracked and verified by an independent third party such as TimerTrac.com or ThetaResearch.com? If not, they can and do post whatever they want on their web site with impressive performance claims and no way to prove it. TimerTrac.com will track and verify a market timer’s performance for FREE. Why would any market timer that’s on the up and up, not use this free service? This is the first and most important thing to look for. If their performance isn’t independently verified – Run as fast as you can from that market timer!
If a market timer’s performance is being tracked by TimerTrac, do the gains they advertise on their web site match what TimerTrac reports? When viewing the performance graph from TimerTrac, is the date range of the graph showing recent performance? Or has the market timer picked a past date range two years ago in which they had some impressive performance. Double check the dates on the graph so you know exactly what you’re looking at. You may find that recent performance has been pretty lousy.
Does the market timer advertise gains based on real trades only? Or do they include back tested (simulated) trades in their performance figures? Many market timing signal providers give the appearance of having very long track records of investment performance. When in fact, their performance claims are based mostly on a computer simulation on what might have been achieved had you invested real money. A properly back tested market timing strategy is a great thing and should be one of your highest concerns. However, back tested results are not real trades. Back test results should be evaluated separately from real investment trades. Index Fund Timing Corp has spent hundreds and hundreds of hours back testing using market data from 1971 to present. Five or ten years of back tested data is simply not enough to assume going forward that you have a reliable investment strategy.
If they have multiple timing signals, will you be invested in the one that makes money this year or invested in one of their six other signals that lose money or severely underperform the market? If a market timer has four, six or more signals, one of them is likely to do well for the current year and that is the signal they will advertise. Next year it will be one of their other signals and then they will advertise that one. But will you be invested in the right signal that breaks out for the big gains in that particular year?
Most investors don’t achieve the gains that the market timer advertises. Why? If an investor trades their own account, they miss trades or don’t place their trades at the right time because they are just busy with life. Investors go out of town, work late, get sick, forget to check if a new timing signal is available… There are a hundred different reasons why they miss trades. Leave the trading to a professional and relax and enjoy life.
Very few market timers are Registered Investment Advisors and for the most part, unregulated. They are not held to the same high standard as a Registered Investment Advisor. Their allegiance is sometimes to themselves rather than to you, the investor. They can bypass requirements of being registered by posting disclaimers such as “The information provided is for educational purposes only, this is not a recommendation to buy or sell a security… etc… etc…” If a market timer is not a registered investment advisor and therefore not highly regulated, they can pretty much post anything they want on their web site. You as an investor need to be aware of this, and proceed with caution and common sense.