Prime Time for Market Timers: 90% Profit in Just 50 Days


The past 50 trading days have provided a rare opportunity for market timers—for really, really good market timers, that is.

Because of trading swings unseen since the worst of the financial crisis, being able to pick tops and bottoms is a talent that could have generated a 90 percent gain in less than two months, according to calculations by Bespoke Investment Group.

The figure comes from the profits generated by the highly unlikely event of picking each short-term top and bottom and is driven by the violent swings both higher and lower.

During the 50-day period, the market has had an average daily move of 1.85 percent, a trend that, according to Bespoke, has been bettered just seven times since 1928. It’s well below the average move of 4.02 percent during the height of the financial crisis, but enough to frazzle plenty of nerves.

“The volatility that we have seen is not likely to just disappear, so investors should continue to expect big moves,” Bespoke said in an analysis. “The levels of volatility that we have seen are monumental in nature and in some respects rival the volatility seen back in 2008 and 2009.”

For instance, there have been nine intraday moves in the past 29 trading days of more than 5 percent.

“For traders this kind of environment is a dream come true — if you time it right,” Bespoke said.

Getting it wrong, the firm said, would be a “career ender,” as traders who guessed wrong on every top and bottom would have lost more than 50 percent since late August.

As such, a lot of investors are avoiding stocks altogether and heading to the relative safety of bonds.

While all of the nausea-inducing volatility was happening, bond mutual funds too in $3.5 billion over the past week alone, suggesting that few are willing to play the stock-timing game.

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