Do Individual Investors Successfully Time the Market?

Abstract

In this study, I examine the market timing ability of individual investors in the US The analysis is based on data gathered by the American Association of Individual Investors asset allocation survey during a period that spans more than 30 years. Individual investors correctly time the market during the full sample period and during sub-periods based on different market conditions.

TOPIC: Style investing

Key Findings

• • Self-directed investors outperform investors that relay on professional financial advisors.

• • A sample of individual investors show good market timing skill during a 30-year period.

• • Timing ability is positive during bear and bull market conditions.