Inside Investment: Common sense about timing and the market

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Inside Investment: Common sense about timing and the market

The notion that “you can’t time the market” has somehow become received wisdom. It is, of course, nonsense. The experience of two very British institutions and some data analysis reveals the truth behind the cant.

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Hesiod is considered the world’s first economist. He lived in the foothills of Mount Helicon near the Gulf of Corinth in the eighth century BC and was a contemporary of Homer. His Works and days is the most significant historical source on Greek farming techniques and the ancient economy. Hesiod’s advice still echoes down the ages: "Observe due measure, for right timing is in all things the most important factor."

Timing, however, is something that is neglected, even abjured, in the investment world. Most pension funds set in stone a strategic asset allocation policy that allows little flexibility to exploit tactical market opportunities. Retail investors are told ad nauseam by (sometimes self-serving) financial advisers that they cannot time the market.

The experience of two great British institutions tells a different tale. The Church of England traces its history back to the Gregorian mission of 597 AD. In spite of Henry VIII’s depredations during the Reformation the church has traditionally been a secular as well as religious power in the land. Until relatively recently most of its wealth was held in land, but of late it has diversified into liquid financial assets.

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