Market timing is an investment strategy based on anticipation of market trends. The goal is to anticipate market movements by buying stock before prices rise and selling stock before prices fall. Unfortunately, market timing is very difficult to do, even for professional money managers, and most individual investors cannot successfully time the market. Rather, they are often too late to both buy and sell stock in response to market conditions. Thus, their attempts to time the market by switching money in and out of stocks actually result in a decreased rather than an increased return. Utilizing such an investment strategy requires a high risk tolerance.
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