Stock market timing strategies can be long or short term. For stocks in an individual corporation, you use different criteria for your stock market timing strategy than you do when dealing with your mutual fund portfolio. For a single company you base your timing on company fundamentals. Is it paying dividends? Are its profits steady or rising. Is the management a team you have faith in or not? For your mutual fund portfolio, the overall market for the fund sector is more relevant.

The benefit of stock market timing strategies lies in the adherence of the strategy to the maxim, buy low and sell high. Knowing what high is, and defining what is low, is where things get messy. And sorting out that mess is the essence of the timing versus buy and hold debate that occupies so much of a traders time.

In opposition to stock market timing strategies is buy and hold. The thinking behind buy and hold is that overtime, stock markets will rise. If one can weather out blips and bubbles, one will make money in the market. That is fine as far as it goes, but even in a traditional investment scheme, one has to be able to recognize when one is sitting on a bubble. The 2000 to 2001 collapse of the tech sector demonstrated this to many. More recently, the housing bubble crushed many. In short, if it looks like a bubble, buy and hold is not successful.

Setting limits is a commonly used tactic when it comes to stock market timing strategies. Buying stocks when they are at their highest level is only a good timing strategy when the company is a penny stock that has made some sort of fundamental breakthrough.

To illustrate this, take the example of a wireless technology company. These are a dime a dozen and only a very few will actually become a significant long term find. However, this is a sector that is sexy and moves on emotion, so quick jumps can be significant.

But keep in mind that these types of investments are almost total losses if the only thing drive the valuation upward is air. For this reason, you should only risk this type of in and out when a change in a company’s fundamentals is shaping up. For a wireless technology company this could be something as simple as the adoption of an industry standard that is compatible with the company’s technology.

Regarding mutual funds: buy and hold with an eye on sector economics is the best way to go. Do not, however, allow yourself to become complacent. Mutual fund holdings must be monitored every month. Too many investor go into denial when a sector falters and tell themselves what they are doing is buy and hold, when what they are really doing is sticking their head in the sand. It is just human nature to avoid bad news.

Stock market timing strategies versus buy and hold is a debate that will continue far as long as there are stock markets. The market moves on emotion, but it earns on fundamentals. Day traders make their living on stock market timing strategies. For the average investor, however, buy and hold, but staying informed and being willing to move when fundamentals warrant, are the order of the day.

Taking advantage of stocks is simple when you have the techniques of market timing! Get all the information you will need today to incorporate market timing in your trading strategy and see significant returns fast!