Investors are inclined to put their money on the sidelines until conditions improve. Finding the ideal re-entry point is nearly impossible and can be damaging as the market recovers. As you can see, the danger of timing the market is far greater than remaining fully invested. Understand the true meaning of asset allocation. Most investors will tell you they employ asset allocation principles, but react and manage their money on a very short-term basis.
Asset allocation works over the longer-term.
The nature of asset allocation models is that not all of your individual investments will perform at the same time for the same reasons, but, over time, you should achieve more consistent performance with your overall portfolio. Unfortunately, investors want to micro-manage each position. This tends to cause more volatility and less performance. Asset allocation is based on the principle that, as economic conditions change, various sectors and styles of management outperform others. The problem is that we don't know when these changes take place.