However, this summary presents a somewhat biased picture. The time period used was the most favorable 5-year market period since the 1930's. Market timing, if successful, pays off in sideways and down markets. To illustrate the point, let's take a similar look at a less bullish period, for example, the five years following the above period. This table shows the payoff for very successful market timing in a mild bull market, just as the previous table shows the penalty for very unsuccessful market timing in a strong bull market.
Markets usually go down faster than they go up.
That is, the percent change during the big down days is greater than the percent change during the big up days. Thus, missing the worst down days results in increased return, even if a few big up days are missed in the process. The two studies above don't shed any light on this, they just assume exceedingly bad timing in the first case, and exceedingly good timing in the second. Neither assumption has merit.