Successful market timing in Asian bourses can add much value to the performance of one s portfolio. But this simple statement belies the fact that all these three Asian markets have undergone wrenching bear cycles as well as exhilarating bull markets, vacillating between gloom and glee. The efficacy of the long-term investment approach in the US markets may not be so cogent in the small Asian bourses. The existence of derivative markets also adds a huge dimension to the art of market timing. Stock index futures, in particular, traded on Asia s major stock markets, enable investors to get in and out of equity positions on a whim.
Some analysts regard the use of derivatives in hedging cash positions as risk management.
Whatever the name used, it is a style of investment that requires a high level of technical skill. As such, the tools necessary to implement market timing successfully require some effort to master, but this is often worth the effort. Understanding the contribution that market timing can bring to the investment process, AsiaOne Markets offers many tools for this purpose and it is useful for you to learn how to use them effectively. The problem with many a portfolio is that the investor may make nine correct choices out of ten, but the wrong one may hopelessly outweigh the correct decisions. And this happens very often to many people.