Investing in stocks, mutual funds and exchange traded funds can be a great way to build wealth, but timing the markets can be detrimental to your bottom line and extremely hard to do. While there are many services out there that claim to accurately pick the highs and lows, the reality is that very few individual investors can accurately use market timing effectively. Here’s why.

Unless you have a crystal ball or a time machine, accurately predicting the future gyrations of a stock or the markets is nearly impossible. It may be slightly easier to follow the trend and reallocate your assets close to bottoms and close to tops, but if you are an average investor, you don’t have the time, temperament or training to do it well. Most financial and investment advisers don’t either.

Reasons Market Timing Fails:

1. Time: Most investors don’t have the ability to spend an adequate amount of time watching and trading their investment portfolio. Even with today’s high-tech world and the internet, most people work during the hours that the market is open. Others are sleeping because they work nights or swing shifts. To properly time today’s volatile stocks and rapidly changing markets, you need to be available Monday through Friday from 9:00AM to about 4:30PM EST. If you miss a day or a week for vacation, a lot can change.

2. Temperament: Having the right temperament for trading is also imperative. You have to be able to pull the trigger on a trade immediately and live with your decision. All too often market timers are caught in a whipsaw market and buy one day, sell the next and then get caught trying to buy again after some market news has prices shooting up again. You also have to be able to set a target price and when it is reached… sell. Take your profit and move on to the next trade. But most average investors get greedy and have a hard time selling.

3. Training: There are several types of training that market timers need to trade effectively. Technical analysis or charting the markets is one very important technique. Fundamental analysis or understanding the balance sheets, economic indicators and governmental issues is another necessity. Finally, having a gut instinct and being somewhat of a contrarian are qualities of a great market timer. There are many times, when everything looks great or looks terrible, when you have to move in the opposite direction.

4. Mutual Fund Specifics: Funds have some unique issues that make them harder to profit from market timing. Most funds are priced only once daily, after the close, so intraday trading isn’t possible. Most funds have a short-term redemption fee for trades held less than 90 days. Many funds invest in stocks, bonds and other assets which could actually go up on a down day, or down on an up day. But you will not know until after the market close and you have to place your trades before it closes.

Summary: As you can see, there are many reasons why market timing of mutual funds can be a difficult task. It is better to use an asset allocation model and adjust your allocations as needed. While most stock investors that trade or time the market usually lose money, most fund investors tend to make money over time. So select quality funds that meet your objectives, adjust your allocations and let the markets work to your advantage.

To discover additional investment, financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.