DALBAR Study Shows Market Timers Lose Their Money.

Business Editors

BOSTON--(BUSINESS WIRE)--April 1, 2004

It is widely believed that rapid fire trading produces huge profits for traders at the expense of the average investor. But the latest DALBAR study shows that market timers actually lose money instead of making healthy profits.

Examining the flows into and out of mutual funds for the last 20 years, the DALBAR Study of investor behavior found that market timers in stock mutual funds lost 3.29% per year on average. The average investor earned 3.51% and those who pursued a consistent investment strategy earned 6.8%. Over the same period the S&P grew by 12.98%.

This finding challenges the actions of regulators and the mutual fund industry to curb market timing. The victim of market timing is not the average investor but the investor that tries this technique. The average investor actually benefits from the losses of market timers.

"This finding is consistent with the well known behavior of investors to brag about their gains but remain silent about losses" said Lou Harvey, DALBAR President. "The occasional money makers create the illusion that all timers are winners all the time. The fact is that most timers lose money most often and this data now confirms it."

The analysis is available by contacting DALBAR at 617-723-6400 or at [e-mail]

DALBAR, Inc., the nation's leading financial-services market research firm, is committed to raising the standards of excellence in the financial-services industry. With offices in both the US and Canada, DALBAR develops standards for, and provides research, ratings, and rankings of intangible factors to the mutual fund, broker/dealer, discount brokerage, life insurance, and banking industries. They include investor behavior, customer satisfaction, service quality, communications, Internet services, and financial-professional ratings.