If You Decide to Use a Timer, Select Carefully

Investors who buy stocks as long-term investments and don’t have the time to follow the market closely should generally avoid trying to time the market because of the cost and the frequent chance for error, many advisers say. But a good timer can still be helpful if used as one of several resources in investment decisions.

Here are some tips for selecting a good timer:

- Consider subscribing to one of the newsletters that track timers. The two most prominent are Timer Digest (P.O. Box 030130, Fort Lauderdale, Fla. 33301) and the Hulbert Financial Digest (643 S. Carolina Ave. S.E., Washington, D.C. 20003). Timer Digest will provide a free sample copy, while Hulbert will provide back issues for $5 each.

- Look for timers with outstanding long-term track records who have been through bear markets. While timers always make mistakes, some have consistently made more good calls than bad in the long run.

“There are a lot of bad timers,” said Robert James of the Timer Digest. However, he said, the bad ones eventually lose subscribers and drop out. Many of the good ones stick around a long time.

- Be wary of timers who try to switch you in and out too often. Unless you are trading no-load mutual funds with no switching charges, the commissions and other transaction costs can kill you. And capital gains are taxable each time you switch or sell a fund or stock.

The timers with the best records tend not to overdo switches anyway, says Mark J. Hulbert of the Hulbert Financial Digest.

- Be wary of mail and phone solicitations. Like brokers, timers rely on client fees to make a living and thus are not above resorting to hype and exaggerated claims. “Some of them are so dishonest it’s almost humorous,” James said.

- Before subscribing to a timer’s newsletter, ask if it will provide sample copies. Many will.

Here are the top 10 timers as currently ranked by Timer Digest for the period between Oct. 31, 1986, and Oct. 30, 1987:

1. Ned Davis, Davis-Zweig Futures Hotline, P.O. Box 5345, New York, N.Y. 10150.

2. Stan Weinstein, Professional Tape Reader, P.O. Box 2407, Hollywood, Fla. 33022.

3. Heinz Petzold, Petzold on the Market, 4455 Torrance Blvd., Torrance, Calif. 90503.

4. Bernard Schaeffer, Daily Trader, P.O. 46709, Cincinnati, Ohio 45246.

5. Martin Zweig, Zweig Forecast, 900 Third Ave., 30th Floor, New York, N.Y. 10022.

6. Peter Eliades, Stockmarket Cycles, 2260 Cahuenga Blvd., Los Angeles, Calif. 90068.

7. Gerald Gordon, Gordon Market Timer, P.O. Box 938, Englewood Cliffs, N.J. 07632.

8. Robert Nicholson, Nicholson Report, P.O. Box 561065, Miami, Fla. 33256.

9. Gerald Appel, Systems & Forecasts, 150 Great Neck Road, Great Neck, N.Y. 11021.

10. Charlie Hooper, Mutual Fund Strategist, P.O. Box 446, Burlington, Vt. 05402.