In the ETF space, it’s not easy to find a supporter of the idea that trying to time the market is anything but a fool’s errand. But Hull Tactical, the firm behind the new-to-market Hull Tactical US ETF (HTUS) is working to change that perception.
Steve McCarten, chief operating officer of Hull Tactical, tells us why the time is ripe to dispel old notions about market timing and embrace the art of making calculated bets through a systematic approach.
ETF.com: In the world of ETFs, the concept of market timing gets a bad rep. Does it deserve that negative connotation?
Steve McCarten: Historically speaking, I agree it has had a negative connotation. But a lot of things have changed, especially recently. Look at how data is analyzed today, how it’s gathered, how it’s mined across various industries.
Data is king, and there's never been a time prior to now where the data was available more than it is now to do research, nor has there been the ability to take such large amounts of data and analyze it multiple ways. Financial markets are just one industry to benefit from that.
ETF.com: So you think it's really possible to buy and sell at the right time? Anyone in behavioral finance would argue that people do just the opposite because emotions get the best of them.
McCarten: That's a great question, because people have been market-timing for a long time, and the negative connotation has always been there, and people continue to market-time anyway.
They just do it wrong. Their emotions get in the way and they buy at the top and sell at the bottom. And that just further increases the volatility or the price fluctuation.
The key is to have a systematic, disciplined approach; that’s based on data and on analyzing that data to remove emotion.