While I don't know how K5 times the market or whether it is asinine or not, I know that I time the market, in a very coarse way, and it has worked very, very well for me. I have gotten out and back in only 3 times...once it worked out fine, once it worked out great, and this time, we will see. I got out near the end of December 2013.
I use extremely coarse factors, and do not rigorize them in any particular way; I am not a fan of over-analysis. I look at election cycles, tax rates, corporate bonus rates, large-scale monetary policy, consumer sentiment in other parts of the world, black market estimates, market drivers such as tech IPO's, where the money is going, rates of return on investments other than the markets, whether the average joe has any money in his pocket, in the US in particular, what it can buy.
As you can surmise, I don't play with shorts, FOREX, or COMEX.
While I think there will be a significant downturn in the markets, I don't think it will be catastrophic or calamitous. There is a lot of expectation built into the markets, akin to the "confirmation bias" that agip brought up. People have been making money for what seems like an eternity--5 years or so. Memory is short, 2008 is now the distant past. A lot of people I know who are "investors" expect to be making money, and will see a market that is down, say, 20%, as the buying opportunity of a lifetime.
Even if there is a downturn greater than that, I see a relatively quick rebound as likely. Maybe not a complete rebound, but a good bounce. Money is easy to move around quickly within the market, once someone has decided to be there. Getting out, then back in, or into some other investment, is a much bigger decision that requires work and effort, and people don't want to do it.
So while I don't know how K5 "times the market", I have done very well with my coarse type of "analysis". Getting out then back in takes some courage. Yes, there are tax implications, and no, nobody will be lining up to help you do it. I'm talking in the aggregate of course, not in reference to active trading, where I think that the potential to lose is every bit as great as it is to gain, for the little guy.
Even though I'm in and out, I see myself as very conservative and pretty risk-averse. I only move when my horse sense tells me to, when the hairs on the back of my neck rise. Fear has been my ally, my trusted companion. Plus I have access to some unique and very experienced people, and when they make certain moves in their lives, I know it's time to get nervous.
DJIA down only 40 on the day now. Still fiddle-faddling.