"[A] new study that provides yet more evidence that most mutual fund investors would fare better if they didn’t try to time the market. And because so many fund investors try to do so anyway, the study suggests that these fund flows provide a new sentiment indicator for gauging excessive pessimism or optimism.
The new study, “Measuring Investor Sentiment With Mutual Fund Flows,” is forthcoming in the Journal of Financial Economics, an academic publication. Its authors are Avi Wohl, a finance professor at Tel Aviv University; Azi Ben-Rephael, a Ph. D. student there; and Shmuel Kandel, now deceased,.....
the average mutual fund investor would be far better off if he never engaged in stock market timing.
Still, the research also shows how we might become better market timers. The key is to do the opposite of what the average mutual fund investor is doing — in other words, to become a contrarian."
Here is working paper version of the paper from SSRN.