The stock market timers with the best track records are treating the market’s carnage as a buying opportunity — while the timers with the worst records are not.

That’s good news on the theory that the best performers are more likely to be right than the worst ones.

The news becomes even better in light of the consistency which the best timers are more bullish than the worst ones: Regardless of the time period over which I measure performance, the best timers on balance are stepping up to the plate — not just in their own right, but also in contrast to the worst timers.

Take a look at the accompanying table, which reports this best-versus-worst contrast over six time periods, ranging from as short as the last 12 months to as long as the last 20 years. For each time period, the top timers are those on the Hulbert Financial Digest’s monitored list whose stock market timing advice puts it in the top 25% for risk-adjusted performance over that particular time period. The worst timers are those within the bottom quartile. The negative exposure levels for the worst timers means that they on average are net short the stock market.

Time period over which performance is measured... Average current equity exposure among the top quartile of timers Average current equity exposure among the bottom quartile of timers 1 year 87% -7% 3 years 93% -12% 5 years 80% 16% 10 years 80% -0.2% 15 years 83% 13% 20 years 72% -15% Average 83% -1%

Notice that, on average, the timers in the top quartile are recommending an equity exposure level that is 84 percentage points higher than among the bottom timers — who themselves, on average, are completely out of stocks.

It’s important to stress that this best-versus-worst contrast is more helpful for intermediate-term guidance than for short-term market timing signals. Just prior to the market’s sharp correction in April 2011, for example, the best timers were also more bullish than the worst ones. The Dow Industrials DJIA, -1.84% nonetheless proceeded to fall 16.8%. (Some of you may be willing to excuse the top timers’ failure in that case, given the market’s subsequent sharp recovery: One year after the decline commenced, in fact, the Dow was higher than where it stood before.)

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The best-versus-worst contrast performed admirably prior to the bursting of the Internet bubble. Beginning in late January 2000, for example, six weeks before that bubble burst, the worst-performing timers on average became more bullish than the best-performing timers.

The best timers’ record during the 2008-2009 bear market was more mixed, since many of them were taken by surprise by the severity of the market’s drop. Still, before that bear market began to gather steam in late 2008, the overall contrast between best and worst timers was far less bullish than it is currently: In late August 2008, for example, two weeks before Lehman Brothers went bankrupt and the financial markets almost completely unraveled, the best timers over the trailing 12 months actually became more bearish than those with the worst records.

The bottom line? To bet that a protracted bear market has begun, you in effect have to bet that the market timers who in the past have been the most right will now be wrong — while those with the worst records at calling market turns will now suddenly get it right.

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