The most common question I am asked in my job as a financial adviser is 'Should I buy now?', followed closely in popularity by 'Should I sell now?'

It is easy to understand why these questions pop up so frequently. Why then is it so difficult to find advisers who can provide reliable answers? Do incompetents and fools populate the investment industry? (Some may say yes, now that markets are in a tailspin).

I think these questions prove tricky for two reasons.

Firstly, the person asking the question may have an unrealistic expectation of the skills of advisers, and secondly, no one can predict the future accurately and consistently.

Advisers add most value by helping to control risk, select suitable products and impart 'inside knowledge' of investment pitfalls, such as the detrimental effects of high fund expenses or the high staff turnover of a particular fund house. Their value does not lie in their skill in timing markets.

Some advisers, frankly, have a relatively poor understanding of markets and economics - but clients should not really expect too much in these areas. Even Nobel laureates are consistently wrong with their economic predictions.

Moreover, the investor who asks these questions may be slipping into short-term thinking - hoping to avoid losses now, while somehow hopping back on in an uptrend later.

As an adviser, I can understand that these goals are good in principle, but the panicky thinking behind them easily leads to corrosive switching and chasing of hot trends.

Yet the most important reason for 'adviser incompetence' is that markets generally do such a good job of pricing assets already. The idea has been around for at least a century.

George Gibson, in his 1889 book, The Stock Markets Of London, Paris And New York, wrote that when 'shares become publicly known in an open market, the value which they acquire may be regarded as the judgment of the best intelligence concerning them'.

In other words, he thought that the wisdom of crowds keeps markets sensibly balanced.

The collective effort of thousands of investors makes the market price an excellent match to the true value of a stock.

This also means no investor should be able to beat the market, or know the best time to buy or sell. Equally, no adviser should be able to tell you how to beat the market, or know the best time to buy or sell.

Gurus seem to agree with this idea. Famous fund manager Peter Lynch once sarcastically commented: 'Charts are great for predicting the past.'

In a similar vein, Warren Buffett reportedly said: 'If past history was all there was to the game, the richest people would be librarians.'

Yet before we dismiss market timing as impossible - and advisers as useless - we should look at some arguments that suggest it could work (and hint that, perhaps, some advisers can give good answers).

Having worked in the investment industry for many years, I can see plainly that investors are not perfectly rational. They can become very fearful, wildly blinkered or just overly optimistic. The wise crowd can turn into a herd of sheep.

Nor do financial markets always provide investors with good information. A wise crowd may have the wrong data. Even if we accept that prices of stocks (or oil, or gold) eventually tend towards fair values, large and persistent market bubbles and slumps occur regularly.

It's not hard to see why this could happen. Investors en masse might overreact to bad news, selling stocks out of panic, or because they need to meet margin calls or repay loans.

Pessimism pushes prices down too far and can persist for long periods. Eventually, investors with nerves of steel become buyers and bring prices back up - but not before frightened investors have tipped the market into an unjustified recession.

A good example of this was the Singapore property market in 2003 and 2004. Nervous house owners were selling at prices that were significantly undervalued on many measures of fair value such as affordability.

Investors can overreact to good news too. Individuals may start to base their decisions on positive stories they hear from friends, or fall into the trap of thinking 'things are different this time'. In such situations, markets drastically overshoot.

Currently, though, there is no accepted way to explain bubbles. That means a few smart and well-informed investors may be able to time markets - although perhaps without much precision.

The cold reality, though, is that the average financial adviser in Singapore is unlikely to be in this small minority of successful market-timers.

This is not to denigrate their skills (or mine, for that matter), but merely to accept that the question 'Should I buy now?' is the most difficult any adviser will ever get and on average will be the least well answered. Even if you could find an adviser with a crystal ball, the same emotions that lie at the heart of these market-timing opportunities prevent most of us from acting.

At times we may know it's daft to hold (think China shares towards the end of last year) but may be too keen to extract more profit. At other times, the sense of utter panic in markets - often a clear signal to buy - has us frozen in its grip.

So next time you greet your adviser, don't ask him 'Is it time to buy?' but ask him the current risk level of your portfolio, or the expense ratios of the funds you hold.

They may be more boring questions but their answers are more likely to benefit your returns in the long run.

The writer is the chief executive of wealth management firm dollarDEX.com.

This article was first published in The Straits Times on August 31, 2008.