Index funds track the performance of the market as a whole. They are generally highly automated and thus offer very low fees. Basically, you use them to invest in business as a whole and don't have to worry about the performance of specific companies or even sectors. When the market goes up, they go up; when the market tanks, they do as well, though there might be some small time lags involved. I don't see why market timing would be more successful with index funds than with a diversified equity portfolio, but then I'm certainly no expert. Most financial advisers caution against a market timing strategy because it is simply not reliable unless you own a time machine.