Yes timing does matter.
Using a simple Rate of Change indicator over the past 100 days and smoothed out with a 50 day Moving Average, I have plotted the S&P 500 since the start of 2007.
The idea is to buy when the ROC indicator crosses above the zero line and sell when the ROC indicator crosses below the zero line.
I have compared the results below of timing the markets from the start of 2007 to dollar cost averaging starting from the start of 2007 and investing every 6 months. $80k is invested in both cases.
For the timing the market option $80k was invested at the start of 2007, then the total figure was sold out when a sell signal was given, then the total amount reinvested when a new buy signal was given.
For the DCA option $5000 was invested every 6 months starting from the start of 2007 until the last investment at the start of July 2014.
The results are below:
Timing the markets results in more than double the returns (not including dividends and brokerage).
It has been brought up that I haven't considered tax in my Timing the Market option. So I have updated my timing the market spread-sheet to take into account both long-term and short-term CGT in the USA for someone on the highest tax bracket. The results are below:
The result is still almost a 2x higher returns for the timing the markets option.
Also note that even with the DCA option you will have to sell one day and pay CGT on any profits there. However, the real danger with the DCA option is if you need to sell during a market downturn and not make any profits at all.