New York State Attorney General Eliot Spitzer's complaint against Canary Capital Partners says that market timing and late trading can cost investors as much as $4 billion a year, but another report puts it in terms that may hit home a little harder for many investors. Timing can sap a fund's returns by as much as 2% a year, according to published reports.

Besides diluting returns, short-term trading jacks up transaction prices and may cause some portfolio managers to have a bigger horde of cash on hand than they otherwise might. Obviously, in a good market, the more money on the sidelines not going to work in the equities markets, the lower the return.

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