Why investors mis-time markets -- and how you can avoid their mistake

For millions of mutual fund investors, Dow 10,000 was an awkward milestone. In October alone, as markets crested following an eight-month run-up in stock prices, investors put the largest monthly amount into bond funds since 1984 -- a record $48.4 billion. Meanwhile they yanked $15.5 billion out of their domestic stock funds, according to California-based TrimTabs Investment Research, which tracks investment flows. So far this year, retail clients have poured a record $327.2 billion in new investments into bond funds.

It's more than just profit-taking. "It's been a consistent investor response all year, and that's been 'stick as much money as you can into a bond fund,'" according to Charles Biderman, chief executive of TrimTabs. If history is any guide, they'll soon find they've made yet another investing mistake when bonds crater, as they will once the Federal Reserve begins hiking interest rates.