How does outflow of capital from one asset to another measure investor's ability at timing the market? Yes, one pulls out on equity if one predicts that S&P500's going to drop but most of times decisions are made based on the volatility and risk tolerance. A retirement fund with a closer retirement date or income/growth fund will pull out if they find the risk/volatility level of the general market to be unacceptable.

A better measure of investor's ability to time the market is the performance of hedge funds as by its nature, the traders trades both sides of the market and performance is measured by their ability to predict both downward and upward trends.