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Monday, 22 April, 2013

Market Timing & Corrections

I’ve received a lot of questions lately about the potential for a stock market correction. Though I do agree a correction will happen eventually, I emphasize to clients that we invest for one reason. That reason is to meet long term financial goals. Long term goals require a long term investment perspective devoid of short term thinking and attempts to time markets. This is not to say that we can’t adjust allocations within and across asset classes based on our long term market outlook, but it does mean the dramatic moves of selling everything or waiting to time new buys are not a sustainable investment strategy.

Attempting to time markets is a fool’s game despite the many self-proclaimed market wizards that emerge from the woodwork after each market calamity to highlight how they called the correction. No one can correctly call market tops and bottoms on a consistent basis. For those who do make some calls correctly, it is very difficult to distinguish between luck and skill. Research upon research has shown that being out of the market on a handful of the strongest market return days can dramatically reduce your long term returns. Thinking you can call which day to be invested is akin to thinking you can correctly pick the winning Powerball numbers.

By the way, if you can pick the winning Powerball numbers please call me immediately!



Posted By:  adminUser - Monday, 22 April, 2013 at 12:00 AM



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