There is no discounting the value of timing in life. Meeting the girl of your dreams, hitting a baseball, telling a great joke – all need great timing. But trying to guess the timing of things, particularly in the stock market, can be fatal. Segue to the days at hand. After a strong first quarter, the month of May — due to tariff and trade conflicts and far too much governmental discord versus actual governing — was not particularly pleasant for investors. And that invariably leads to questions like “Should I pull my money from the market now?” or “Should we put it all in bonds?”.
In other words, should we play the timing game?
The answer is a resounding no. This is completely counterintuitive, I know. Yet, when it comes to investments, trying to time the market will invariably get you in trouble.
Simply examine history. The S&P’s average annual return, since adopting 500 stocks into its’ index in 1957, through 2018, is just a butterfly wing below 8%.This means that the market weathered such black swan events as the Russian debt crisis in 1998, the Dot Com bubble in 2002 and the Financial Crisis in 2008 and still turned in an 8% gain over that time period.
Had you tried to time the market during that period, you ran the risk of missing the ten best trading days, which if indeed missed, would have resulted in a portfolio half the size than it could have been. So what does one do as things seemingly fall apart tweet by tweet? As my company’s Chief Investment Officer Doug Walters repeats as a mantra, “trust the process”. No, not the 76’ers/Joel Embid process, that has gone a bit askew. Rather, a “disciplined and repeatable investment process.” Evaluate your risk tolerance in tandem with your timeline and goals. Set your investment allocation. Invest in companies that meet various metrics including sound quality and attractive value. And continuously monitor to tweak as needed.
Original content provided by Gregory Mattacola, Esq., Financial Advisor at Strategic Financial Services.
Content is provided for educational purposes only and should not be used as the basis upon which to make investment or financial decisions.
Different types of investments involve varying degrees of risk, including the total loss of money invested, and past performance may not be indicative of future results.
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $1.7 billion.Overview
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.