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.
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