Disciplined Investing – The time is now

Market timing often works against investors, and jumping in and out of the market typically results in poor returns.

It is important to stick with an asset allocation plan consistent with your time horizon, financial situation, and risk tolerance. Many investors don’t reach their investing goals because they get distracted by rising markets and end up chasing performance and higher-risk investments. On the other hand, during market downturns, many investors move to lower-risk investments and miss out on the opportunities offered by the ensuing market recoveries.

Don’t let fears distract you from the market’s opportunities.

Investors should generally stay committed to their investing strategy and asset mix, provided their personal situation, including time horizon, financial situation, and risk tolerance, have not changed. As this chart illustrates, the periods of great uncertainty, when many investors feel negative, present some of the best times for long-term investors to position themselves for potential future gains. Consider negative news on the trade war front as times to buy. In August, many stocks reached lows seen in December 2018, and proved once again a great time to be buying.

Source: Fidelity Investing, 2018

Remain focused on long-term goals, not short-term swings.

If you’re investing for retirement, a child’s education, or another long-term goal, you should remain focused on your investment time frame rather than reacting to events and market swings. As the following chart illustrates, moving out of the market may represent a greater risk than staying committed to your strategy.

The market has been a erratic lately, ranging from lows to highs in the span of a couple months. A good entry point would be on the next dip down – should it happen again. Remember, market timing is impossible. Search for good valuations, buy, and hold on.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s