Does your financial adviser time the
market? Many do believing they can avoid losses when the market is falling or
grab profits right before the market will rise. The problem is that so much
research shows that market timing fails more than it wins. A new client of mine
showed me their portfolio before they moved from another adviser and I asked
why their stock allocation was so low compared to an appropriate position for
someone with their profile. The answer was that their soon-to-be former adviser
was predicting a market decline. Well guess what? The market is now at all-time
highs and substantially higher than when that adviser sold all their clients’
stocks and that decision has cost the clients a fortune. Can the market crash
in the weeks or months ahead? It’s always possible. But what if it doesn’t? Over
the long term, the market marches higher as companies keep generating new
profits. The adviser is hoping to pick
up a few percentage points in the short term but instead may potentially be
costing their clients a quadrupling of their stock values over the next couple
of decades if they keep waiting for a crash that never comes. Don’t let your
adviser get cute with your portfolio. A steady and consistent long-term plan is
the path to success.
Larry Pike, CFA
Client Priority Financial Advisors LLC
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