The recent stock-market activity has taught a harsh
lesson to market timers.
Market timers
often sell their holdings trying to avoid a 10% or 20% drop in the market.
Then when the market surprises them and goes
up instead, they become sure that it’s an even worse time to get back in.
Then when the market is up 50%-100% in the
next 5 or 10 years, they realize they have missed the entire rise because they
stayed on the sidelines waiting for something that never happened.
An investor hoping not to lose $100,000 on his/her
$500,000 investment might instead not earn $500,000 by staying safe.
People hate to lose money and that causes
them to make decisions that often cost them more in the long run.
The current environment has many investors
sitting on the sidelines.
But in order
to benefit from high, long-term, stock-market returns, you have to stay
invested.
(Past performance may not be
an indicator of what to expect in the future and your individual circumstances
should be considered in any investment choice. Investments in stocks can rise
or fall in value, especially in the short run, and should be the part of your
portfolio intended for your long-term needs and not for money you may need in
the short term.)
Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com
