When you invest for your long-term plan, you have choices. You can add a little bit each month to investment & retirement accounts from paychecks and never sell what you have previously added (until you need it for retirement living or another goal). Or you can follow the advice of many professionals in the news and dart in and out of certain stocks and the market overall based on certain technical indicators. Staying in the market through thick and thin gives you long-term market returns. And darting in and out gives you whatever added value you can get from the pros who believe they know what is coming next. For example, you could have followed one of the largest investment banks who suggested their clients stay out of the stock market in 2019 and 2020 when the markets went up over 50% in those two years. You could have followed the advice of a major investment firm CEO who recently had to explain why their favorite stock pick fell 30% when the rest of the market was going up. Or you could have listened to the majority of analysts this year who all seemed to tell you the market is overvalued and you should stay in cash only to watch the stock market rise 11% year to date. Most investors who dart in and out of the market do worse than those who buy and hold for the long run. Most investors who believe they have the knowledge to do the right things at the right times are regularly schooled by those who do nothing but stay the course. The markets will always face corrections now and then but predicting exactly when to sell and then when to buy is something very few investors have done successfully over the course of their lifetimes. When you are fully invested in an allocation appropriate for your needs, you face the risk that a drop in the market could cause you to lose money. When you sit on the sidelines, fearing that a drop may come, you face the risk that you will be out of the market when it goes up. You can lose money either way. But long-term wealth is generally built from staying the course. Be boring and be wealthier for it.
(Past performance may not be an indicator of what to expect in the
future and your individual circumstances should be considered in any investment
decision.)
Larry Pike, CFA
Client Priority Financial
Advisors LLC
www.clientpriority.com
Hourly, Fee-Only Financial Planning and Advice.
No Commissions. No
automatic, annual fees.
