Another well-written blog was recently posted by Dan Wheeler concerning the recent market pullback. Click Here. The main idea of this great perspective can really be summed up in two points:
- Trying to time the market during these pullbacks is a futile exercise that almost always leads to more losses.
- A long-term investing focus with emphasis on persification and low costs is clearly the best way to have a successful investment experience.
A third point may be a useful addition for the especially nervous investor:
- We cannot successfully time the market reversals, but we absolutely do try to predict them to happen. One popular risk measure of the market, called volatility, is always a key input in determining a client’s portfolio and retirement projections. If the market did not experience this volatility then that would be the real surprise. The market swings can be disheartening if we have a short-term perspective, but some reassurance should come from thinking “I am glad my advisor already planned for this to happen.”