In all my years as a financial planner, I have never met anyone that consciously set it to do that. Yet, I don't know how many times I've heard someone say, "I'm just going to get out of the market for awhile, then I'll get back in again when it looks better." We would ALL love to be able to do this, however, it will take us to make - not one - but TWO correct guesses if we are going to try this strategy. You have to know when to get out AND when to get back in.
Now, lets assume for a second that you make the correct decision on when to get out of the market. When do you get back in? When the market has increased 10%? 15%? 20%? I'm not sure - are you? I do know, however, that if you are the slightest bit late in timing your entrance you will receive a substantial penalty on your overall returns. The following is a chart you have probably seen before, but the message is the same:
It is not difficult to see that if you don't time your entrance perfectly, you will have severe erosion of your overall return.
Ultimately, someone may, one day, successfully time the market. But history is not on their side if they do. People have been trying for 100+ years, and I can't name one person yet who has discovered a way to do so consistently. Remember there are no free lunches in the market. Just ask the people who invested with Madoff and Stanford. If "the answer" had been found, they would not be wasting their time trying to sell it to you. They would systematically execute it until they owned the free world.
Work the plan that is right for your situation and you will create the life you want.
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