Signs You're Trying to Time the Market
While market timing can be tempting, it's rarely successful.
By: Edward Jones
Three of the most common investment mistakes are:
1. Keeping money on the sidelines
2. Reacting to market predictions
3. Switching investments based on past performance
Don't react to predictions
If you hear predictions that stocks could drop, would you want to sell to avoid a possible loss? While this might seem like a foolproof move, consider the possibilities:
• What if the predictions are wrong? If stocks rise instead of falling as predicted, you won't be invested, possibly missing gains.
• What if the decline is small or brief? Staying invested may result in better returns and be less costly.
• If you sell now, when do you reinvest? To sell and then buy back means you have to make two timing decisions correctly, which is doubly difficult.
The risk of sitting on the sidelines
Over the past 10 years, if you chose to get out of the market, missing just the 20 best days would have wiped out nearly all your gains. Missing the 30 best days would have resulted in losses.*
Knowing the right investment moves can help turn risks into opportunities. But the wrong moves at the wrong times can be risky and reduce your chances of success. Work with your financial advisor to develop a strategy designed to help you avoid the urge to time the market, reach your long-term goals and feel more comfortable and prepared for the future.
Source: Ned Davis Research, 10/31/2008-11/
Edward Jones - Mae Luchetti