This is the trillion-dollar question, right? Has the market – and the millions of investors participating in it – decided that prices are about right now? Oil prices have begun to rise again, and the Fed held it’s meeting to decide what to do next to curb the losses. The result appears to be a collective deep breath as I write this.
While I don’t know whether it’s up from here, or if we’ll see further declines, it’s good to take a moment to share a very important reality with you. Timing the stock market is very, very difficult to do successfully and consistently. Please don’t let anyone fool you into thinking otherwise, whether or not they have a neat-looking website, or fancy-sounding credentials. In fact, this quote is one that may help to put the market, and investing, into a new light:
“A $10,000 investment in the S&P 500 back in January 1995, has delivered $65,453 as of the end of 2014. Had an investor missed the ten best days in the market, his return would get cut over half to $32,665. What makes timing markets even more brutal is that six of the ten best days occurred within two weeks of the ten worst days. Meaning, the best and worst days transpired during periods of volatility, and proper timing would require an investor to know the exact days to buy and sell.”
In other words, miss just a few good days and investing is not nearly as fruitful, and the good days stand shoulder-to-shoulder with the bad days. It’s a sobering reality, but that’s the truth. There are ways to participate in the market while protecting yourself, as I’ve said before, but please know that trying to time the market is not one of those strategies for the vast majority of us who have a long-term growth mindset.
On a side note, my family is on day 21 of being without Carie at home. She’s at a military training school for six weeks. While the kids have (sort of) enjoyed crossing the days off the calendar until Carie’s return, I miss her too much and am taking advantage of some airline reward points this weekend. To all of the moms and dads who raised kids successfully, while managing a career, my hat is officially off to you. It’s exhausting. Maybe a few days of Florida sunshine will do me some good. I hope you have a great weekend as well, appreciating those closest to you.
All the best,
Adam Cufr, RICP®
