market timing

Wouldn’t be so easy to just get in and out when the news on the street says it is about time to do so.  If you go back a few weeks, and even a few months, you can see that the bearish sentiment was already on and yet, the markets have continued to rise.  Please do yourself a favour and read this analysis outlined by Ed Rempel in the Million Dollar Journey blog. 

In a nutshell, history has showed us that the market has been up much more often then down.  Since 1950, the S&P 500 has gone up 48 times and down 15 times of which only 3 times were down a lot i.e. more than 20% drops.   So, 76% of the time, in that 63 year period, the market was up. “The difficulty in correctly predicting a bear market, getting the timing right, and not missing out on all the up years, is why, in general, it is best to be a “buy and hold” investor. The key to successful stock market investing is to be fully invested during the 76% of years that are gains. The stock market has very reliably produced large gains long term. If you invested $1,000 in 1950, you would have $749,330 today (1). “Buy and hold” investors can get the long term gains of the stock market. Market timers are far more likely to get lower returns” – Ed Rempel 

So, that is why we advocate to simply buy and hold. It is much safer to buy quality investments, be diversified, and hold to participate in all of the up years rather than second guess and risk to be out when the market either rally or continue to rise.

Here is the full article which is worth reading in full.

(1) Standard & Poor’s