Market timing is, really, the only investment question asked, it is just phrased in different ways.
When taking questions from investors, it always comes down to some form of market timing. It is also the part of investing that causes people the most stress and, possibly keeps them from getting the best results from their investments. If someone is interested in buying a particular stock or investing in a particular sector of the market, the question is always going to be, is this the right time to buy in?
Generally, this is directly related to a popular headline, where they have read about that stock or investment. Usually what happens, unfortunately, is that the investment has increased in value quite a bit before it starts attracting headlines and people's attention.
When you think about it, market timing is not limited to investment decisions. Every single financial decision has a market timing component to it. For example, let's say you are looking at buying a house, you can buy today or wait until the future. If you buy today, you might not have as large a down payment as you want, so your mortgage will be larger. However, interest rates might be low (as they are now) and, maybe the houses price will be higher in the future. So you can buy today, take on more debt possibly, or you can wait for a year or two, save for a larger down payment and maybe end up with less mortgage. However, you do risk the possibility that houses will be selling at a higher price down the road, or interest rates might not be the same as they were initially.
It makes sense that investors would like to have an answer to those market timing questions every time they have money to invest. But regrettably, in real life there are no guarantees and no one can accurately predict the future.
Having a highly diversified portfolio, focused on your asset allocation that follows a well-developed plan will always provide you with the best foundation for your investments. A long range investment program requires patience and perseverance, success is the purpose of investment planning. A byproduct of a good plan is peace of mind. If you develop a plan and you stick to it and, you avoid making those market timing decisions and just stick to an asset allocation strategy and a predetermined plan, ideally with a written plan, with an investment policy statement, then we can avoid all of the stress and just try to have more peace of mind. We call it a positive investment experience, but really it's all about peace of mind.
Stay happy, stay safe, stay well!
-The CM Group
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