You Cannot Time The Market
The past four years have taught us all many important lessons in the area
of investing. First, that it does not pay to try and time the market. Investors
who became timid and scared in the Fall of 2008 (and subsequently sold their
stock and bond holdings) have not fully recovered from the crisis as well
as investors who stayed allocated and diversified among their stock, bond
and commodity holdings.
This is probably the most important lesson that we can glean from the recent (and
ongoing) financial crisis: that crises come and go, but the fundamental laws of investing
are as ancient as mankind has traded goods and services.
Our firm has always espoused the virtues of Time In The Market vs. trying to Time
The Market. Market timing does not work in the long run. Sure, any investor can
buy a double long ETF, or a double short ETF and perhaps fare well over a short
time period. But in the long-run, astute investors that have a disciplined, well
thought out and thorough asset allocation investment plan will almost always (with great
certainty) fare much better than those investors who do not.
As simple as this sounds, this is probably the most important fundamental concept that our
firm has communicated to our clients in the past decade. After all, not all asset classes
and sectors have been 'flat' or 'down' in the past ten years. Certain commodities have
had explosive gains, such as gold and silver. Certain international equity sectors have risen
dramatically in the past ten years: Brazil was up 21.83%; South Korea up 16.99%; Mexico
up 16.50%, and Australia up 14.13% (Source: iShares ETF's; www.ishares.com). Although
past performance is no indication of future results, a ten-year track record does help when
making investment decisions.
So, you see, the most important aspect of being a successful investor is simply ignoring all
the so called 'experts' on the 24/7 financial news channels, and simply following a disciplined,
long-term investment plan. It also pays in the long-run to work with a seasoned Wealth Manager who can guide you through the volatility of the marketplace. We have been educating our clientele to keep their long-term focus and I am proud to say that we are enjoying our tenth year in business on Wall Street.
