From market highs to lows: Panic doesn't pay

No one can predict what the market will do in the future, but remaining "in the game," continuing to invest in line with an expected retirement date, having a solid plan in place, and setting goals can help all investors prepare for potential unexpected future market movements.

Timing the market doesn’t pay.

Although it may be tempting to actively alter your investments in an attempt to avoid loss in anticipation of market lows, historical data show that such efforts tend to backfire.   Those who stayed the course fared substantially better than those who retreated altogether or tried to time the market.

Being in it for the long haul

While the only predictable thing about market behavior is its unpredictability, history has shown repeatedly that continued investing and diversified, age-based asset allocation has delivered better results over time. Three important things to consider:

• Diversification. A diversified portfolio with a well-balanced mix of stocks, bonds, and shorter-term investments is likely—over at least a full market cycle—to provide a superior outcome than a portfolio that is biased heavily toward one or two asset classes.
• Stability. During turbulent times, a steady course is most often the best one. A reactionary approach, including a focus on short-term market activity and related attempts to time the market, typically leads to poorer outcomes in the long term.
• Guidance. Investors don’t have to go it alone. Professional guidance can help minimize some of the historical behaviors that investors tend to have, not only regarding asset allocation but for retirement planning as a whole. Better retirement decisions are made within the broader context of planning for all life’s goals.

By taking a long-term approach to investing and considering the importance of full retirement plan participation and age-based asset allocation, investors can have a solid plan for retirement. Ultimately, the key to success amid market volatility is participation, not panic.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida.