The Trouble With Timing The Market

American Investment Planners LLC

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(516) 932-5130 / (866) 932-5130

It's important to keep up with trends in a number of situations, but where the market is concerned, this doesn't necessarily hold true. While yes, it's natural to try to repeat history or want to adjust your portfolio because you suspect that the market will be at a high during a certain month or two, the truth is that trying to time the market can actually be extremely detrimental to your long-term goals.

An article from CNBC is quoted as saying the following:

"Trying to time the peak in any market cycle is no easier than trying to time the trough. Markets can behave in seemingly irrational ways, and these moves can last for long periods of time."

Since no one can predict external circumstances that heavily impact the market, it would be pretty difficult to pin point an exact period of time when the market will be at a high or a low. 

So what can you do? A suggestion from the Huffington Post is to use a strategy called "time in the market." Put simply, this refers to spending more time in the market and not taking yourself out of it just because it experiences a low every now and then. Of course we all have our short-term goals, but when it comes to investing, a better approach is to focus on the long-term. The Huffington Post explains:

"You don't see a slow, steady and consistent increase or decrease in the market over a specific time frame. Anyone who invests knows the market is extremely volatile and prone to drastic movements. This makes it even harder to time the market because you're dealing with a roller coaster of an investment ride."

As such, your best bet is to spend as much time in the market as you can, since you may be more likely to see the return you were hoping for by sticking it out through the highs and lows rather than making drastic changes to your approach to try and hit the market at just the right time.

Here at American Investment Planners LLC, our team has an incredible understanding of the market and knows what you need to do in order to achieve financial success. So, let us help! To learn more about our financial planning services, visit www.americaninvestmentplanners.com or call (516) 932-5130 today.