UPTICK - Markets Enjoy the Best Week of 2016
"SHOULD I STAY OR SHOULD I GO ?"
Stocks enjoyed their best week of the year as markets processed some actual good news and turned their attention ( or least one eye ) away from oil. We witnessed a solid bounce from the recent over-sold conditions as stocks actually rallied about 6% from last week's lows.
Few words characterize today's financial markets more so than volatility. When overseas economic issues can rob investors of more than a year's worth of gains or when speeches by Federal Reserve officials cause markets to flip-flop unpredictably, it's no wonder investors are left wondering what they should do. In an attempt to make major market movements work for their portfolios rather than against, some people attempt to time the market.
Market timing is the strategy of trying to predict future market movements to time buying and selling decisions. When markets are rallying or pulling back, it can be very tempting to try and seek out the top to sell or the bottom to buy. The problem is that investors usually guess wrong, missing out on the best market days. Can the cost of trying to time the market make a big difference in your returns? YOU BET IT CAN.
Unfortunately, the average person misses out on performance in part because their money tends to come in near the top and come out at the bottom. Retail investors are notoriously bad at picking the right time to enter or exit the markets; by the time most investors feel "the time is right" to "get back in," markets are often at or near its peaks. Corrections are a normal part of market cycles and periods of high growth often occur very close to major pullbacks. Investors who sell during the bad times frequently miss out on the best days of performance. If you are not in the stock when it moves, you may miss much of the upside.
Developing a disciplined investment strategy is a much better long-term strategy than making emotional investing decisions. Our experience shows that "time in the market" is more important than "timing the market."