Sounds simple, right? 'Buy low, sell high' is the classic model in the financial world. Once you see a company at its lowest value, buy it, and sell it right before the price begins to fall again. Unfortunately for all of us, investing isn't that simple. The major flaw in timing the market is that you don't have to make one correct call, you have to make two: buy at the right time and sell at the right time. You'll have to make those correct predictions over and over again if you're planning to fund your retirement years.
Since none of us have the means to accurately predict the future, it is incredibly difficult, if not impossible, to consistently predict market moves in advance. We may accurately anticipate some fluctuations, but I'm not comfortable betting an investor's entire portfolio on a hunch. Instead, I help my clients to create a sensible and disciplined investment strategy. As healthcare technology continues to improve and companies move further towards defined contribution plans, we are now responsible for funding our own retirement that could be 30-40 years long.
Planning for a 40 year retirement isn't as simple as planning a summer vacation. Folks are recognizing that they need to structure their investments in a way that gives them the potential for growth, but they also want to protect their assets from a devastating setback. I recommend finding a comfortable balance between stocks, bonds, and cash, which could possibly provide you with potential growth opportunities and a degree of downside protection. I do not recommend funding your retirement by constantly jumping between stocks and cash. Over the long-term, using a disciplined investment plan will trump any strategy focused on hunches and emotions. If you're interested in building a sensible and disciplined investment strategy, please don't hesitate to reach out to me.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).