I am sure many of us have heard that trying to “time the market” is not a good idea. Statistics have shown that missing the five best trading days of the year can significantly affect investment returns.
Well, a different statistic this year shows again why timing is not a good idea. According to a study last week by the analysts at Bespoke1 , year-to-date returns for the S&P 500 Index would have dropped from 8.3 percent to -3.8 percent if you were out of the market the first trading day of each month!
The concept of buying near the low end and selling near the high end of a trading range in an attempt to extract incre¬mental return out of a relatively flat market may be appealing. However, when large returns are spread among a few widely dispersed days, asset allocation suddenly looks more attractive than attempting to aggressively trade a range-bound market.
The message? Traditional investment markets continue to be a great place for a longer-term strategy, but jumping in and out of the market for incremental returns is playing with fire.
Source (1): “If Only There Were 20 Months a Year”, December 1, 2010, Bespoke Investment Group, www.bespokeinvest.com
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Welcome to Exile Economy
Despite the fact that there are different drivers in various geographic regions, and certain factors insulate economies in different ways, no economy functions on its own. There is no such thing as an economy in exile.
Welcome to Exile...Here I will take an occassional moment to comment on Economics and Financial Planning.
Welcome to Exile...Here I will take an occassional moment to comment on Economics and Financial Planning.
Jason Vitucci has over 10 years experience as a Financial Advisor. He has been a resource for various media and been a guest on many radio programs throughout his career.
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