AFA Blog

Keep Calm, Select the Best Route

Keep Calm, Select the Best Route
Headlines add volatility to the markets. There will always be new headlines, and any of them could mean turbulence for Wall Street. 
 
As an investor, how much will this turmoil matter to you in the long run? Not as much as you may expect. There are many good reasons to remain in the market rather than attempting to guess when and where big shifts in fortune may occur.
 
What is market timing? Market timing is the use of predictive tools and techniques to try to predict how the market may move – and then make investments accordingly.  Most experts will tell you market timing doesn’t work. Every bear market has historically given way to a bull market and no one can predict the timing of these moments.  Here are trusted comments from a couple of long-time observers:
 
“I can’t time stocks.  I don’t know anybody else who can either.”
Warren Buffett, Berkshire Hathaway
 
"After nearly 50 years in this business, I do not know of anybody who has [timed the market] successfully. I don't even know of anybody who knows anybody who has done it."
Jack Bogle, Vanguard Group
 
When you work with your trusted financial professional and cultivate a financial strategy, your need to factor in market timing is not necessary. You also don’t need to sit still if you have concerns. Instead, you have a strategy based on your goals, risk aversion, and time horizon. This balanced approach means you won’t need to make hurried decisions when volatility arises.
 
There may well be a situation in which you may need to adjust your strategy, but it’s also possible that snap judgements might cause you to undercut yourself. The market reacts to headlines, but it’s just as common that quick dips experience fast relief.
       
Many investors come to regret emotional decisions. The average recovery time for bear markets (meaning a downward swing of 20% or more), where equities return to bull market levels?  About three (3) years -- measuring each recovery since 1900.  For that reason, investing with the longer term in mind -- with periodic rebalancing from your financial advisor -- may allow you to remain calm and weather the headline-induced peaks and valleys.
               
Breaking news should not dissuade you from pursuing your long-term objectives. The stock market is always dynamic. Episodes of upward and downward volatility come and go. A wise investor acknowledges that downturns are expected and has patience when they do. Decisions made during market turbulence can backfire. While some of these ups and downs may be significant enough to signal a change in your asset allocation, they need not change the fundamentals of your investment policy.
 
Please call us at (770) 977-2434, send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. or visit our website at http://afainvestments.com/
 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
 
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