Time The Stock Market At Your Peril
b"With Steven Goldberg, Investment Advisor, Writer for Kiplinger.com
Timing the stock market can be a loser\\u2019s game, but just like in Vegas, many people still gamble against the odds. And with easy access to the endless stream of information out there, anticipating the market\\u2019s gyrations has become even more difficult, if not impossible.
Steven Goldberg of Kiplinger.com recently wrote an article around this theme called, \\u201cTiming the Stock Market at Your Peril.\\u201d
So how can you tell which way the financial wind will blow in times of stormy weather? A near seismic event occurred with the Brexit announcement which sounded pretty serious for a couple of days when stocks sold off, but then the air cleared and the market quickly recovered all its losses.
With all of his 35 years of experience in the business, Steven Goldberg admits that at the end of the day, no one really knows what the market\\u2019s going to do. It has a mind and a momentum all its own. Events of great magnitude can occur causing a market to fall, but sometimes it\\u2019s as simple as someone deciding to unload shares for whatever reason and buyers being unwilling to step up to the plate.
Circumstances can occur which point to a market turn, such as with the famous speech by Alan Greenspan in 1996 about irrational exuberance when stocks kept rising by double digits. His assessment was correct, but the peak didn\\u2019t happen until three years later. Someone reacting to this information too early would have been correct in terms of direction but wrong in terms of timing and would have missed out on all those earnings.
It\\u2019s very hard for investors to live with uncertainty, but with the enormous amount of information available on a 24-hour basis and so many more players in the game, Steven says it\\u2019s harder than ever to beat the market. There are ways to position your investments to profit from cheap valuations, however. For example, he cites that back in \\u201996 \\u201cto have sold some of the tech stocks and bought some of the more value-oriented stocks and some of the foreign stocks would have worked.\\u201d It\\u2019s the emotional aspect of investing that\\u2019s the most challenging; staying on the sidelines when tech stocks were going up would have been really hard. \\u201cCurrently,\\u201d he goes on, \\u201cI think the real values are in foreign stocks and also in emerging markets and yet they've done terribly.\\xa0 US stocks have beaten foreign stocks for 3 or 4 or 5 years now.\\u201d\\xa0 Acknowledging that even though emerging markets are beating everything right now, Steven says we don\\u2019t yet know whether it\\u2019s just a head fake, a false alarm.
The last five years have seen a lot of head fakes. In a world full of uncertainties, we\\u2019re experiencing one of the longest bull markets in history which could be because the Federal Reserve is keeping the market propped up. Again, we just don\\u2019t know.
In conclusion, Steven adds that we need to remember \\u201cthat since 1900 stocks have returned about 10%.\\xa0 In that period, we had the Great Depression, we had 2 World Wars, and all kinds of disasters that were smaller.\\u201d
The best advice is to buy good quality investments and to be diversified.\\xa0 If you're going to buy mutual funds, buy index funds with low cost and low taxes. Successfully timing the markets would be very profitable if you could actually do it, but you really can't.
People tend to hold on to their farms, their residences, their commercial real estate, and they tend to make money over time. But in stocks there is a blessing and a curse: The blessing is that stocks are liquid, and the curse is also that stocks are liquid.
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