With many of the world’s stock indices hitting all-time record highs, it comes with no surprise that many investors are wondering if now may be the time to lock in profits, sit on cash and attempt buying into the next market downturn. This is defined as market timing. Sigma’s belief is that it is very difficult to accurately time when to exit and enter a market on a consistent basis.
Let me share an analogy that illustrates the difficulties of achieving market timing. You’re on your way home from an event and get caught in major traffic. Your hope is to arrive at your destination as quickly as possible. Looking through your rearview mirror, everything appears 20/20. Nevertheless, what might be obstructing traffic ahead remains uncertain. You look to your right and see the lane next to you beginning to progress forward. Compulsively, you execute a lane change maneuver only to be met with an abrupt halt. You peer over to your original lane with a feeling of guilt, for now it is the one that begins to progress.
Your advisor’s duty is to reassure you that the best course of action is to keep two firm hands on the wheel and stay the course. Allow your asset allocation the ability to chauffer you to your goals.
All comments and suggestions are welcome.
Daniel J. Robinson