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Market Timing: Predicting the Unpredictable

By Jennifer Osgood, President, Wagner Wealth Management


We’ve all heard the story of the unwitting investor who became a multi-millionaire by entering the stock market at just the right time. Conversely, there are many cautionary tales of investors who missed out on a financial windfall by selling too soon or waiting too long to buy in. 


The stock market has always been a somewhat confounding space; often moving in unexpected directions. The past few years have further proven this idea, as world and economic events have resulted in market shifts that even the savviest of investors could not foresee. From the market crash in March of 2020 in response to the initial effects of the pandemic to its meteoric rise through January of 2021, many market predictions were decimated. 


The growth seen in 2021 was then followed by a long downward slide of both the stock and bond markets in 2022. Then, in 2023, markets once again experienced unexpected growth despite the Federal Reserve rapidly increasing interest rates. The recent behavior of the market has been anything but predicable!  Even so, many investors have kept a closer eye on news reports and rate movements to try and make investment decisions; in essence, attempting to time the market.


Does Market Timing Work?

Market timing is a strategy that uses predictive methods to move investment money in or out of a financial market or to switch funds between asset classes. The theory is that if investors can predict when the market will go up or down, they can make trades that will turn that market move into a profit.


Whether successful market timing is possible is a matter for debate, though nearly all market professionals agree that doing so is a difficult and time-consuming task.


The best course of action for most investors is to leave the market timing to the professionals. Wealth advisors have the resources to watch the market closely, recognize trends, and act decisively. This set of skills, when combined with a client’s personalized financial plan, gives a knowledgeable wealth advisor distinct advantages that can make timing strategies more successful.


Is There A Right Time To Invest?

Waiting for the right time to invest can be as risky as investing at the wrong time. 


Attempting to avoid the market’s downs may also mean missing out on the ups. Data shows that 78% of the market’s best days occur during a bear market or during the first two months of a bull market, when it is difficult to tell whether a bull market has begun. If you missed the market’s 10 best days over the past 30 years, your returns would be cut in half! Missing the best 30 days would have diminished your returns by an astounding 83%. 


It’s impossible to know whether the market is entering a bear or bull stage until after the fact. Historically, investors have generally been better served by simply being invested rather than waiting for an arbitrary “right” time to invest. 


How To Get In and Stay On Track

A great way to stay on track is to create and maintain a financial plan that incorporates investing a predetermined amount on a regular schedule. Sometimes called a “set it and forget it” strategy, this can reduce any internal debate investors may have about whether it’s the right time to invest. However, when working with a wealth advisor, no one is actually going to “forget it.” Investments will be tracked consistently and advice regarding adjustments will be given accordingly. The investor doesn’t unnecessarily concern themselves with market timing, but leaves it to their advisor to watch the markets and anticipate the need for changes.


A wealth advisor helps their clients stay on track by building a customized portfolio that aligns with their risk tolerance and financial goals. With an intentionally designed portfolio and a wealth advisor who serves as fiduciary, investors get the confidence they need to weather volatile markets as well as resist the temptation of making knee jerk reactions to market predictions. 


While market timing is not entirely impossible, it is a strategy that most investors do not have the time or expertise to implement successfully. A wealth advisor can use the strategy of market timing in tandem with market research and experience to identify certain patterns and trends. 


On its own, market timing rarely yields impressive results. In the long run, informed decision making and consistent investing through a personalized financial plan pays off.

Because while everyone dreams of being the investor who finds the lucky stock at the right time, many more are the ones who scoffed at Microsoft in 1995.


Wagner Wealth Management has offices in Greenville, Anderson, and Oconee counties. Call us at 864-236-4706 or visit www.wagnerwealthmanagement.com to learn more about our firm.


Securities offered through Arkadios Capital. Member FINRA/SIPC. Advisory services through Wealth Management Advisors, LLC. Arkadios Capital and Wealth Management Advisors, LLC, are not affiliated through any ownership.

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