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It’s not all about timing the market

Child Ready for SchoolMy son has picked up a new 4-year-old thing where he tells a joke that makes absolutely no sense and asks: “Is that funny?” For example: “Why did the chicken cross the road? Because he couldn’t get out of the tree… is that funny?” Hilarious, right? What’s less hilarious is that joke or variations of it told 500 times whilst traveling down the road. Throw in the baby crying and it gets amped up to 11. My hope is that he continues to develop his sense of humor and over time he’ll be able to understand timing, situation, and be appropriately (but unexpectedly) funny. For right now, though, we’re doing chicken jokes. I could just write him off and assume he’s never going to get it. Or… I could wait and see before making a judgement call on a 4-year-old!

I’m telling this story because this is how some treat their short-lived time in the markets. 

Setting expectations for a short time in the market

In this scenario, the individual tried it once (investing in the markets, that is) and felt it was all a bad joke, so they never attempted it again. It’s a story in their life that’s being played on repeat, too. Usually when I hear about an experience like this, I ask: “how long were you investing?” Typically, the answer lies between 0-3 years.  In that period, did that investor allow the markets to do what they do best? Was their risk tolerance appropriate for their timeline? What were their expectations? We see here that the disconnect is the expectation over time, or perhaps expectations that are set in too short of a time frame.

Ringing Alarm Clock

Time in the market vs. timing the market

I love the phrase “it’s not about timing the market, but rather time in the market.” This little phrase is practically the definition of good investing practices. How much faith do you have in the markets in the current climate? Then ask yourself, do your assumptions change if you’re investing over a long period of time? When you judge your level of failure or success based on monthly, quarterly, or annual account performance you begin to treat your investments as though they are the ponies at the local track.

A long-term view is key to assessing the success of the markets

This is the reason three, five, and ten-year performance is vitally important when assessing the success of the markets. A ten-year view allows economic cycles to take place and news to go full circle. This allows you to see how you performed in the peaks (and the troughs).


Changes are good too, but don’t call the game before it’s over

I’m not saying that one shouldn’t be able to pivot in the stock markets or make changes that would rebalance or benefit your portfolio in general. I’m speaking to something completely different — I’m saying you don’t call the game until the clock is at zero!

So, before you feel your hand hovering over the eject button when markets are volatile, I feel you have to ask yourself several questions:

  1. What’s my timeline? How long do you have for your investment to work before it’s needed? If retirement is the answer, make sure you’re counting the number of years for which you’ll be retired. Your money must work even when you’re not.
  2. Is my risk appropriate for my time and situation? Timeline and situation are so vitally important to assess before investing. Please ask for help from a professional financial advisor, who can help you along the way!
  3. Am I investing for my mental well-being also? Make sure you’re working for the benefit of your future self, of course. But you must be able to sleep peacefully at night! Many times, education and perspective help in both categories.

If there is ever a way that I can help you or your family, I’m only an email away.

June 2019


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

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