In a volatile market, it is common for investors to attempt to predict the market timing - that is, selling shares and then buying back into the market when the outlook improves. However, as an investment strategy, it is flawed. An investor has a 25 per cent chance of getting both the "sell" and "buy" timing exact. This is because it is difficult to determine when exactly the market will hit the bottom; the current market price is the actual price if one wants to sell, and not the actual loss. Furthermore estimating the date in which a bear market will end is anyone's guess. History has demonstrated that the highest percentage of growth tends to occur early in recovery, before an upswing in the economy. If we turn to history, it will show us that the market always bounces back. In the past, we have had 14 bear (down) and 14 bull (up) markets. The average bear market lasts 14 months while the average bull market lasts 45 months. The best strategy: staying invested in a well-adjusted portfolio; even during an economic slump, making consistent contributions to an investment gives space for an investor to purchase more shares at a lower price, lowering the cost-basis of an investment.
By stockPickTrading
