Buy low, sell high. That is a common adage that people put forward to explain why some investors are so successful. When it comes to timing the market, we tell our clients the following: You cannot time the market. At Worth Advisors, LLC, we want you to take that information and be optimistic about how successful you can be at investing. Stop thinking that there are gifted or one-of-a-kind financial advisors who can turn thousands into millions instantly by telling you when to invest and how much to generate a quick profit.
Although timing the market is legal (as long as no insider information was used), it is challenging. Even on the rare occasion when it happens, you can’t rely on it consistently and throughout your life. Look at how quickly housing prices have dropped and increased in the last twenty years. Although you may not be familiar with stock trends (yet), the housing market shows how cyclical markets can and will be. Unlike houses, stock prices change rapidly.
Financial giants such as Warren Buffet have found success in doing this, but that is not his cornerstone. Furthermore, as successful as Warren Buffet has been, he has also said the following:
“Our favorite holding period is forever.”
Rather than believing you can time the market, shift your perspective. Accept that you need to invest money and that you will do so over the long term. Perfect timing is not a prerequisite for financial success. For instance, studies have shown that you can invest with poor timing and still see favorable returns over twenty years or more.
Dollar-cost averaging (DCA) directly applies to this mindset. DCA is when someone invests equal amounts of money at basic intervals in different stocks, regardless of the stock price at the time of purchase. These are how 401(k) plans operate. Rather than waiting for a stock to skyrocket, DCA allows you to protect your investment from the market’s inherent volatility.
Shift Your Perspective With Worth Advisors
You no longer need to be too afraid to invest because it is the “year of volatility,” nor do you need to worry about the absolute perfect time to buy low. At Worth Advisors, LLC, we tell our clients that they need to stick with their investments over the long run because it is in their best financial interest. Furthermore, due to the cyclical nature of the markets, there will be new sectors that emerge. Technological growth is exponential, and there is innovation happening daily. Why would you not have to be a part of that? The good news is that you can, and if you aren’t concerned about the short term, you can do so without unneeded pressure. Contact Worth Advisors, LLC, to schedule a consultation.