It is more important that you buy vs when you buy
Buy low sell high is the strategy that every investor strives to accomplish. Those that may have kept cash on the sidelines during the recent market highs may have just been presented with an excellent opportunity to buy quality companies at a discount. The Dow is coming off the worst week since 2008 and here is a chart of how the Dow has performed this year as of market close on Friday 3/20.
This may cause a lot of investors to fear, especially those that are nearing retirement. However, it is important to remember that we have faced bear markets in the past and 100% of the time we have recovered from them. What really matters is time in the market as opposed to timing the market. Over time, what has mattered is that you buy, not when you buy.
No one can time the bottom in a bear market. However, that should not prevent you from investing. As you can see from the chart above the stock market has seen more bull markets than we have bear markets. The best way to invest during these times is to stick to a disciplined plan. A recurring buying strategy is the best way to control your emotions during these times. An example of this would be “invest 20% every Friday for the next 5 months.” This will take the emotion out of your investment decisions and allow you to work your money into the market.
For farther reading check out Michael Batnick’s post here.
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