Have you been tempted to invest in the US market this year? Although the S&P 500 dropped 9% between January 26 and February 8, it has since reached a record high. In contrast to the international stocks which have lost over 7% year-to-date, investing in the US market seems like a good idea at present.
When you examine the issue more closely, revisiting the 2017 market can help you see why it is not advisable to follow these short-term trends. In 2017, international stocks outperformed the US stocks by 4%. Money flowed heavily into the international stocks in the beginning of 2018 as investors chased the gains. Those who followed this trend lost money.
In 2018, they are buying the US stocks. However, if you’re a prudent investor, you might be wondering if they will drop the way international stocks did this year. This is good thinking, but we cannot predict the short-term, and trying to do so will only cause you stress.
You can avoid the emotional roller-coaster by sticking with your asset allocation plan and investing regularly. This is a relatively stress-free way of investing because you follow only your asset allocation and not the market movements. You will see the benefits in the long run.
While this sounds simple, it is difficult to execute it on your own when the majority of investors are doing the contrary. This is why an independent advisor can help you stay on course. Your time is better spent on things that are truly important to you such as work and family. Fretting about market timing is, I am afraid, a waste of your most precious resource – time.
Continue the conversation with me here.
The Well Tempered Investor 