Timing the market means you are trying to predict how the economy will perform based on short-term indicators, it means knowing when to buy into and sell out of the stock market. Is it possible that an investor would have access to this information in the long term?
Also, consider that selling out of the market involves missing out on potential gains when the market goes upwards. As a consequence, the investment return would be reduced.Timing the market focuses on gains or returns, but it seems to forget a fundamental element of investing: risk if the market goes down or an unfortunate event. What do investors look for? Managing risk where asset protection comes first and the performance is considered second.
How can this be done?
Determining the average rate of return the person will need and the amount of risk that can be afforded to maintain their financial plan, having a backup plan, or devising an effective exit strategy.
The best market action plan is the length invested in the market, instead of trying to time the market.
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