These Two Investment Strategies Are a Recipe for Failure, Ep #63

<p>In this episode of the Retirement Made Easy podcast, I share two conversations I had with listeners. Both were given advice that I would consider a recipe for failure. One was given a strategy to time the market and the other was advised to chase short-term performance. Why are those two things dangerous? Listen to this episode to find out!</p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>[3:10] Stop trying to time the stock market</li> <li>[10:46] Don't chase short-term performance </li> </ul> <h2>COVID’s impact on the stock market in 2020</h2> <p>I had a nice conversation with a listener who followed another podcast that promised a strategy for timing the market that worked. They claimed they knew when to get out and when to get back in. It sounds like a rosy story but very few people have been able to do this successfully. Why is it so difficult to do? No one knows when the market is hitting the top or bottom. You’ll drive yourself mad trying to predict it.</p> <p>At the start of 2020, the S&P 500 index—within 33 days—dropped 34%. People were panicking and sold out of the market. The market bottomed on 3/23/2021 and 59 days later the market recovered. No one could have predicted that it would recover that fast. </p> <h2>Stop trying to time the stock market</h2> <p>We don’t know when the market will correct, but it’s inevitable and natural for it to happen. So what do we do? We set up your portfolio to account for it. If you live in Louisiana, the hurricanes are disastrous. But if you live there, you know hurricanes happen and know that you need an emergency plan in place. People who live in tornado alley have tornado shelters to shield themselves. </p> <p>Jumping out of the market to avoid the storm is not a wise decision. A well-positioned portfolio will help you accomplish your goals in retirement. An all-weather portfolio will get you through both the sunny and rainy days. You need to have patience and let time work for you and can adjust your sails as your course chan