Updated: May 22, 2019
If you were fully invested in the stock market for all of 2017, You’re probably smiling right now. The S&P 500, which is often used as an indicator of how the market’s doing, finished the year up around 19 %. But how long can this really last?
While no one can predict what the market will do next, more than a century’s worth of history has taught us that there will be a downturn at some point. However that does not mean you should take your money out.
Time and time again, investors take profits by selling their appreciated investments, but they hold onto investments that have declined in the hope of a rebound. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice.
Short-term investing is considered to be speculation or gambling by many. Which is mainly due to the risk involved,
If you want to try short-term investing be sure that you do not put all of your money or assets into it. Only invest money that you are willing and comfortable to lose.
When you invest for the long-term you should not panic when stocks drop and you should not sell when the market looks bad. The market has always recovered from drops in the past, it just may take time to do so.
Look to the long-term horizon. It is not effectively possible to predict the direction of the markets over the short term. While there is no absence of prognosticators that have successfully bought at a market bottom or sold at a market top, there is little evidence that such a buyer went on to sell at a market top
So take the long view. You are in this for the long term so do not make frequent trades –Do not follow fads and fashions. Do not panic when markets occasionally crash – these are buying opportunities for the brave. In actual fact it pays to be contrarian. When the stock market is low it is the best opportunity to buy.
Remember that returns come from the time in the investment, not from the timing of the investment.