Time not timing (part1)
The topic exposed in this article is probably the most representative of what "investment behavior" means.
We could explain this better through 2 questions for people that have a diversified portfolio...and time :
Do you prefer to invest when the market is growing up ? most of the time the answer will be yes.
Do you invest when all the stocks are falling down? be honest ...probably not.
And both decisions would be wrong on a long term basis. So have a look on this chart, can you recognize your personal reaction?
"Tell me, dear experts in portfolio management, what are your solutions?"
Back to Basics :
What are the general rules to observe more than ever in a volatile market?
Be diversified (at least 50 stocks in different sectors and countries)
Asset Allocation strategy (short term = cash; long term = stocks)
Time not Timing : nobody knows when the market will recover or crash so your best friend if you have a good investment strategy is to wait
You have cash and you don't need that money in the coming months but you are afraid to invest now : you can chose to invest regularly (Cost average effect) and you'll reduce the volatility of your portfolio.
Buy and hold strategy vs timing the market :
The buy-and-hold principle is based on the notion that a good investment will generate reasonably attractive returns over the medium-to-long term. This simply means ignoring short term movements in the market. Which could be the conclusion of this article.
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