By Ben Carlson, CFA
A Wealth of Common Sense
Timing the market is hard for a plethora of reasons.
Markets are right more often than people give them credit for. The direction of the stock market is impossible to predict in the short term. And, even if you get lucky by getting out at the right time, you still have to get back in at some point. Market timing requires being right more than once.
But, the degree of difficulty for market timing is even higher than most people assume, because investors typically look to jump in and out when emotions are running high. Making decisions about your life savings when your emotions are steering the ship is a recipe for portfolio disaster on most occasions.
Here are the five times when the siren song of market timing tends to be the loudest...