All about investment

By:Terry Mitchell

Here's an illustration of why attempting to the time the stock market is so perilous.
Let's say you are tired of all the recent losses and decide to exit the market when the DOW is at 7500, with plans to get back in when you think it is safe again. Then it goes up to 8000 and you start to believe that the worst is over, so you get back in at that point.

However, it turns out to be a "sucker's rally" and the DOW goes down to 7000. You panic and get out again. Then it goes up to 8500 and you think the market is surely out of the woods this time, so you get back in.

But you are wrong and ride the DOW back down to 7000 before getting out again. Then it shoots back up to 8500 and you swear you will not be fooled again, so you stay on the sidelines this time. Finally, being extra cautious, you let it go all the way up to 10,000 before finally being convinced that the worst is indeed over.
You are right – this time it is. But look at all the gains you missed out on and unnecessary losses you took by trying to time the market instead of staying the course.

Therefore, no matter how low it might go, I do not plan to remove my retirement funds from the market until I reach an age at which keeping them in would no longer be prudent, i.e., I wouldn't have enough time left prior to retirement to recoup any potential losses. And at that point, I would have no intention of re-investing in the market.


Terry Mitchell is a software engineer, freelance writer, amateur political analyst, and blogger from Virginia, USA. He posts a least one article a day to his blog - http://commenterry.blogs.com - on subjects such as current events, politics, technology, society and culture, religion, health and well-being, self improvement, personal finance, trivia, and sports.

You can now have any article and blog post he writes – in advance, if you would like – for use in your book, newspaper, magazine, ezine, newsletter, website, or whatever!! This includes the thousands of articles and blog posts he's previously written. Contact him via this website or his blog for details.