The chorus of large money mangers telling the public to “sell everything” is getting louder. This article from Bloomberg does a good job of summarizing the bearish calls – http://www.bloomberg.com/news/articles/2016-08-05/goldman-gundlach-and-gross-are-worried-about-the-markets-time-to-get-out. Students of the markets will remember that we have heard these calls before – most recently in January of this year. With the S&P 500 down roughly 7%* in January, the “sell everything” crowd was out in full force. The S&P has rallied about 14%* since then to new all-time highs.
Missing large market moves like these can be a “career killer” for money managers and painful for individual investors who bought into the bearish thesis. Another reason to not try and time the market (and go to “cash”) is that you may miss a big one day move to the upside. Not a big deal? Take a look at this data from Yahoo! Finance. Missing the five days with the biggest market gains in any year since 1996 would have decreased your returns by over 42%. The bottom line: if your asset allocation is diversified and appropriate for your age, then stick with your allocation and don’t get suckered into timing the market.*Returns courtesy of Morningstar.com
*The above article is informational in nature only and is not a recommendation to buy or sell securities. All information is gathered from sources believed to be reliable, but neither Charles Brown nor Ausdal Financial Partners, Inc guarantees the accuracy of the information. All investments carry a degree of risk. Individuals should consult with their tax and investment professionals before making changes to their investment portfolios.