The Case for Staying Invested Through Volatile Markets

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Shifting investment strategies during or in anticipation of market movements is often counterproductive.

March 3, 2020

Featured, Roger Young, CFP®, Senior Financial Planner

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Highlights

  • Reacting to where you think the market is headed may compromise long-term returns.
  • Stocks respond to numerous forces, making timing the market a complicated and risky proposition.
  • Keeping a long-term perspective can help you meet your investment goals.
  • Market losses can be disconcerting, but investors also can find themselves thrown off by a prolonged period of rising stock prices. In fact, a bout of nerves now and then can seem inevitable—and even reasonable. When stocks have gone up so much, isn’t the wisest strategy to take a lot of money off the table and lock in gains? Or is getting out of the market at the first sign of trouble the best move?

    • Instead of staying focused on the fundamentals of a long-term strategy—including portfolio rebalancing and modest tactical adjustments—some investors let emotions drive their decisions. Doing so makes no more sense when times are good than when times are bad. “Attempting to time the market and avoid a downturn by making dramatic changes in your asset allocation can cause harm to your long-term investment results,” says Roger Young, CFP®, a senior financial planner with T. Rowe Price. “This is because you have to accurately make two decisions that are likely to trip you up: when to get out of stocks and when to get back in.”

    Read more: https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/retirement-and-planning/personal-finance/case-for-staying-invested-through-volatile-markets.html.html

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