Gephardt: Be Wary Of Day Trading In Uncertain Climate
Mar 17, 2020, 7:24 PM | Updated: 7:30 pm
SALT LAKE CITY, Utah – Affix a roller-coaster-car to the line that tracks investments and it would make even the most iron-constitutioned person sick to their stomach.
After all, it’s not just a plunge.
Stocks go down – way down. Then they jolt back up again, before crashing back down, and then up – and so on.
Big gains are certainly better than big losses, but financial advisor Jeff Segelke said experienced investors know they’re nothing to be celebrated.
“That is not normal. In fact, that’s unhealthy for the stock market that it’s bouncing up and down in such wild motions,” he said.
Consider this: the very best days on the stock market all happen during “wild” times like these.
If you had a crystal ball, it could be great. You could sell stocks before the days when they lose value, and then reinvest before the big-spike days.
Few do that very well, Segelke said.
“Trying to time the market is extremely hard for professionals, let alone the average person out there,” he said.
If you’re tempted, whatever you do, don’t guess wrong. Since 1988, investors who let their money ride have ridden up about 10.3 percent. If you remove just the 10 best days, it drops earnings down to 8.1 percent.
If an investor who guessed wrong and missed out on the top 50 days, their investment drops way down to a meager 3.9 percent.
“If you’re invested for the long term, then chances are you shouldn’t probably do anything at this point. You should just ride the wave and say, ‘Hey, this stinks.’ But as long as you don’t need the money for 5 to 10 years or longer, then you can wait this out.” Segelke said. “On the other hand, if you’re thinking about retirement in the next year or two, this could be devastating. I mean, the market could go down further from here, and that’s going to really hurt your retirement prospects if it hasn’t already.”
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