Has the Market Hit Bottom?

by Carlos Portocarrero, WeSeed Writer

One of the best pieces of advice I would give novice investors is also probably the toughest one to follow: don’t try to time the market. In other words, don’t make decisions based on where you think the market is going on a short-term basis.

It’s great advice because it takes the guessing game out of investing. Forget about all those indicators, metrics, news, and calls to Miss Cleo when you’re considering buying a stock.

Instead, simply set up a schedule that has you buying into the market at certain times and you’re done with it. I try to do it every three or four months, and I’ve found it’s a lot easier on my stress levels than listening to Jim Cramer shriek about this or that stock going up or down.

One of the reasons it’s so tough to resist “don’t time the market” right now is because the market is trending upwards. Take a look at what the S&P 500 has done over the past year:

It was bad, bad, bad. Then it got worse. Then you started to see more and more articles come out about the inevitable “bottom.” That more companies were optimistic. That money wasn’t being spent as quickly. Spring was thawing away all those icky feelings everyone had about stocks during the winter.

And since that dip in early March, the S&P 500 has shot up 33%. Boo-ya.

Great. But let’s not forget to put that into some context:

That’s the S&P over the past five years—we are a LONG ways from getting back to the halcyon days of mid 2007.

But anyway, my point is that rosier forecasts make it harder to stick to the trusted tenet of not trying to time the market.

Your instincts tell you that the market has nowhere to go but up. You don’t want to miss this great opportunity. It’s once-in-a-lifetime!

The moment you start talking like a midnight infomercial on a Saturday night, you know you need to step back and re-evaluate.

So don’t let the market steer you away from sensible, responsible investment advice. And if you still don’t believe me, than at least practice safe investing by buying stocks for your WeSeed portfolio. Try to time the market all you want and see where it gets you.

Image by Aranha