Stay Away From Timing; Focus on Time-In

The stock market is a very fickle beast and people's reaction to it is manytimes counter productive. Every time you hear someone talk about the market you will get the age old addage of "Buy low, sell high," but so many people do not listent to the logic in that. Instead when the stock market drops people panic and take their money out in order to keep from losing more. And when it is going up they dump money in ensuring they buy at a higher price. The only thing that these brash reactions accomplishes is to make sure that over time you do not get the greatest benefit of being in the market. A perfect example of this reactionary nature is the American Funds family of mutual funds. They saw a 7% decline in assets from February to April. We aren't talking about money value here, we're talking about number of shares owned in their funds. Vanguard saw a decline over that period of 4%. THIS IS CRAZINESS!!!

The average investor cannot time the market. It just takes too much time and the learning curve is steep. What we can do is spend time in the market. The market has proven to go up over time (at about 11% a year over its entire history). So instead of selling off at a loss why not just let your money sit and grow. Check on things once or twice a year to make sure you are properly diversified and let it sit. This constant fretting over the exact price of our portfolios only brings stress and bad decisions.