https://www.cnbc.com/2022/05/18/stock-market-futures-open-to-close-news.html (click to read article I am commenting on).
Ok...can we please just get it over with then? In the past two weeks I posted about what the end of a selloff looks like and we are not there yet. Will today be the day? I hope so, but I assure you that the end of the selloff will be announced well after the end has taken place.
Remember that back in 2009, the experts predicted that the DJIA was going to go to 3,000 when it was currently at 6,000 just 3 days before the eventual market bottom. We were told the rallies were just fakes and do not be fooled by them. You see the problem with gambling and market timing is that eventually you lose as you need to know when to get out and when to get back in over and over again.
We probably need to see the VIX index spike into the upper 30s and beyond on high trading volume and I am hearing some market technicians say they want to see the S&P 500 hit 3,800 before they are interested in jumping back into the market. You may be asking then, "why am I in it if these market gurus are out?". Remember that about 90% of average daily trading volume is done by market traders and computer algorithms. A computer algorithm may buy at 9:30, sell at 11:30 and buy again at 2:00 pm.
Our current situation is a great reminder as to why it is so important to have a properly diversified investment plan that is back-tested over time through good and bad markets.
All types of diversified portfolios are losing money this year, but the key is to lose less than the market and to have the fortitude to not only stick with the plan, but to rebalance (trim from what is currently doing best to buy asset classes that are currently doing the worst) every 12-18 months and/or add money to your portfolio if you are able especially during periods of big price dislocations.
Sooner or later this will pass, you just have to keep the faith!
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The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.