Always Remember That Markets Go Through Cycles
It’s a fact of both history and economics that markets go through cycles. The real estate market goes through cycles. The stock market goes through cycles. Gold goes through them. Even the price of oil goes through cycles.
The issue isn’t market cycles, because they’ve always happened. The real issue with market gyrations (and the real threat to your retirement preparation) is when people believe that they can “time” the market, and jump in or out to avoid being on the wrong side of market history.
What I recommend you do
First, it’s important to understand that, in general, markets are driven by emotion. Prices tend to go up when people think they are missing out on an opportunity, and, conversely, markets tend to drop when people fear a decline (or a bursting bubble), and they sell in haste or panic.
This is called “behavioral finance,” and it’s a major threat to your retirement preparation.
That’s because studies, like those referenced in my "Don’t Let Market Gyrations Wreck Your Retirement" webinar, show that, while “timing” the market is, at best, usually futile, and at worst, a threat to your financial well-being, staying in the market for the long haul is usually a good approach to investing and retirement preparation.
It may not be glamorous, but a study of market history shows that slow and steady often wins the race. Want more proof that the experts don’t know anything that you don’t? In 2005, well-known television analyst Barbara Corcoran of Shark Tank actually said that the rise in the value of domestic real estate was just beginning, and that there was no such thing as a real estate bubble. Then, three years later, after the crash, Jim Cramer, host of CNBC’s popular, “Mad Money,” breathlessly told a national television audience on The Today Show, just as the stock market was entering an upswing, “Get any money you need to live on for the next 5 years out of the market now."
The experts are wrong just as often as they are right. The reality is that there are no magic bullets. What’s truly rewarding is when you take the careful steps to achieve the retirement of your dreams via a consistent approach to investing.