I admit it. I’m guilty of weaving in and out of traffic to try and beat whomever is in front of me in an attempt to get where I am going faster. Whether I blame it on my type A personality or my general desire to get ahead, I find myself all too often trying to squeeze out every second of my drive.
When I stop to think about it, this rarely works and only adds to my frustration and anxiety. The truth is, I often end up at the next traffic light right next to the person whom I was trying to out run. I get nowhere fast with this strategy.
The same holds true about investing. Trying to buy and sell in order to prevent losses and increase gains rarely works. Look at recent market behavior. If you sold as the market was declining, when did you get back in? The market is back in bull territory. Had you stayed in and held steady, you would have been better off.
As long as you have an appropriate allocation of your investments, that not only matches your risk tolerance but works with your financial plan for the future, there is no reason to weave in and out of the stock or bond markets. Rebalancing to maintain your risk level is needed but making substantial changes based on market conditions is a fool’s errand. Stay the course and you will get to your financial destination with less stress and more reliability.