Timing the markets – are you missing out on stock market gains by ‘sitting on the sidelines?’

May 28, 2019

As Enable’s IFA’s in Bishops Stortford know global stock market pessimism it not good for the world and trying to second guess the markets is impossible. Recently Larry Fink of BlackRock which manages £5trillion of investors’ money worldwide said he believes there is just too much pessimism around, leaving investors at risk of missing out on stock market gains by ‘sitting on the sidelines’.

Many say they may have lost faith in the markets and are not sure what to do at the moment with their cash deposits. But cash in almost zero interest earning accounts means many are missing out on stock market returns, and those cash or near cash nest eggs are also being put at the mercy of inflation.

Of course, there are no absolute guarantees in the stocks and shares markets and none of us can see into the future. But what Fink is warning about is that being nervous and holding back is likely to do nobody any favours. Long-term investments are what stocks and shares are all about and as they say in the financial management world, time in the market is more important than timing the market.

Timing the market and trying to buy or sell when prices look right is always risky. Tom Stevenson of investment group Fidelity rightly says: ‘The future is always unknowable.’ He agrees “being nervous and holding back is likely to do nobody any favours, ” earlier periods of uncertainty, such as the 1970s, now appear to have been in better shape than they seemed to be at the time.

In ten years’ time, we will know how Brexit worked out and how the US-China trade wars resolved. But says Stevenson: ‘If we step back from the market today for fear of what might happen, we will not be able to wind the clock back if things turn out better than we expect.’

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