July 20, 2009

Approach to Investing

Your approach is everything. Bottom line is that while the bulk of investors are awaiting a pull back from the March 2009 lows, I am pretty confident that any pullback will be mild.

Your approach to investing has to change if you think you can time the market. I just read an article at yahoo finance which backs up what I've known for years, that timing the market is virtually impossible.


1983-2003 period for S&P 500

Buy and Hold ~ 10%
Minus 30 worst days ~ 19%
Minus 20 best days ~ 5%

Moral of the story is that if you are willing to risk missing the best days trying to miss the worst days, go ahead but you will have probably wasted a lot of your time, and money and got nowhere. You need to change your approach to investing.

I have said it before and will say it again, buy a no-load mutual fund or ETF that tracks the S&P 500 and you are doing really all you can do.

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