Wednesday, January 29, 2020

Again, Bad Advice from the "Pros"

Quoted in CNBC:
“If you have 40 years left to invest, a bear market right now is just noise and should be ignored — in fact, often celebrated,” said Doug Bellfy, a certified financial planner at Synergy Financial Planning in South Glastonbury, Connecticut. On the other hand, Bellfy said, “a stock market crash that starts the day after you retire can cause a permanent lifestyle impact if all your money is invested there.”
Oh my! This is the buy and hold advice that most young (and old, in fact) investors are given. It's taught in financial schools. It's a common paradigm for long-term investing. There are whole theories in finance that revolve around this; for example, the Efficient Market Theory (EMT).

I don't buy it. Avoiding bear markets, no matter how many years you have left, can be a huge difference in the outcome of your retirement portfolio. The charts below show that just holding can mean holding for more than a decade to "break-even."

You don't have to do this. See some suggestions after the charts.

There are many reputable sources to learn how to avoid bear markets. Here's a few that I recommend.

Buy, Hold, and Sell!: The Investment Strategy That Could Save You From the Next Market Crash


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