Market-Timing Traps and Temptations
Even though we know it was just dumb luck, can we get a round of applause for seeming to forecast last month’s surprisingly strong market returns? It’s almost (but not really) as if the market were reading our mind when three broad U.S. stock indexes ended July 2022 with their best returns since 2020—up 9.1%, 6.7%, and a hefty 12% for the S&P 500, the DJIA, and the Nasdaq Composite, respectively.
Sweet. It’s not often we get to look like soothsayers in this fortuitous fashion. In considering the market’s dismal returns during the first half of 2022, we’ve simply been reminding readers how underperforming asset classes often surge surprisingly, just when we’re most convinced they never will. To illustrate, we pointed out that the last two times the S&P 500 Index performed even worse in the first halves of 1962 and 1970, it happened to rebound gloriously in the second halves of those same years.
Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.