Your market timing is likely wrong

“I am both fascinated and horrified” by those investors who try to time the market, said Barry Ritholtz. Many people like to think of themselves as pretty good at consistently buying low and selling high. Maybe you’re one of them. If so, ask yourself if you were among the lucky few who managed to sell “equities in February near the highs” and buy back in after the 34 percent collapse. Timing like that is both “emotionally challenging to execute and more costly than many people realize.” Most of the time, an exit from equities is motivated by emotion. “I almost never hear investors say, ‘Everything is going great. Liquidate all my holdings immediately!’” But

that’s essentially what you need to do “to catch the market at the top.” More often, the exit is “capitulation.” The markets fall and investors panic. “That strategy is never the recipe for strong market returns.” Re-entering is even harder. Most of us aren’t programmed to be contrarian. Catching the precise market bottom requires “conviction in your ability to do what nearly all investors cannot” and the discipline to follow that conviction “despite the mayhem” in the news. And “for the small chance of getting the timing right,” remember that you could be paying higher taxes on short-term gains. So do yourself a favor: Ride it out.