Finance By James Dolan It’s been a good year for stock market investors – a good several years, in fact. Since the great market downturn of 2007-2008, stock markets around the world have rebounded strongly. This is particularly true of the U.S. stock market which, at time of writing, has more than tripled in value since its bottom in March of 2009. But you know what they say about too much of a good thing. Now that it’s been a full eight years since we’ve seen a significant correction or extended downturn in the U.S. stock market, many analysts are ringing the alarm bells. “Equity valuations are too high.” “It’s getting harder and harder to find bargains.” “A downturn is inevitable.” “The gains are being led by a small group of overpriced stocks.” And so on. So that brings up an important question: is it time to read the writing on the wall and pull your money out of the stock market, then wait for a correction or downturn before getting back in? Or should you add more to your holdings, hoping that prices will continue to go up? Or should you do nothing? Let’s take a look at the argument for market timing and try to determine whether it makes sense for you to shuffle your assets in or out of the market in anticipation of some sort of change. Why market timing is usually a bad idea (And what you should do instead) 32 | www.snowbirds.org
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