{"id":13970,"date":"2022-09-12T12:30:03","date_gmt":"2022-09-12T19:30:03","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=13970"},"modified":"2022-09-12T12:30:04","modified_gmt":"2022-09-12T19:30:04","slug":"nobody-rings-a-bell-at-market-tops-or-bottoms","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/nobody-rings-a-bell-at-market-tops-or-bottoms\/","title":{"rendered":"Nobody Rings a Bell at Market Tops…or Bottoms"},"content":{"rendered":"

Anyone who invests in stocks understands that volatility is part of the game. Stocks go up in value and they also go down.<\/span><\/p>\n

Now bond investors are getting a taste of that reality, though it has taken decades to get to this moment in the <\/span>fixed-income<\/span><\/a> market.<\/span><\/p>\n

The result has been an excruciating few months for investors all around, as stocks have taken a hit and bonds have fallen at the same time.<\/p>\n

The bad news leads to the obvious question: When will it be over?<\/p>\n

\"\"<\/p>\n

It will end, if market history is any guide. Selling continues until it stops, and it stops because buyers see bargains they can\u2019t ignore.<\/span><\/p>\n

The problem, as the adage among traders goes, is knowing exactly when. Nobody rings a bell at the market tops, or bottoms.<\/span><\/p>\n

Expecting some kind of obvious signal to buy or sell is the problem with speculative investing. It relies on the largely mistaken assumption that somebody knows when a trend is exhausted and must reverse course.<\/p>\n

Nobody knows. So what can you know?<\/span><\/p>\n

You can know a lot, actually. For one, it’s a fact that bear markets<\/a> last months while bull markets last years.<\/p>\n

Patient hands<\/h2>\n

If you look at some of the worst bear markets in history you will find that the longest-lasting bear run was from March 1937 to April 1942, a 61-month bear that resulted from the Great Depression.<\/p>\n

Nevertheless, in modern times bear markets tend to last about nine months while the typical bull run is 2.7 years in length. That\u2019s just averages. The bull market that started in March 2009 ran until March 2020, when the pandemic began.<\/span><\/p>\n

Another fact is that stock valuations are always a two-way street. If there are sellers there must be, by definition, buyers.<\/span><\/p>\n

Warren Buffett, the iconic billionaire investor, put it this way: \u201cThe stock market is a device for transferring money from the impatient to the patient.\u201d<\/p>\n

Essentially, investors who seek a quick buck are usually punished, while those who wait for valuations to be fair often can pick up shares at fire-sale prices.<\/span><\/p>\n

Those patient buyers are active when it counts, quietly taking shares from those who simply cannot wait and want out.<\/span><\/p>\n

These two facts are the fulcrum upon which prudent portfolio investing<\/a> rests.<\/p>\n

A long term investor needs to be patient of course, but he or she does not need to be right about the direction of stocks and bonds at any given moment.<\/span><\/p>\n

Rather, the long-term investor should own both (as well as other asset types) and use rebalancing and cash savings to purchase shares when they are suddenly made cheap.<\/p>\n

In time, bulls get exhausted and collapse. In time, bears get worn out and hibernate.<\/p>\n

You don\u2019t need to know when tops and bottoms are here, just be patient and ready to invest appropriately as prices eventually begin to favor your own investment goals.<\/span><\/p>\n

\n

Information presented is for educational purposes only for a broad audience.  The information does not intend to make an offer or solicitation of\u200bor the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. MarketRiders (dba Sogotrade Asset Management) has reasonable belief that this marketing does not include any false or material misleading statements or omissions of facts regarding services, investment or client experience. MarketRiders (dba Sogotrade Asset Management) has reasonable belief that the content as a whole will not cause an untrue or misleading implication regarding the adviser\u2019s services, investments or client experiences. Please refer to our Firm Brochure (ADV2)<\/a> for material risks disclosures.<\/small><\/p>\n

Past performance<\/strong> of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, nature and timing of the investments and relevant constraints of the investment. MarketRiders (dba Sogotrade Asset Management) has presented information in a fair and balanced manner.<\/small><\/p>\n

The opinions<\/strong> expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass.  Any opinions, projections, or forward-looking statements expressed herein are solely those of MarketRiders, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Anyone who invests in stocks understands that volatility is part of the game. Stocks go up in value and they also go down. 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