By Indexopedia Research Team | October 1, 2024 | In
One of the biggest mistakes investors make is trying to time a down market. There are countless reasons why someone might be tempted to pull their money out or hesitate to invest. Maybe the market just hit an all-time high, there’s fear of an impending recession, concern over who’s in office, or anxiety about the national debt. The list goes on. While the reasons behind the fear may vary, history has shown that most investors, even the pros, cannot consistently time the markets. Even some of Wall Street’s most seasoned professionals have tried and failed. So what should you do if you’re convinced the market is heading for a downturn? First, it’s important to understand that down markets, or pullbacks, are a natural part of market cycles. Much like breathing, the market inhales and exhales. Declines are just as much a part of the overall market cycle as the rallies. Over the last 67 years, there have been 34 market downturns ranging from -5% to -45%. That means, roughly half the time, the market is experiencing a pullback. Exhibit 1 (Source: Factset) Down markets aren’t