Forget Market Timing (Stock Market History: A “Crash” Course for Investors, Part 4)

450px-NYSE-NYXStock Market History: A Crash Course for Investors, Part 4 (on YouTube below) explains market timing briefly.

Rather, “Buy (the market) and Hold” that basket of securities goes beyond the buy and hope that most investors do. A market approach is done through an indexed based approach. An indexed based approach gathers the market and wealth effect an investor seeks and has sufficient individual companies in the index so the odds of all those companies going to zero is very low.

More importantly, how you mix different indexes is what determines your degree of fluctuating values. Yes, markets go up and down and your portfolio value still will too. But, you get 1) if mixed properly, less fluctuating overall value and 2) better odds you may capture the overall long term trend of the markets (long term = the rest of your life). However, your exposure to stocks vs bonds can be adjusted over time as you age … as it should … to dial in your risk according to your specific situation.

The true value of an adviser begins to become clearer. But first, what is the money for?


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Photo above By The Web President (This image was originally posted to Flickr as nyse) [CC-BY-SA-2.0], via Wikimedia Commons

Dimensional is the sub-adviser for SA Funds which I use with investors. You may obtain a prospectus (click link here) or simply asking by clicking on the “Ask Larry” button above (for information, not a solicitation).

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