When the stock market collapsed in 2008, many investors panicked and wondered: Should I ride this out or should I make changes?
The market’s spikes and dips can certainly throw people for a loop—especially if you’re new to investing. But if you ask a financial planner about the top strategy that a person could have taken during the recession, here’s the answer you’re likely to hear: People who held on—staying the course—typically fared the best.
“Over long periods of time, markets compensate investors,” says John Tabb, a Certified Financial Planner™ at Questis, which manages market-based, globally-diversified portfolios. “When you try to jump in and out of the market, you have to be right twice—which is hard to do. If you miss one of the two or three best days of the year, you may miss a large portion of that year’s gain.”
Dana M. D’Auria, a certified financial analyst and director of research at investment advisory firm Symmetry Partners, agrees: “Most people aren’t going to outsmart the market. The goal is to buy low and sell high, but investors are notoriously bad at timing and tend to do the opposite.”
What about simply looking at the history of a stock and trying to guess? The unanimous reply from experts: If you’re not a finance pro, that tactic can be a big gamble. It may sound clichéd, but “past performance is not indicative of future results,” says Laurie Nardone, a Certified Financial Planner™ at investment advisory firm Shira Ridge Wealth Management.
Of course, there are always going to be some people who are investment intrepid—like these three men and women, who’ve all been investing for at least 10 years. So we asked them to share their thoughts on what they’ve done well and what they could have done better before, during and after the recent economic crisis.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Past performance is not indicative of future results. The individuals interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services. LearnVest Planning Services and any third-parties listed, discussed, identified or otherwise appearing herein are separate and unaffiliated and are not responsible for each other’s products, services or policies.