Trying to buy or sell assets based on absolute market highs or lows may produce lower returns.
Buying low or selling high is a prudent strategy for most investors, an effort to maximize returns. But buying the lowest or selling the highest is an elusive strategy, one that is difficult to execute and that may lead to lower returns and missed opportunities.
Predicting a market high or low is achieved only through hindsight. Therefore, if you transfer money out of stocks when the market is low, you may not get back in time when prices begin to increase.
Rather than trying to find the “perfect” time to invest, adopt a balanced investment strategy that aligns with your personal risk tolerance and time frame. Of course, past performance does not guarantee future returns, but the stock market has always rebounded from downturns. And these rebounds can come about quickly.
Without any clear indication of when markets will rebound, investors may miss rebound opportunities when they fail to invest. Below are more examples of downturns and subsequent rebounds:
S&P 500 Total Returns by Year [https://www.slickcharts.com/sp500/returns]
Year Return 1990 (downturn) -3.1% 1991 (rebound year) +30.5% 2002 (downturn) -22.1% 2003 (rebound year) 28.7% 2008 (downturn) -37% 2009 (rebound year) +26.5% 2018 (downturn) -4.38% 2019 (rebound year) +31.49%