When stocks are tumbling, it’s tempting to try your hand at timing the market (i.e., sell before prices go even lower and then buy before they inflect higher).
Unfortunately, no one is good at it. Even Warren Buffett — arguably the most successful investor in history — admits he’s terrible at this and advises against trying it.
There’s always the risk that you think you’ve identified the bottom, but prices continue to fall. That can be pretty regretful, especially if you don’t have the time to recoup those losses.
There’s also the risk that you miss the bottom and prices go higher, in which case you may have done irreversible damage to your potential long-term returns.
Fortunately, there’s a lower-stress, time-tested way to invest for those who believe prices will be higher in a couple years and can put in the time. It’s a simple strategy that worked out great as the market crashed during the financial crisis.
