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– It Was Not a Good Time to Bail Out

The market (DJIA) closed up today – up about 23% from its low for the year just 3 weeks ago.

Flash back 17 days ago – March 9th, 2009.

The Dow Jones Industrial Average reached a low for the last year of 6440.  In fact, it was actually a 12-year low.

Everyone who follows the stock market was nervous – very nervous.  The fear was gut-wrenching.  People felt sick and nervous.  I felt sick and nervous.  How far down is it going?  Should I bail out now and cut my losses?

We don’t know where the market is headed from here, but the past seventeen days have indicated to us that would have been a bad decision to bail out of the market at that point.  If you had, you probably would have missed out on this incredible growth over the past 17 days.

The problem with timing the market, is that we don’t have any ida really where the market is headed.  Timing strategies require that you make two decisions:  When to get out and when to get back in.  There is no evidence that anyone has ever made these decisions isuc repeatedly and successfully.

The strategy that has proven to be successful is a strategy of holding a risk-appropriate, well-diversified portfolio of low-cost mutual funds operating in tandem with a reasonable re-balancing strategy..

I believe that we will look back in a few years and realize that this is the best strategy for optimizing your returns.


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