I predict: This Saturday at 6:51 a.m. EDT summer will arrive. While I suppose this is not 100% guaranteed, it’s about as close to a sure bet as we’ll ever get. In investing, there is a strategy known as Tactical Asset Management, whose devotees make similarly bold predictions about the future. The difference is, they’re not betting on when the sun will rise and set. They’re setting their market-timing watches according to the whims of the investment universe. If you ask me, that’s a good way to send your financial plans out of orbit from your financial goals.
Market Timing by Any Other Name
In past posts, we’ve talked about building your portfolio according to the body of robust academic evidence on how different asset classes are expected to deliver different long-term returns. But what is this “tactical asset management”? Although it may sound deceptively like some of the same terminology we use, tactical asset allocation is really just another term for market-timing.
But don’t just take my word for it without checking out some of the available information for yourself. “Sketch Guy” and Behavior Gap author Carl Richards says it all in a single napkin, along with a bounty of supporting evidence in his New York Times post, “Forget Market Timing, and Stick to a Balanced Fund.”
Give Carl’s piece a quick read. Then get on with enjoying your summer, starting this Saturday.
For more information or to set up a consultation, contact Pathway Financial Planning at 248-567-2160 or email email@example.com.