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The Elusive Buy/Sell Strategy of Perfect Timing

Published: February 11, 2022

The Elusive Buy/Sell Strategy of Perfect Timing

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 lowest or selling 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.

About Rebounds

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
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%

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*Total returns include two components: the return generated by dividends and the return generated by price changes in the index.

The S&P 500 is an unmanaged index which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.

The Standard and Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This material was prepared by LPL Financial, LLC. Content is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

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