I am often asked, “Can’t we just take the money out of our portfolio when the markets are going down, and then put the money back in- right when it hits the bottom?” While it sounds like a reasonable plan, it is absolutely impossible to actually accomplish. Anyone that says they can time the market is either lying or delusional. The perils of market timing have been quantified by Dalbar, a highly regarded financial services research firm. In a study they conducted from 1995-2014, they looked at what various investments actually returned vs. what average investors actually made. From 1995-2014 (averages):

• Stocks: +9.9%
• Bonds: +6.2%
• Int’l Stocks: +5.0%
• The Average Investor: +2.5%
• Inflation: 2.3%

That means that the average investor only captured about one quarter of the total return of the stock market.  How does this happen?! The primary issue the average investor faced? You guessed it - market timing. Investors were switching in and out of funds at inopportune times. Human beings are emotional creatures.  Everyone knows that you should “buy low and sell high” but very few people actually do it.  People panic.  People make irrational decisions. You need a plan and you need to stick to it.  Stop thinking you can outsmart the markets. You can’t.     The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. The value of fixed-income securities may be affected by changing interest rates and changes in credit ratings of the securities.  Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Indexes are unmanaged portfolios and individuals cannot invest directly in an index.  Actual results will vary. This communication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel.