Bulls, Bears and Baseball Revisited

By Jon Theriault, MBA, CKA®, CFP®

I wrote an article in 2012 that coincided with the start of the baseball season. A couple weeks ago, I had a sense of déjà vu when a parent approached me following our team’s practice to ask my thoughts on the market. My answer is the same today as it was four years ago, and it will be the same a year or four from now. Hence, we thought it might be fun to reproduce my old article with a few minor updates to bring things current. So here goes…

A parent approached me at the little league field the other day and asked, “Are you bullish or bearish about the market these days?” My son is a Twin this season, I thought to myself. But kidding aside, he was asking about whether or not he should get out of the stock market. Without intending sarcasm, I simply responded with “both”, and the confused look on his face really stayed with me.

It happens quite often, actually. People approaching to ask which direction the stock market is headed. I always appreciate being asked, but when I suggest they are asking the wrong question, that same puzzled look appears. When time permits, I go on to explain it is a far better use of energy to diversify their investments and avoid taking a big risk betting on someone else’s theory regarding the direction of the Dow or S&P 500.

One of the more challenging things to explain to the casual investor is that there are no absolutes when it comes to the stock market, not to mention the timing of its swings. Of course the media and Internet would have us believe otherwise where, in a constant effort to draw our attention (and hence advertising dollars), a long line of experts are placed in front of us on a daily basis to offer opinions designed to entice us one way or the other.

To that end, we all might be best served to ask ourselves…why is this person so sure? And why do they care what I invest in? Hmmm. It makes me think of a compliment offered by a client a few years ago. He told me the reason he knew RS Crum was the right place for him was when he realized we could admit we did not have all the answers, that we did not know exactly what would come next. He took comfort and found wisdom in our humility.

Most investors realize the need to maintain equities in a balanced portfolio, but many of them not only look for someone else to tell them where to place their money, but also “when” to do so. Therein lies the problem. Though both fascination and speculation on the “when” will never go away, the inability to accurately time the stock market will always remain a constant…unless by chance you do it once, or even twice if you’re extremely lucky.

All one has to do is step back from the stock market for a short while to observe its completely irrational behavior; understanding that, by itself, it is far bigger than any one person’s forecast can influence, much less predict. Therefore, and albeit counter-intuitive to our most basic emotions, having the discipline to remain invested once you’ve started, and to do so with patience and strategy, is absolutely vital to long term performance.

As it relates to little league, I’ll keep working patiently with the Twins this season, encouraging and teaching our players about the importance of timing. But investing is not a game, and timing the stock market has no teacher.


THE PERILS OF MARKET TIMING: According to data compiled from Yahoo! Finance, there were 5,043 trading days for the stock market from 1991 to 2010. If you were invested in the S&P 500 Index for all but the 10 best days of the market over that 20 year period, you would have missed out on 61% of the gains! (Source: Index Funds Advisors, Inc. 2012)