AWM Insights #9: Should I Stay In or Jump Out of the Markets During Uncertain Times?

While many states in the U.S. are beginning to relax social distancing practices, the future is still uncertain with some still wondering if there will continue to be drastic market fluctuations. This has sparked many to wonder whether they should stay in the markets at all in the face of potentially more downturns? Why not just return to the markets once they begin to normalize again?

While market fluctuations can certainly be unsettling, trying to jump out of the markets before a potential downturn and then get back in when the markets have normalized has many issues - namely that there is no guarantee that the speculations will end up as predicted.

Taking the most recent example, in March we experienced the fastest bear market in history with stocks falling more than 30%. Later that same month, we experienced the largest three-day surge in the Dow Jones Industrial Average since 1931 followed by the best monthly performance in April for the Dow Jones and S&P 500 since 1987. Had you jumped out of the market at the outset of the downturn, you may have missed out on the potential market recovery that occurred directly after.

In this week's episode, Brandon & Erik discuss these questions and give some insight on a better approach that focuses more on long-term wealth creation rather than short-term gains.