“I can’t get invested right now.” That’s the statement a recent prospective client said to me. “Why not?” I replied back. “The markets are too high and it’s a bubble, and I’m waiting for it to go lower before I get in.” “Well how low would the market have to go for you to get invested?” I inquired. “Oh I don’t know probably a 20-30 percent drop would get me thinking about it.” He replied. “So you’re waiting for the next crisis?” “Yes!”
We decided against working with this prospective client, because the simple answer is he’ll never get invested or start thinking about it. If the market does take a 20-30 percent dive, he won’t be the one calling up asking to invest now. The new line will be everything is horrible, and it’s a bad time to invest. The markets are either in a bubble or a crisis, but it’s never just right. That’s the tough psychological game of investing for basically everyone. When do I start?
Let me just get this out of the way right now. You will never invest your life savings at a generational bottom of any given market, it just doesn’t work like that. The fear level, and general panic surrounding those type of events makes it almost impossible for anyone to throw money into a perceived sinking ship. I mean did you call your 401k provider or your financial advisor in the depths of 08-09, and say now is the time to go all in on stocks? I’m thinking that conversation didn’t happen.
People as well as professionals have tried to time the stock market, since markets have existed. I’m sure you could go back thousands of years, and find instances of a Roman farmer standing around trying to time the sale of his crop. It’s a past time that for all general purposes is useless. If you wish to get started in investing, and in your financial future, pick up the phone. Either start a plan on your own and dollar cost average your way into the market. Or call a local financial professional, and they will help you with the basics.
Sitting around and waiting for the next crisis is not an investment strategy, it’s an excuse. Now if the next crisis is a legitimate worry of yours that’s fine. There are plenty of other avenues, and asset classes that you can investigate in to ensure your financial well-being. The stock market isn’t the only game in town when it comes to building wealth. The idea though is to get you off of first base, and get you to start thinking about it. Sorry for the baseball reference, playoffs are right around the corner!