Retirement Weekly: Your most important New Year’s investment resolution

by | Dec 30, 2022 | Stock Market

One of the most important investment resolutions for 2023 would be to actually follow your financial plan—no exceptions. And if you don’t have a plan that outlines how to react to all possible situations, then another crucial resolution would be to devise such a plan ASAP.

What you most definitely don’t want to do is spend another year merely reacting to what the markets throw our way. That approach, which is all too common, usually leads to disappointing results—buying when you should be selling, and selling when you should be buying. Read: 6 New Year’s resolutions for retirement: back to basics Many concede that this is the case during bull markets, when most deviations from a fully-invested posture result in lagging the market. But they believe the situation is different during bear markets—such as this past year. They’re wrong, as you can see from the accompanying chart. It plots the average recommended equity exposure among short-term market timers, as measured by the Hulbert Stock Newsletter Sentiment Index (HSNSI). Notice that the average market timer became more bullish as the market rose and more bearish as the market fell. This is the very essence of closing the barn door after the horses have left.

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