{"id":8668,"date":"2020-06-01T18:36:32","date_gmt":"2020-06-01T18:36:32","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8668"},"modified":"2022-02-26T13:06:39","modified_gmt":"2022-02-26T13:06:39","slug":"3-investment-mistakes-to-avoid-in-this-market","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/3-investment-mistakes-to-avoid-in-this-market\/","title":{"rendered":"3 Investment Mistakes to Avoid in This Market"},"content":{"rendered":"\n

All 50 states have now moved to ease Covid-19 restrictions,\nand signs of revived activity are returning to the U.S. and global economy. Initial\njobless claims peaked in March, truckloads are starting to fill back up, air\ntravel and hotel bookings are inching higher, mortgage applications are rising,\nand people are applying to open new businesses again.1<\/sup> Meanwhile,\nthe stock market\u2019s rally since late March has been powerful and sustained (so\nfar). <\/p>\n\n\n\n

In short, things are looking up. <\/p>\n\n\n\n

Signs of an economic rebound may serve as a signal for some\ninvestors to take action. Whether that\u2019s getting back into the market, taking\nsome profits off the table, or reallocating a portfolio to fit the \u2018new economic\nnormal,\u2019 the nascent recovery may motivate investors to make some changes. If\nthat sounds like you, here are three mistakes to avoid making now.  <\/p>\n\n\n\n

1. Selling into the\nRally\/Taking \u201cProfits Off the Table\u201d<\/strong><\/p>\n\n\n\n

As the stock market rallies off the March 23 lows,2<\/sup>\ninvestors may be wondering whether this is just a \u201cdead cat bounce\u201d within a\nbear market. Investors who are convinced that there is more downside left to go\nmight see now as a good time to take some profits off the table, wait until the\nnext down leg of the bear market, then get back in.<\/p>\n\n\n\n

This investment thesis may hold up, but it also could be\ndead wrong. The point is that no one can know for sure, and guessing means in\nengaging in market timing \u2013 which I do not advocate doing.<\/p>\n\n\n\n

Historically, event-driven bear markets have been steeper on\nthe downside and shorter in duration than structural or cyclical bear markets,\nand event-driven bears have taken less time to recover. We also know that bear markets\nbottom out, on average, four months before\n<\/em>a recession ends.3 <\/sup>So, if the economy starts growing again by\nlate summer, historical evidence says we could already be in a new bull market.\n<\/p>\n\n\n\n

Selling into the rally now may mean missing out on some of\nthe returns of an early stage bull market, which could adversely impact\nlong-term returns. In my view, the opportunity cost of being on the sidelines\nduring a bull market is greater than the cost of participating in some downside\nin the short term if you\u2019re wrong.<\/p>\n\n\n\n

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Market Timing Could Be Costly\u2026Time to Focus on the Fundamentals<\/a><\/strong><\/p>\n\n\n\n

No one can know\nfor sure when the market will recover; this is why market timing can be a risky\ngame. Instead of trying to time your investments around headlines, gut feelings\nor the \u201cnew normal\u201d surrounding the pandemic, I recommend making decisions\nbased on data and fundamentals. To help you do this, I am offering all readers\nour just-released Stock Market Outlook report. This report contains some of our\nkey forecasts to consider such as:<\/p>\n\n\n\n