On TechTicker this week, I asked finance professor Kenneth French whether he had softened his stance on the wisdom of investing in index funds given that global stock markets have plummeted 40% this year, taking index funds with them. Wouldn’t market timing be a better strategy?
Of course not, says French, who is also the director of investment strategy at the phenomenally successful Dimensional Fund Advisors. The only thing you can be sure of about market-timing is that most people who try it lose.
If you can’t handle the current volatility, the smart answer is to shift your portfolio allocation more toward cash and bonds and less toward equities… and keep it there. Just don’t try to leap in and out of stocks to catch the latest market moves.
Earlier, professor French explained why it’s actually not a stock picker’s market.
See Also: A “Stock Picker’s Market”? Please
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