As of August 21, the longest-running S&P 500 rally (by some counts) was born out of “the ashes of the financial crisis.” Then came mid-September – ten years since the beginning of the financial crisis of 2008 – along with the usual flurry of “decade after” reflections. As of quarter-end, as reported by Morningstar, “Following a flattish first half, global equities enjoyed a fairly strong third quarter, with the Morningstar Global Markets Index now up 4.5% year to date.”

And yet … you may fret. Tariffs and trade war threats remain wild cards in the financial deck. A Brexit looms nearer and scarier. Emerging markets struggle while global leaders’ squabble. And, historically, many of the worst days in the markets have arrived in the fall.

When it comes to market forecasts, will the sky be falling soon, or are we set to soar some more? Have you been tempted to get out of “high-priced” markets while the getting seems good? Here are four compelling reasons to avoid trying to time the market in this manner.

1. Markets (Still) Aren’t Predictable

Before you decide you’d like to stay one step ahead of a market that seems certain to rise, fall or head sideways, consider this quote from The Wall Street Journal personal finance columnist Jason Zweig: “Yes, 2018 is full of uncertainty and teeming with hazards that might make the stock market crash. So was 2017. So were 2016, 2015, 2014 – and every year since stockbrokers first gathered in New York in the early 1790s.” 

2. Economists Aren’t Wizards

A day rarely goes by when you can’t find one respected economist suggest we’re headed for a financial fall, while another opines that we’re going to keep going like gangbusters. Which is it this time? As one Bloomberg columnist reports, “a 2014 study by Prakash Loungani of the International Monetary Fund found that not one of the 49 recessions suffered around the world in 2009 had been predicted by a consensus of economists a year earlier. Further back, he discovered only two of the 60 recessions of the 1990s were anticipated a year in advance” (with “recession” defined in the referenced paper as “a year when output growth was negative”).

3. You Can’t Depend on Your Instincts

Still thinking of trying to sell ahead of a fall? For this, and any other investment “hunch” you may have, your best bet is to assume it’s a bad bet, driven by your behavioral biases instead of rational reasoning. For example, loss aversion can trick you into letting the potential for future market losses frighten you away from the likelihood of long-term returns. Couple that with our oversized bias for seeing predictive patterns, even where none exist, and it’s all too easy to talk yourself right out of any carefully laid plans you’ve established for your wealth.  

4. Be Disciplined and Consistent

"Nobody ever becomes an expert parent. But I think good parenting is about consistency. It's about being there at big moments, but it's also just the consistency of decision making. And it's routine”. This quote by Sebastian Coe, the first human to run a what was thought to be impossible four-minute mile, points to the value of discipline. The key piece of this is, “the consistency of decision making. And it’s routine”. In many aspects of life being consistent and following a routine until it becomes a habit is what ultimately brings you success. Say you want to become a great basketball player and commit to shooting 100 free throws a day until you can consistently make 90% of the shots. However, after some time doing this you give up and follow the current trend of people trying to dunk a basketball. Your objective has now been tossed aside and your most significant accomplishment has been to chase the latest fad. Consistency and routine equals discipline, and discipline is what is needed as we enter uncertain times in the global and domestic economy.

As Bobby Knight, the legendary (and sometimes controversial) Hall of Fame basketball coach said:

“Discipline is doing what has to be done, when it has to be done, as well as it can be done, and doing it that way all the time.”

Part of the “what has to be done” is learning to separate what’s important from the endless noise and chatter, focusing on the very important things and not the day to day changes. Success in the world of investing is like success in life’s other endeavors: find appropriate strategies that work and use them consistently. You may never run a four-minute mile, but you may find success in achieving something significantly beyond what you thought possible.

For these reasons and more, we’re here to advise you: Your plans aren’t there to eliminate uncertainty. They’re there to counter the temptation to succumb to it. As financial author Tim Maurer likes to say, “personal finance is more personal than it is finance.” We couldn’t agree with him more, so please be in touch with us personally if we can help you review your plans, share your successes or to discuss any other topic you would like to share with us.

John C. Moynihan