Warchi Co-authored with Hidden Opportunities The word recession immediately makes investors uneasy and anxious, giving them the urge to sell everything and sit with cash to wait for a favorable entry point. Research suggests timing the market is extremely difficult for the average investor and will likely cause you more harm than good. Over the last century, the stock market has faced numerous recessions and "end-of-the-world" economic conditions.
But during this period, it has been the source of incredible wealth and the general trend has followed the U.S. economy towards upward growth.
If you simply held through every selloff, correction, and bear market, you would've done incredibly well. Timing the market to sell before the drop and buy before the recovery is really hard for the average investor to do successfully. Even if you manage to sell at the right time, the odds are high that you will miss the rally, and having cash on the sidelines will really hurt your long-term returns.
Morningstar The unemployment rate is one of the best measures to determine whether we are in a recession at a given time. Historically, unemployment has spiked during, not before, a recession. So, the unemployment rate climbing to +4% should be interpreted as a warning sign that a recession might be happening right now.
I will be honest, neither can I time the market, nor am I interested in trying. I can't control market sentiment or prices. This is why I follow the Income Method, to control what.
