<\/p>\n
\n This is the market-timer\u2019s dilemma in real time \u2013 trying to outguess short-term moves instead of sticking with a long-term, risk-appropriate plan.\n<\/p>\n
\n
\n This week\u2019s post dives into that very topic. Several reader comments landed in my inbox recently, and they all highlight the same challenge: the temptation to jump in and out of the market entirely, or to change strategies based on short-term noise.\n<\/p>\n
\n
\n Here\u2019s why that approach is so dangerous, and why staying invested through the ups and downs is almost always the smarter move.\n<\/p>\n
\n
\n Honestly, I worry whenever I receive a bunch of emails from nervous investors. I\u2019m concerned that they might abandon their sensible index funds at the faintest threat or whisper of adversity.\n<\/p>\n
\n
\n Here\u2019s what a few of them said:\n<\/p>\n
\n\n \u201cWe sold 70% of our (global equity) holdings in early September, since September tends to be a negative month for markets. We put the cash into a short-term GIC and now that it\u2019s matured, we\u2019re wondering if we should dollar-cost average back in or go lump sum. FOMO is starting to creep in since the market has been soaring higher.\u201d<\/em>\n <\/p>\n<\/blockquote>\n
\n
\n And they\u2019re not alone. Another reader recently shared:\n<\/p>\n
\n\n \u201cWith the unknowns surrounding Trump and tariffs I converted our savings to cash around the end of May and am currently earning 2.75%.\u201d<\/em>\n <\/p>\n<\/blockquote>\n
\n
\n Then came an email that struck a similar chord:\n<\/p>\n
\n\n \u201cI am wondering if one should add some gold ETFs to their portfolio to hedge off any downturn in the market? I read an article from Ray Dalio concerning having some gold\u201415% or so\u2014in your portfolio.\u201d<\/em>\n <\/p>\n<\/blockquote>\n
\n
\n These are all versions of the same worry: maybe diversification isn\u2019t enough. Maybe this time is different. Maybe a tweak or two will protect me from the next downturn.\n<\/p>\n
\n
\n Look, investing is hard. When markets are roaring, it\u2019s tempting to chase the hottest stocks or indexes. Tech stocks, the Nasdaq, even the S&P 500 all look shiny when they\u2019re leading the pack. Meanwhile, holding a global index portfolio feels boring and vanilla, even though returns have been strong and diversification quietly spreads risk across thousands of companies and dozens of countries.\n<\/p>\n
\n
\n I worry too. I worry that investors chase returns in rising markets. But I\u2019m even more worried that they\u2019ll abandon their risk-appropriate portfolio when markets fall.\n<\/p>\n
\n
\n And markets will<\/strong> fall. That\u2019s not a flaw; it\u2019s a feature of investing. It\u2019s the very reason stocks offer higher long-term returns than cash, GICs, or bonds. The \u201crisk premium\u201d exists because investors have to stomach temporary declines along the way.\n<\/p>\n
\n
\n That\u2019s also why I recommend asset allocation ETFs<\/a>. You get globally diversified growth during good times, and that same diversification cushions (not eliminates) losses during downturns. Index funds aren\u2019t magic. When markets fall, your portfolio will fall. That\u2019s how it works.\n<\/p>\n
\n
\n The key is staying the course<\/a>. It\u2019s painful to watch your portfolio drop, but history shows that trying to time the market, selling and then figuring out when to buy back in, almost always leads to worse results than just holding your risk-appropriate mix and riding it out.\n<\/p>\n
\n
\n We saw this in 2022 when investors fled to 5% GICs, only to miss the sharp rebound from 2023 through 2025. Markets can recover faster than most people expect, and missing just a handful of strong days can derail long-term returns.\n<\/p>\n
\n
\n So yes, we\u2019ve had a good run lately. The \u201cLiberation Day\u201d tariff scare from the spring feels like ancient history now. But eventually, markets will drop 10%, 20%, maybe even 30%. Long-term investors in global index funds know this will happen and should not be surprised. Those drops are temporary. Over time, the line still moves up and to the right.\n<\/p>\n
\n
\n For retirees or near-retirees who\u2019ve been flying a little too close to the sun with their equity exposure, now\u2019s a good time to set up your 10% cash wedge<\/strong> to help facilitate future withdrawal needs. You can do that in a few ways:\n<\/p>\n
\n
- \n Sell a small slice of your ETF holdings while markets are high.\n <\/li>\n
- \n Turn off dividend reinvestment and direct those distributions into a HISA ETF.\n <\/li>\n
- \n Put new contributions into that HISA ETF until you reach about 10% of your portfolio in cash by the time you retire.\n <\/li>\n<\/ul>\n
\n That small cushion will give you peace of mind when the next correction hits so you don\u2019t feel tempted to abandon your plan.\n<\/p>\n
\n
\n Stay diversified. Stay invested. And most importantly, stay the course.<\/strong>\n<\/p>\n
The original post was published here<\/a> By Robb Engen<\/a><\/p>\n
Related articles:<\/u>\n<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
This is the market-timer\u2019s dilemma in real time \u2013 trying to outguess short-term moves instead of sticking with a long-term, risk-appropriate plan. This week\u2019s post dives into that very topic. Several reader comments landed in my inbox recently, and they all highlight the same challenge: the temptation to jump in and out of the market […]<\/p>\n","protected":false},"author":1,"featured_media":2618,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[62],"tags":[],"class_list":["post-2617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-options"],"_links":{"self":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/2617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/comments?post=2617"}],"version-history":[{"count":0,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/2617\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media\/2618"}],"wp:attachment":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media?parent=2617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/categories?post=2617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/tags?post=2617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}