Range Bound markets can make your portfolio bleed cash. And with all the unanswered questions looming about what’s next for the economy, it looks like we could be stuck in a range for a while.
Here are 3 reasons I think your best trade is to just sit and wait:
1.) Everybody wants in. The masses are looking for reasons to buy and get in. When the herd gets involved, what seems like the right decision in the short term often ends up the wrong decision for the long term. Bottom line, herds just create more turds.
2.) The rules keep changing. The government keeps modifying the rules of the game. They're trying hard to make sure Wall Street does not revert to its old bad habits.
3.) It's not clear where the best investments are. It is unclear where the best place is to put your money. Do you go with equities, stay in fixed income and commodities, or take a chance on emerging markets. Fight your fear of missing out and wait.
Never Say Never. If the past year and a half has taught us anything, it's that the markets are emotionally charged and can be unpredictable. I'm not saying you should never get back in the market, I'm just saying right now may not be the best time.
Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, 8 Ways to Great (Putnam, 2010).
Have a question for Doug? You can reach him through his Web site,
Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.