The question I’m asked most often is, “What do you think will happen to the markets if ‘X’ happens?” The second most common question is “Should I sell stocks now?”
The honest answer to both questions is that no one knows for sure. Short term volatility along with event “risk” many times leads to fear and poor decision making.
In the long run, many factors contribute to the rise in equity markets. Inflation, population growth, GDP growth, and wage growth are some of these factors which lead to increases in the value of equity markets over larger time frames.
People who invest over time using dollar cost averaging are typically better positioned to have a healthy retirement nest egg, than those who trade. In fact, according to the UC Berkeley Haas School of Business, 98% of people who trade, lose money or at best, underperform benchmarks.
Retail investors tend to buy high when everything seems great, and sell low when fear runs rampant. The professionals know this and take advantage of this psychological edge. The reasons you should use a Financial Advisor are many fold, but one of the bigger reasons is to help prevent you from making poor decisions at the wrong time.