One year ago today, the markets finally hit bottom and brought us to where we are today. While we’ve come a long way since then, it’s important not to forget where we’ve been. A one-year anniversary is a convenient way to mark a milestone, but it’s important not to forget how you felt last year at this time no matter how impressive the market’s gains have been in the last 12 months.
Perhaps it was fear, anger, sadness, frustration, or all of the above.
Last year at this time, if you were invested you were likely hurting in a big way. And if you were invested at this time last year, it likely wasn’t because you had just bought but instead, like millions of investors, you hung on and rode your positions to the bottom. You suffered losses. [How to Become a Better ETF Investor.]
It’ all an important reminder of the need to control the impact of market volatility by having an exit strategy. Even though by following our strategy we were able to avoid the lions share of the declines seen in 2008-09, we didn’t buy back in until the markets moved back above their long-term trend lines. Your exit strategy will save you from a lot of heartache if you stick to it. [The Case for Trend Following.]
The trends right now seem to be somewhat firm, but as we look back on the last year, it’s a reminder that the market is no stranger to extreme moves. Be prepared, and you can protect yourself. [Why Have a Strategy?]
To learn more about trend following in both bull and bear markets, check out The ETF Trend Following Playbook.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.