While investors have been on a roller coaster with markets plummeting for 6 days straight, only to recover some of the losses of losses, and now selling off some once again today, many endeavor to time the swings that result from tweets and news releases regarding trade and currency wars. But at least one expert feels this is not the time to try and time markets.
Liz Ann Sonders of Charles Schwab explains how these fluctuations are really nothing new in her opinion, and it is best to just re-balance portfolios and avoid market timing.
“Well I think this week is really just a microcosm of what’s been going on since 2018. We’re only about 8% up from that level. So a lot of sound and fury, not getting us anywhere. So our message since the end of 2017, which is the time where we move from an overweight US equities to neutral was don’t try to time the market but rebalance more frequently,” Sonders said on CNBC.
Rather than buy and sell based on social media and news, re-balancing avoids stress and is more defensive, the Schwab expert explains.
“The beauty of that re-balancing is that it forces investors to do what we know we’re supposed to, which is by low sell high or add low trim hi. And your portfolio will tell you when it’s time to do something. You don’t have to worry, which one of us on halftime report has the best market call. So that’s been our message: don’t try to trade around tweets on trade, but really go back to sort of defensive, diversified— go back to your tried-and-true disciplines for this type of environment,” Sonders stated.
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Despite the scramble markets made off the recent 6-day decline, Sonders doesn’t see this latest stock rally as any type of bottom.
“Well in the short term I think the more definitive sign of a possible bottom is really just limited to the sentiment situation where you saw the spike in AAII and some other measures. So I think that provide some short term support for the market. But I just don’t see how the macro environment is supportive of this being a true bottom here. I think certainly with regard to trade and the knowledge that really it was something as simple as a tweet that can move the needle in either direction, I think that’s just treacherous to try to guesstimate around that,” she added.
While investors are still leery of where the market is headed, there are a variety of ETFs to choose from depending on which direction they see markets going. The Direxion Daily S&P 500 Bear 3X ETF (SPXS) offers investors with a bearish view of the market a chance to trade the downside, while the ProShares UltraPro QQQ (TQQQ) supports a more bullish view, for investors seeing the selloff as just a pullback.
For more market trends, visit ETF Trends.