Time, Not Timing: A Smarter Approach to Long-Term Investment
At Ecovis DCA, we understand that volatile markets and scaremongering articles can cause a great deal of tension and concern. With constant shifts in political landscapes, economic policies, and global uncertainties, the temptation to make sudden portfolio changes can be incredibly strong for business owners. However, here at EcovisDCA we firmly believe that time in the market consistently outperforms attempts to time the market, and that long-term investments stand the test of time, and reduce the stress of trying to utilise the financial crystal ball.
Historical Consistency:
History has proven this time and time again. For example, during Black Monday in 1987, global markets plummeted in a single day. Investors who maintained their positions saw their losses recover over the following years. Similarly, the dot-com crash and the 2008 financial crisis caused significant disruptions, but those who adhered to a long-term strategy were rewarded during the recovery.
Economic and Market Impact:
Research consistently shows that missing just a few of the best-performing days in the market can drastically reduce returns. For example, an investor fully committed to the S&P 500 between 1999 and 2018 experienced strong annual growth. However, missing even 10 of the best trading days during this period cut their return by more than half. This highlights the importance of staying invested rather than attempting to predict market movements.
The Trump Trade Doctrine:
The Trump Trade Doctrine, as outlined by Stephen Miran, Chair of the Council of Economic Advisers emphasises the need for tariffs to protect American industries, generate revenue, and address the overvaluation of the US dollar. This strategic approach aims to reshape global trade in favour of the US, rather than being a reactionary measure. Miran’s paper, “Restructuring the Global Trading System,” argues that these policies are designed to create a more favourable economic environment for the US.
Outlook:
While Donald Trump has shown the ability to swiftly change policy direction, it is unlikely that we will see a sudden shift following recent announcements. At Ecovis DCA, we will continue to monitor developments closely and keep our clients informed of any significant changes.
Conclusion:
The Trump Tariff policies represent a fundamental shift in the global trading system, driven by a core belief in protecting American interests. At Ecovis DCA, we remain committed to providing our clients with the latest insights and strategies to navigate these changes effectively. Remember, it’s time in the market, not timing, that builds wealth. Should you have any queries or concerns, please don’t hesitate to reach out to our team any time.
