If you knew the stock market was going to move up (or down) significantly over the next two weeks, planning your investment moves would be simple.
However, we don't know what the market is going to do in the short term and only have history to guide us over the long-term. As they say in every financial disclosure you'll ever read, "past performance is not an indicator of future results."
Faced with some of the most important financial decisions we'll make, it is not comforting to know you are at risk of failure in every move you make.
Invest heavily in stocks and you may see the market collapse under you (it happened twice in the period of 2000 - 2008).
Invest in fixed instruments (bonds, bank CDs and so on) and high inflation and subsequent high interest rates can ruin you.
Since we don't know what will happen, our best tactic is to focus on long-term results because we know history is on the side of growth over a period of years.
While some people make money trading stocks and bonds over the short term, most don't. The risk of failure is too high for most people.
You may think you know what the stock market is going to do in the short run, but history suggests that a few lucky guesses is not the same as a rational investment plan.
If we have learned nothing else from the 2000 - 2010 period its the stock market is still a great place to make money, but it is also riskier than many want to believe.
Avoid the stock market for short-term needs and time your exit so that you have plenty of time to sell if the market is in one of its more frequent slumps.
