The recovery from the March 2020 low was the fastest and most dramatic in stock market history. Investors were already feeling more confident by May 2020 and then on top that, they were rewarded with lower interest rates, stimulus packages, greater home valuations, and a surge in cryptocurrency values. “There’s no way 2021 can be better than 2020, they surmised.” And then it was.
Some investors tried to call the top and sell their house or cash out from the stock market. While they locked in solid gains, this strategy might end up costing them future investment returns.
They key to investing is sticking with it. Just because your investments have done well, doesn’t mean they can’t do even better. They economy is doing well. Americans have more wealth in savings than ever before. While interest rates remain low, investors don’t have many alternatives beyond continuing to invest in stocks, which will continue to drive up prices.
Even if there is a short-term correction in 2022 or 2023, stock values will continue to climb over the long-term. Could you imagine pulling all your money out in 2019 because it had been a 10-year bull market and then miss out on the massive returns we’ve seen in the last two years?
10 years from now you will wish you had invested versus waiting to time the market. Don’t hide your money under your mattress where it is guaranteed to erode by the power of inflation.