Have you ever entered a contest or a raffle where the fine print reads: “Must be present to win”? Of course being there won’t guarantee you’ll take home the grand prize, but there’s one thing you know for sure: If you sit on your hands, safe at home, they will undoubtedly remain empty.
The markets are a lot like that too, or so the evidence has indicated so far. Market returns have often been delivered rapidly, without warning, and immediately following scary downturns. If you don’t remain “present to win” by exposing yourself to a market’s risks as well as its rewards, your odds of receiving its available long-term returns rapidly diminish.
In this third video in Dimensional Fund Advisors’ series of common investor questions, we and several of our wealth manager colleagues explore this concept, as we address the frequently asked question, “How do I handle the ups and downs in the market?”
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