Is it timing the market, or time in the market ?

In January of 2020, I had two clients who were both looking to invest with boodle and place their trust and their money with our market opinions. At the time we viewed the market as neutral, but not negative. Client A was a gentleman who recently retired and was somewhat risk adverse. Client B was also recently retired and wanted to grow her money safely with only a modest amount of risk. Now at boodle we believe that in the short term the market tends to be volatile, but in the long term, things settle down, and gains can take on a consistency.

So, when the “moving” day arrived for client A, we worked with him, and upon our suggested opinion, he moved what pretty much was his life savings into the stock market. We didn’t know it at the time of entry, the world was about to change forever with the coronavirus heading to America, and just about every country in the world.

Client B was a bit different. Her money was retirement money as well, and she was looking for a safe place for her money, but one that also offered a growth component as well. As we worked on the logics of moving her funds, we soon found ourselves faced to face with Covid 19.

Client B found herself face to face with her first real money crises while working with boodle; should she follow our suggested opinion and invest in the stock market, or should she stay liquid, in cash? With the panic and fear that was sweeping the country, client B decided to sit in cash and wait things out. So, we had two clients with sizable portfolios that took radically different paths. One was in a falling market, the other, client B was sitting safely in cash. Which client faired the best?

Client A started to take on water almost immediately. His portfolio went down with the rest of the entire market; five percent, ten percent, twenty percent and more! What would you have done? Meanwhile, client B was watching the financial storm from the sidelines, feeling no pain because she was not in the stock market.

Finally, in March, the market hit a bottom and started to ascend. While the market rose, client B stayed on the sidelines. Here we are in August, and we can now see clearly that client A faired better with a nearly 5% gain, while client B’s gain is fractional. Moral of the story? It’s not timing the market, its time in the market.