Investing for the Short Term vs. Long Term
Time plays an integral part in your investment strategy. Markets can act very differently over the course of one year compared to 10 years. Over the short term, they are typically volatile. Meanwhile, over the long term – say, more than 5 years – markets exhibit behaviors that allow you to choose an investment strategy based on expected performance.
You could say this distinction between short-term and long-term market conditions is equivalent to how the random nature of atoms and subatomic particles is diametrically unlike the predictable motions of large celestial bodies like planets and galaxies.
The key is having a time horizon long enough to stay invested through at least a full market cycle. If your time horizon is too short, you could end up buying high in a bull market only to turn around and be forced to sell low in a bear market.
Learn more about short-term and long-term markets by watching this video clip from Tony Watson, Chief Investment Officer.