All the justification u need to invest

So does this mean that now is the time to get back into the market? Is the worst now over for investors or are we simply experiencing a bear market rally? No one really knows, and in reality we will only ever know for sure with the benefit of hindsight.

The reason I highlight this recent market strength is to point out an interesting irony that often acts to paralyze otherwise sensible investors. A peculiar facet of investor psychology is that there is often a significant disparity between what we think we will do in a given situation, and what we actually end up doing.

Back in March when the market was at a five year low, people were avoiding making purchases and quoting the maxim that you should never buy into a falling market. Most investors recognized that shares were cheap, but were fearful that losses would continue. Many investors said that they would only start to buy when things started to improve, and a new up-trend was established.

However when things did actually start to turn, fear and skepticism meant that many investors saw this as nothing more than a brief reprieve from the dominant downward trend. As the rally continued, the more it seemed inevitable that the market would soon turn, if for no other reason than profit taking.

Now in early June, following three months of amazing gains, most investors are still reluctant to enter the market. People are saying that the next leg down is just around the corner, and that the recent gains are unsustainable with stocks heavily over-bought. Now people are saying that they will buy on the next pull back.

Regardless of where the market actually goes from here, you can see that there is an obvious disconnect between expected behavior and actual behavior. The tragedy is that most novice investors, especially those that have been burnt, will only be tempted back into the markets after prolonged and significant gains are observed. That is, after the majority of the recovery has occurred. Of course, this also means that these investors will be buying closer to the top of the market, when there is greater downside risk.

Attempting to exactly time the bottom of the market is a difficult and distracting task and is not essential to long term success. If you believe that the market will be higher when you plan on selling, then thats all the justification you need to make a purchase. When it comes to investing it is not the journey that matters, but rather the destination.

Make the markets work for you