Let's assume you are holding an S&P 500 ETF, but it really concerns every ETF tracking some underlying asset. I can tell you one thing I know for sure: if you want to achieve those long terms market returns (in the case of an S&P ETF, at least) of about 5-6% or so in real terms, the returns of which, by definition, you deemed as reasonable the moment you bought the ETF, you should keep buying them regardless of what the market does. In other words, as contradictory as it sounds, in order to get the market return you should not make any judgement about the market. If you do make this judgement, you have transformed into an active index investor and it is all up to you to make good picks, just as with every investment strategy. ETFs are the tool to easily obtain the market returns, but that does not mean the holder will be able to get those without suffering once in a while. Expecting not to suffer is madness when talking about long term returns clearly hovering above the risk free rate.
-- Nya -- |
