The sharp rally in stock prices over the last thirty days may or may not be the beginning of a new bull market. Global stock prices have moved decisively higher from their low point in early March despite an avalanche of discouraging financial news.  A number of analysts and market technicians have dismissed the surge in prices as too much too soon, and expect the downturn to resume in the near future.  They may well be right. On the other hand, even if this current rally ultimately fizzles out, it offers a preview of what the real thing might look like—a powerful upsurge against a backdrop of very discouraging news that leaves many analysts scratching their heads and market timers watching in frustration as they seek to identify the right time to go back in the water.

It may be premature to announce the beginning of a new bull market, but the dramatic recovery over the past two months offers a powerful illustration of the unpredictable nature of stock returns.

Asset allocation is still the unquestioned driver of portfolio performance. Since effective and ineffective managers cancel each other out in the  marketplace, asset allocation — taking advantage of the fact that the markets tend to go up over time —is the only reason the average investor makes any money investing.

No investment strategy can help if you sit on the sidelines. A big part of effective
investing is in the fundamental work of getting cash invested quickly, keeping your asset allocation at the desired balance, and knowing your own risk tolerance so you can resist the temptation to bail out at the first sign of turbulence.

If you are looking for a long term strategy that you can depend on, contact Odyssey Advisors. Leave your investment strategy to us.

Mark Collard authored the above article.

Mark Collard is a Partner in the investment management firm, Odyssey Advisors, LLC. Collard received a BS in Business Finance and Accounting, Cum Laude from Saint Vincent College and an Executive MBA from the State University of New York at Buffalo.