"It's human nature to think this time is different," says Bryan Rogowski, founder of Rogowski Wealth Management in Bainbridge Island, Washington. "There's nothing different this time than in many other generations. If you look at Fed activity, rates are still very, very low. Even if the Fed raises rates, they will still be very, very low."
"Many people sold fixed income several years ago, thinking that the Fed was going to raise rates at any moment, and they were wrong about that timing decision," he says. "Making timing decisions over and over is really dangerous to overall wealth. It's a gambling game, and it's not worth playing. I would rather be right about a buy-and-hold strategy and a proper allocation to fixed income and equities over a client's full-time horizon, which may be five, 10, 20, 30, 40 or more years, than any one market timing decision."
Rogowski says individual investors are mistaken if they believe they can somehow outwit markets, considering all the information that is publicly available. "The market reacts instantaneously to any new information, which is always a surprise, no matter how much in hindsight we say we could have seen it coming," he says.
But when an event is widely anticipated, such as an interest-rate increase, market prices generally reflect that expectation. "So there are no actionable nuggets here to capitalize on that," Rogowski says. "We're not going to make a buck by acting on information that's in the press and publicly available, or a news release from the Federal Reserve. So we have to return to our original purpose: Achieve the highest return we can to meet our goals, with as little risk as we can take."