Taking a break from trading can badly impact returns says Citi exec

Kristen Bitterly, Citi Global Wealth's head of investments for North America says investors must stay in the game

Taking a break from trading can badly impact returns says Citi exec

Investors sometimes need to take a break away from the volatility of the money markets, don’t they?

Not according to one senior investment executive who warns that taking even short breaks from trading can have a major negative impact on portfolios.

Kristen Bitterly, Citi Global Wealth’s head of investments for North America, told BNN Bloomberg that the tough first half of the year for both stocks and bonds is a confusing time for investors trying to assess whether we are in a recessionary bear market or a non-recessionary bear market.

With a clear understanding of the potential downturn unlikely before the fall, Bitterly shared something of Citi’s defensive strategy includes steadily adding quality fixed-income assets to its portfolio, based on the expectation of peak interest rates being seen in this calendar year.

Taking a break

On the subject of pulling back from the market and market timing, the Citi team have researched the impact over 50 years and Bitterly says that being out of the market for an average of just 2 days can result in a decrease in annual returns of almost 10%.

That’s because “the worst days in the market tend to be followed by the best days in the market,” she said.

Therefore, she says that trying to time the market can result in “extreme opportunity cost and underperformance.”

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