Long-Term Investing: Why Market Timing Fails and Diversification Wins

With Chris Osmond, Chief Investment Officer at Centura Wealth Advisory

Investing in today’s market can feel overwhelming, especially when headlines highlight record market highs or economic downturns. But as Chris Osmond, Chief Investment Officer at Centura Wealth Advisory, emphasizes, the key to long-term wealth growth isn’t timing the market—it’s staying invested and diversifying effectively.

The Myth of Market Timing

Many investors hesitate to put cash to work when the market is at an all-time high, fearing an inevitable correction. However, market highs often lead to even higher returns over time.

“A bull market doesn’t have a timeline. Historically, returns are stronger when you invest at an all-time high than waiting for a correction that may never come.”
— Chris Osmond, Centura Wealth Advisory

Case in point: in 2023, the S&P 500 reached 57 all-time highs and delivered a 25% return. Investors who stayed in cash waiting for a pullback missed out—not only on market gains but also on purchasing power due to inflation. Cash yields, though modest, were outpaced by inflation, leading to a negative real return.

The Cost of Sitting on the Sidelines

Avoiding market volatility can feel safe, but it often leads to long-term losses. Missing just a few of the market’s best days can drastically reduce overall returns. Historically, the best market days closely follow the worst, meaning pulling out during downturns can be costly.

“The best days in the market typically come right after the worst days. Reacting emotionally to short-term volatility can lock in losses and prevent recovery.”
— Chris Osmond, Centura Wealth Advisory

For example, investors who sold during the COVID-19 market crash in March 2020 missed the rapid recovery that followed. Losses are mathematically harder to recover than gains—losing 20% requires a 25% gain to break even, while a 50% loss demands a 100% recovery.

Risk Management Through Diversification

At Centura Wealth, minimizing loss is just as important as pursuing gains. The focus is on delivering superior risk-adjusted returns by managing drawdowns and avoiding large losses that hinder long-term wealth accumulation.

Diversification is key. Portfolios are structured across a range of asset classes—public equities, bonds, and alternative investments—to reduce volatility and balance risk. Alternative investments like private equity, private credit, and real estate play a crucial role in reducing market correlation.

The Role of Alternatives in Wealth Growth

Alternative investments offer lower correlation to traditional markets, reducing overall portfolio risk while enhancing potential returns. Private real estate, for example, not only diversifies portfolios but also provides significant tax advantages through depreciation and bonus depreciation from cost segregation studies.

“Real estate offers a natural inflation hedge and delivers major tax benefits when held directly. Our clients benefit from personalized, thoroughly vetted opportunities that align with their wealth goals.”
— Chris Osmond, Centura Wealth Advisory

Direct real estate investments, particularly in multifamily housing, allow clients to offset passive income with accelerated depreciation, improving cash flow and reducing tax liability.

The Centura Investment Philosophy

Centura Wealth Advisory believes in creating resilient, diversified portfolios tailored to each client’s unique financial goals. The firm prioritizes thorough due diligence, especially when selecting alternative investments, to ensure every investment aligns with clients’ long-term objectives.

Key principles include:

• Risk Management: Limiting drawdowns to protect capital.
• Diversification: Spreading investments across asset classes and geographies.
• Tax Efficiency: Incorporating tax-advantaged strategies to maximize wealth growth.

Ready to secure your financial future with a strategic, diversified investment approach?

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein.  All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice.  We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).  Please read the disclosure statement carefully before you engage our firm for advisory services.