How should investors react to market declines? Should they prevent losses by selling or buy more stocks at a favourable discount? Even then, when is the best time to do so?

Volatility and downturns are part and parcel of investing, and it happens more often than you think. As long as you are holding a diversified global portfolio, staying put throughout the turbulence would have given you a long-term return over 7% in SGD terms.

The market will eventually pull back — while there are some indicators that allow us to gauge the probability of a correction, we suggest that the best time to prepare yourself for such an event is now.

Stock picking is looking for a needle in a haystack. Diversification is buying the whole haystack.

Can investors consistently time the market? Will you be able to tell when to buy or sell? In this video, Jim Davis from Dimensional Fund Advisors runs more than 780 tests on data from 15 stock markets to see what the evidence says.