Is it possible to predict the exact day in which a stock will rise or fall in price? By analyzing trends and company data, short-term investors believe they can time the market for the best opportunity to buy or sell. They sell a stock when they think it will drop in value and buy again when it seems ready to recover.

Unfortunately, timing the market on a consistent basis has proven to be virtually impossible. In trying to "buy low and sell high," market timers may actually sell after prices have already fallen and buy after prices have moved up.

Short-term investors should also be aware that the best growth in the market has historically occurred over a brief period of time. Jumping out of the market for even a few days can result in missed opportunities. Good timing is not easy to achieve.

For an investment strategy that carries less risk than timing the market, the more prudent approach is to stay invested for the long term. By focusing on long-term potential rather than short-term fluctuations, an investor can weather the inevitable ups and downs of the market.

The success of this buy-and-hold strategy is illustrated by studies showing that holding a stock for a long period of time increases the likelihood of a positive return.

A University of Michigan study found that staying in the stock market from 1963 to 1993 resulted in average annual returns of 11.8 percent. Missing just the best 90 performing days during this period reduced annual returns to a mere 3.3 percent.

Another way to weather the effects of volatility is by diversifying your investment mix. Diversification is key. Different types of investments respond differently to changes in market conditions. By distributing your assets over a wide segment of categories, you may minimize volatility when one investment experiences a decline. For example, if stocks take a plunge in value, losses may be offset by a gain in bonds.

Diversification can also be accomplished by obtaining stocks from both large and small companies, as well as growth and value stocks. Mutual funds afford an easy way to spread your funds over a wide variety of assets.

Never lose sight of your objectives. It is important to always keep your investment objectives in focus. By being aware of fluctuations and the stock market's historic potential for long-term investment, an investor will be less likely to panic when the market suffers one of its periodic declines. It is important to play an active role in your investments, but that does not mean jumping in and out of the market on a regular basis.

Volatility is an inevitable part of the market cycle. By adopting a buy-and-hold strategy, you can endure the wild fluctuations on Wall Street while focusing on your long-term financial future.

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Alan Friedlander is the owner of a financial services practice in Gurnee Illinois. For your free no obligation investment review, you may contact Friedlander at 847/855-4888 or alfriedlander@yahoo.com