Last edited Tue Oct 4, 2022, 04:25 AM - Edit history (3)
You're just giving me a lecture on how great stocks are, and I agree (link).
(Late edit or perhaps you are agreeing with me and I'm entirely misreading your post, in which case, I apologize).
The substantial historic outperfomance on stocks is precisely exactly why I loaded up on some additional equities when the market had dropped by 20% (actually a broad-based equity mutual fund with a value tilt).
So please, when did buying say an S&P 500 index fund when the S&P 500 was down 20% or more *not* pay off? It's worked for me, and yet you claim "trying to time the market is always a fool's game."
ALWAYS? Not in my experience. Actually, never. Not in the market's historic experience either, though sometimes one may have to wait many years before the payoff.
And is that not an example of market timing? Yes it is. I'm making a conscious decision to increase my equity allocation based on the U.S. stock market being down 20% or more.
Rebalancing and bucket strategies are also examples of market timing. They tilt to increasing the equity allocation when equities are down.
What's foolish about those very widely recommended market timing strategies again?
I don't buy individual stocks either. I buy broad-based mutual funds and ETFs. I have only one individual stock that I inherited and kept. I sold the rest. I would never argue that buying one or a few stocks always pay off when the market is down. If I did, that would indeed accurately classify me a fool.
The Crash of 1929 and the subsequent Depression was a one-off. There were a lot of specific and unique things that built up to it, that really don't apply today. So every time you read something that says an equivalent crash is looming, know that's wrong.
I don't recall reading anywhere that an equivalent crash (89% drop from peak to trough) is looming. And I certainly never said/wrote that I believe one is. And even if it is a slight possibility, I don't make financial decisions based on the worst possible outcome. But rather I make decisions based on probabilistic expected value with some hedging to protect against the worst possible outcomes (that's why I'm not 100% in stocks for example).
You seem to think I'm advocating sell sell sell because the end is coming. I am arguing precisely the exact opposite -- BUY WHEN THE MARKET IS DOWN. BECAUSE IT HAS WORKED EVERY TIME.
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