Quote:
Originally Posted by MoneyGuy
All of this assumes that one knows when the next supposed 10-15% downturn occurs, when to exit the market and when to re-enter. I submit that no one does. Check out these facts.
-When the market does reach bottom and the recovery starts, on average it tends to make up fully a third of the losses in the first 40 days!!
-Over the last half century, bear markets tend to average negative 30% over 11 months; the bull markets tend to last five years and go up 161%.
That first point illustrates why you can't afford to miss the initial part of the recovery, which is spring loaded. I'd rather risk being in the market for a further 10-15% drop than being out of the market for any of the recovery. I want to be there to benefit from the entire recovery.
Market timing is just guess work. It usually fails. I wouldn't try.
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It depends on your time horizons too, if you absolutely need to cash out in the next couple months it's a different story. I'm not in that situation.