06-04-2014, 08:16 AM
My original post was mostly a joke, but I'm glad it has spawned a good discussion!
I don't argue with your math, daat, but would just point out that what you are describing is the very essence of market timing. If you make the right timing calls, then it is a strategy that will outperform most all others. But most of us can't do it well enough to make it pay off. Study after study supports that. "Experts" who have studied the markets their entire lives and who do it for a living can't even do it very well.
So while it seems like a perfectly reasonable assumption that there will be a 10% correction in the next 18 months, I wouldn't count on it either. Folks have been waiting for / expecting / assuming a big correction throughout this 5 year bull market. And don't forget that, while the better entry prices of a correction are great, if you buy now and plan to hold for a very long time, you will weather the (eventual) correction and recovery with no ultimate harm.
I tend to agree with the others who have advocated taking a partial approach. Ramp into positions gradually, and you are somewhat safe in either scenario.
If despite everything you are convinced about your call, nobody will fault you for sticking to your convictions. (At least not me!)
(06-04-2014, 04:24 AM)daat99 Wrote: If I'm reading this right than I need to decide if I believe that the market will take the 10% dive within 19 months from today or not.
So my question is, with the market as it is now, who believes it'll take a 10% dive in the next 18 months?
I don't argue with your math, daat, but would just point out that what you are describing is the very essence of market timing. If you make the right timing calls, then it is a strategy that will outperform most all others. But most of us can't do it well enough to make it pay off. Study after study supports that. "Experts" who have studied the markets their entire lives and who do it for a living can't even do it very well.
So while it seems like a perfectly reasonable assumption that there will be a 10% correction in the next 18 months, I wouldn't count on it either. Folks have been waiting for / expecting / assuming a big correction throughout this 5 year bull market. And don't forget that, while the better entry prices of a correction are great, if you buy now and plan to hold for a very long time, you will weather the (eventual) correction and recovery with no ultimate harm.
I tend to agree with the others who have advocated taking a partial approach. Ramp into positions gradually, and you are somewhat safe in either scenario.
If despite everything you are convinced about your call, nobody will fault you for sticking to your convictions. (At least not me!)