Quote:
Originally Posted by oldjudge
Greg, if I understand what you are saying you buy when the market is weak and sell when the market is strong, or at least don’t buy then. Following that strategy you would have entirely missed the post 2008 financial crisis bull market. What am I missing?
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I am too young to have bought before the 2008 fiasco (I was 17 and broke as a joke in my dorm eating whatever I could scrounge up for $2 a day then), so all of my buying has been since this period.
We had a bull market, in the sense that it has gone up a lot from 2008-2021 and was very good overall when looking at the block of time. In 2031, we will probably say the same thing about the period after it. But within that period, there were dips and buying opportunities that were evident at the time. Obviously if I could see the future I'd do a lot better. Some times I have gone riskier than others. I bought in 2016, when there was a lot of doubt in the market though the year ended very well. I bought a lot in 2020, when Covid killed the market because I believed that the state would not actually commit suicide over the virus. This one was a very safe conservative bet.
There are some periods of time where things are stably going up year to year, and this was one of them. 2021 was very different; with records being set constantly, recovering quickly and then skyrocketing to be almost double the low in a year. Thus, I held off buying (I am speaking of blue chips and index funds, I have a relatively small amount in non-blue chip specific stocks I think will outperform and are less about the economy as a whole).
You can't always wait for a dip like the one we have right now (though most knew this particular one was coming and the incredible spike was not sustainable), but there are lots of periodic dips. When everything is breaking the record set last week, which broke the record set the week before, it's usually a bad time to buy.
That said, with blue chips and index funds, I have no doubt Peter's method will produce a fat profit in the end too. I'm just up 20% right off the bat by knowing the Trump boom wouldn't last forever. In 6 months I might be down 10%, it ain't a science but I think it's pretty easy to separate boom times from the normal times from the lows where everything is at a steep discount and you can buy in with a much lower floor risk.
*I am not a financial advisor or smart.
EDIT: Selling timeframe varies for everyone. I am 31, I intend to 'sell off' for retirement in addition to my IRA's, 401K and social security. I don't do stocks to feed myself tomorrow or next year, and keep more cash on hand than most financial advisors would probably advise. One should sell when times are good, not during bad times like right now, as a general rule. If I live long enough to retire and it is in an economic downturn, I won't sell them until we're recovered (and surely won't hit the peak, but I'll be selling in a better good time rather than a clear bad time). I do sometimes sell a specific stock because I see a bad future for that stock and I want to divest and pocket what I've made off it (or lessen losses, depending how well one picked). I usually don't manage to time the peak exact, but I try to know the specific stocks I own well to sell off when the red flags hit.