Quote:
Originally Posted by G1911
My argument is to buy when the market is generally low and hold long term, not short term flip. Buy blue chips and indexes when the market sucks, hold it for the long haul. Don't let your cash get so low that you need to sell stock, sell it late in life when you don't have work income coming in, and sell it when the market is generally good. Don't retire with only a couple years cash on hand with a bad market.
Even in this example you have, the person doing this doubled their money buying at under 7 and selling at ~14K. They missed out on even greater gains, but they doubled their money in the short term using this basic strategy but as a short term hold instead of my long term hold. If only we could all double our money in the short term!
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Ahh, but I think the point is what did those people do to invest after they sold at $14K? Since the motive for selling was the perception the market was too hot and you were selling at a "high," presumably the advice would be to just hold cash. For the past decade, you would be lucky to get 1% on your money. Since there was a decade without any major declines, until Covid in 2020, you would have been on the sideline during a great run-up.
The other extreme could be true today. We are down 20%. You could invest today, but there is nothing to guarantee the market will not fall another 40%. You are better than the guy that is down 60%, but still far worse than the guy "smarter" than you who wait for the market to go down 60%.
If you have a windfall right as the market has a major downturn, then you have lucked into a great investing opportunity. But, if you are strategically trying to buy and sell based on where you think the momentum in the market is, you are going to get beat by the "buy and hold" guys 95% of the time.