If you can manage it, checking your portfolio less frequently helps enormously. Someone who noticed Jan 2020 and Jan 2021 was a gain didn't have to watch a 1/3rd drop in March 2020, for example.
While I agree with your sentiment in general if anyone was able to miss the COVID Crash of 2020 they were living in a cave. There some things you just can't avoid being aware of if you are not a hermit.
The past 4 years were nearly impossible to optimally navigate by anyone who was capable of reacting to dramatic events. In May 2020, at the point when the market turned upward, COVID seemed unstoppable. I applied the lesson of 2009 and asked myself if the government was doing the right things. I concluded from DJT's behavior encouraging conspiracy theories, discouraging masking, and blocking public health efforts that the government was NOT doing the right things. The trajectory looked very much like the Great Depression, so I reduced exposure near what would be the bottom.
I figured we'd probably all get COVID eventually, healthcare systems would be overrun, and the 1-2% fatality rate would rise to about 3%. But only part of that was correct, and the stimulus bill passed in Spring 2020 popped the economy right out of the gutter. Restaurants and airplanes were crowded with people spending stimulus checks in between getting sick and sometimes dying. Government misinformation worked - getting people out of their houses and out in the marketplaces working and spending. As the metrics turned around, I bought back in after missing most of the summer 2020 gains.
After the spring 2021 stimulus bill, I took a risk-on approach - deciding to ignore successive waves of new variants and steadily rising inflation. By the 3rd and 4th quarters of 2021 I was in triple-levered ETFs and made up most of the ground I ceded the year before. However I flew a little too close to the sun and was burnt badly by the 1Q2022 downturn in anticipation of higher interest rates. Then it was back to a risk-off approach as inflation and rates continued to climb. I had foreseen higher rates and wondered why the market was taking so long to react, but it's hard to change course when you're gaining $50k per week.
I stayed risk-off during the later months of 2022 and through the first months of 2023. I was at least smart enough not to buy TIPS or long-duration bonds, but I missed most of the 2023 rally with a conservative allocation. I did manage to burn myself with a small OZKAP position, buying high and selling low just as the banking crisis resolved and CRE fears failed to materialize.
I earned a large win in Q42023 with bond trades, and then pivoted back into a stock-heavy, un-leveraged AA in January, with a concentration in small and mid caps due to their compelling valuations.
So for those keeping score:
2020 - failure
2021 - success
2022 - failure
2023 - success
All this back and forth and losing large sums due to reacting just behind the curve has finally led my arrogant mind to conclude buying and holding is best. I played the react-to-the-news game the best I could and still came out way behind what I'd have if I'd only kept a risk-on attitude.
The interesting thing is to look back on those fateful 4 years and try to imagine how a person could have possibly made the right moves at the right times. What thought process would have led to optimal navigation of the turmoil?
- A focus on the scientific facts about COVID would have led to the wrong approach, because you'd have sat out 2020 and 2021, and probably bought back in for 2022 as herd immunity was building up.
- A focus on trailing economic metrics would have kept a person out of stocks for all of 2020 and left them in the market for the 2022 bear market.
- A focus on politics would have been off, because booms and busts occurred during each administration.
- A focus on forecasting interest rates would have done very well, getting you into stocks in 2020 as the federal funds rate was cut to 0.25%, getting you out of stocks in late 2021 as it became apparent lots of rate hikes were on the way, and getting you back into the market in 2023 when rate cuts were being forecast as early as the 4th quarter of that year. It would keep you in the market today because rate cuts are still being forecast for the 2nd half of this year.
So an interest rate forecasting thought process would have worked best over the last few years but there's no guarantee the trend of what worked last time will continue working next time. Maybe in the future a thought process focused on valuation will work best.
