On a scale from 0 (not likely) to 10 (very likely) do you think the markets are going to drop significantly (think something like 2008) in the next 5 years. Why? Why not?
A 20% drop? I'd say 5. It'll happen, but people who say they can predict when are deluding themselves. And it may be because something bad happens with North Korea, which all the technical analysis in the world can't predict. In other words, it's always a 5.
Something like 2008? 0 or 1. It wasn't called "The Great Recession" just because it sounded cool. Those kind of events are relatively rare. And they're usually preceded with a whole lot of irrational exuberance, and people getting into a "you just can't lose" mentality. I haven't seen that yet, I'm seeing a lot of people still burned by 2008-2009.
I agree with you but I'd suggest that a little introspection is in order. Many on this site and on this very thread seem have a "you just can't lose" mentality with regard to indexing. I wouldn't argue with them about it likely being the best approach to building wealth. I'm bullish and have been for a very long time. However very bad things can and do happen. We are talking about risk assets after all. Those risk assets are now trading at very high valuations yet people continue to plow money into ETFs. I think a crash is extremely unlikely in the near future, but you never can tell.
And your actionable alternative is.....??
I'm not suggesting an alternative. Like I said i'm bullish. I've been long the market for a very long time. The thing I was trying to point out is that I feel like I have seen a "you just can't lose" mentality, and I've seen it here. That type of dogma causes me a little bit of concern. At some point the best thing to do will be to sell stocks, but of course you and I probably won't know when that time will be. What I do know is that if the whole world had that "you just can't loose" attitude I would be bearish.
In case I in any way have added to the perception of a "you just can't lose" mentality - let me be clear in saying that is definitely not my approach to investing. My approach of plowing money into the market regardless of what is happening is not based on some blind bullish view - but moreso on the lack of actionable alternative (as tyort1 pointed out).
I would also point out that I believe there is a significant difference between the market tanking and my 'losing.'
Losses happen when I sell. So long as I can wait out a bear market when it happens, I haven't lost.
I might lose some sleep... some hair... and some confidence... but hopefully I'll hang on (again) long enough to not lose a ton of money.
Indexing, to me, certainly isn't about being bullish... it's about realizing there isn't an obvious actionable alternative.