I'm amazed at how many versions of, "I know timing the market is bad, but should I time the market in X way?" we see around here. And generally the responses are, "don't try to time the market."
Why does timing the market when it's low seem to get a free pass that timing it when it is high doesn't? Am I missing something?
So, am I missing something about this that makes it different? (And no, that's not rhetorical. I'm not a nuanced market numbers person like many of you so I figure chances are decent that I *am* missing some element.
What maizeman said. You hold off on major purchases for a year or two in order to get that 20-30% deal.
I believe @Nords ? did this during the 87 crash.
The 27-year-old newly-married Nords of 1987 had no clue about asset allocation, other than to put every spare dollar of our dual-military paychecks into equity mutual funds.
The 1987 crash was quickly labeled a glitch of program trading ("portfolio insurance"), much like the flash crash of a few years ago. Everyone "knew" that the crash didn't reflect the economy or the stock market's typical volatility. Fortunately that turned out to be correct.
When the crash happened, my spouse and I were students at graduate school. The week after the crash, the campus was practically a ghost town. After a couple days of this eerie quiet we learned that the absent students who fancied themselves as big swingin' traders were spending their days at home on their (landline) phones, frantically dialing their brokerages' toll-free numbers to place buy orders or to wire more funds to their accounts.
Back then we were impressed by the prescient behavior of people who seemed to know a lot more about this than we did. We scooped up whatever we were planning to spend for that month's entertainment budget, wrote out the checks, and mailed them to our Fidelity accounts.
On the other hand during the market declines of 1990, 1998, and 2000-01 we knew that the economy would never recover and the stock market was going to zero. If we'd tried to take advantage of all those monthly (weekly!) sales opportunities then we would've given up after about three months. Fortunately during those times we were busy with DESERT STORM, parenting, and then with retirement preps.
By the time of the Great Recession we had more investing experience (and more emotional experience). By this point we were living off our investments at the 4% SWR (with some variable spending). We'd had a clearly-articulated asset allocation since 2004. We'd kept a cash stash of two years' expenses to handle the sequence-of-returns risk of the first decade of retirement. We knew enough to keep that AA, spend down our cash stash, and just take the tax-loss harvesting every few months as we hit our rebalancing triggers.
Yet once again by early 2009 we were absolutely positive that the economy would never recover. We were sure that a double-dip recession would go for a triple dip and stay with the type of stock market that we'd seen in 1966-82. (In Hawaii we were also convinced that America was emulating Japan's "lost decades" of their 1990s and 2000s economy.) Our cash stash was nearly gone by early 2010 and we were selling shares for living expenses, not just to replenish the stash. This time we were rebalancing by taking a little cash out of the markets, not simply selling one part of our AA to buy another part.
Today we've moved most of our investments into a total stock market index fund. (It'll take a few more years to finish the process in a tax-efficient manner.) It pays the dividend rate of the stock market, and we've just been sweeping the cash into our checking accounts for spending.
I can appreciate anybody's bold talk about buying shares when they're on sale. The problem is that when the sale starts, everyone still thinks that everything is at least 20% too expensive and nobody wants to be too early to the real sale.