There are signs like this everywhere that the smart guys/big boys are getting out, just follow zerohedge for a week.
This is a very interesting comment, which offers a good thought experiment for the newbies of the thread. What's the best sign that some people are selling? Market price. Simply looking at a graph shows us that people are getting out. But what else does it show us?
Remember, for every dollar that's selling,
there's a corresponding dollar that's buying. So for every "smart guy/gal or big boy/girl" who is getting out, another one is getting in at that exact point! Who are you to know that one half is smarter than the other half? What information do you think you have, that they don't?
The only way to win, is not to play. When buying an index, you are mathematically guaranteed to beat or match 50% of all dollars invested in the market. You will never underperform.
If you're looking at one particular year, sure, there's a chance you can beat the market on your own. But over the long term with the index, you're beating 50% of all invested dollars this year, then beating 50% of all invested dollars next year, and the year after that...every single year for the rest of your life.
If you're trying to beat this, even one bad year can make it almost impossible to catch up. Losing 50% one year, means you need to gain 100% next year just to break even. If you do 10% better than the index one year, then do 10% worse than the index the next year, you will still end up with less money than simply choosing the index.
It seems counterintuitive, but the opposite has the same result. Do 10% worse than the index one year, then 10% better than the index the next year, and you are still behind the index.
When looking at the long term, you're beating significantly more than 50%, you're beating almost everybody. The compounding effects of bad years make it incredibly difficult to beat the index long-term.
