It's interesting to hear people say the next recession won't occur until year 202x because - wait for it - the economy is currently growing at a fast pace. Are they aware that the definition of a recession is two consecutive quarters of negative growth, or that measurements from the previous quarter are not available until the next (and are then revised months later), or that most investors do not realize a recession is occurring until it is almost over, that stocks decline many months before a recession, or that growth does not necessarily slope downward for a few quarters to allow plenty of data to confidently draw a trend?
It is also interesting to hear predictions of continued jobs growth when unemployment is 3.7%, a record since the 1960s (that was followed by economic disaster in the early 1970s). Exactly who is going to work these new jobs?
It's simple linear extrapolation of current trends. A recession, like a correction, is a BREAK in the linear trends. That's why you're not going to predict it with currently available data*.
For me, FIRE is 4-6 years away almost regardless of the economic weather. I put my assets that were not locked into a 401k into protected put positions this summer, guaranteeing no worse than about a 5% loss in 2.5 years, at a cost of about 3%/year. I watched my 95% stock portfolio exhibit the volatility, and underperformance, of a 60/40 portfolio for a few months. In October, however, my puts made up for much of the hit. I referred to my IPS which forbids me from selling my puts at a profit unless the market has dropped 20%. So I'm holding everything, not sweating the correction, and still aggressively allocated to the S&P and Nasdaq. This portfolio feels great - most of the upside of stocks and very little of the downside, all while rooting for a market crash that is historically probable across any 2.5 year span.
Will I underperform a 100% stocks B&H portfolio over the next few years? Probably, but there is also a chance I'll overperform. This late in the game, I am more concerned about a bear market turning my 5 year career into a 10 year career.
That said, I don't advise going this route until the VIX gets back down to the 11-13 range. The implied volatility of options is high enough now that you'd lose a third of your hedge as soon as the panic passes. I mean, if you're about to capitulate and sell everything, but the puts instead! But otherwise wait until portfolio insurance is on sale. Do the math on the historical probability of a large correction and make that your top dollar, in terms of the cost of protecting assets.
Regarding moving average investing: could that be called "selling the dips"?
*I'll allow for one possible exception: evidence of massive asset bubbles that deviate from historic valuation metrics. Massive means exceeding historic valuation metrics by at least 50% and being a very widely held asset.