I find it quite remarkable that index funds can be characterized as "safe".Consider the facts (as of Oct 26, but not changed much):S&P as represented by VFINX with distributions reinvested had, since 1994, a 10.2% return with a 47.5% drawdown.NASDAQ index had, since 1994, an 8.8% return with a 77.9% drawdown.Russell 2000 index had, since 1994, a 7.7% return with a 46.0% drawdown.Of the three things mentioned above, only the Russell 2000 is in positive terrority since 5 years ago.So if you had put money into VFINX 10 years ago, you would have profit, but over the last 5 years you would have a loss.Of course, past performance is no guarantee of future results. In the future you could get 10%/year for the next 10 years with no significant drawdown. Or you could get 5%/year with a 60% drawdown. Nobody knows.In any case, there is such uncertainty that there needs to be a better way, and there is. But the important thing is to get rid of this idea that there is safety in index funds. If I had gotten results like those above, I would be seriously reconsidering everything. So I advocate timing and trading. Not difficult, and it does not have to require much work at all. Check out my previous posts, and ignore the random walk, efficient market stuff. That is mathematically unsound.
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