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As the great Yogi said (and Paul echoed): Predictions are hard - especially about the future

It is absolutely certain that we will see a decline in the equity market - the trick is "when". Say you're sitting in a bar on March 6, 2009 and wondering whether to put chips down in a stock market which had lost more than half its value over the past few months. Feel comfortable? Well, from that day, it rose in nearly a straight line for a decade. How many times during that decade did pundits predict a decline? More than the fingers on your hands.

Can you time the market? Sure, there are ways which give some visibility, but more than likely you are just kidding yourself that you know what's going on.

Decide on a strategy (there are a few which work over time - the simplest is holding three or four diversified index funds and annually rebalance, Paul's suggestion of holding stocks which increase annual earnings and pay increasing dividends (if that's your thing) and so on. The more complicated your model, the more attention you have to pay as the complicated models tend to be fragile.

But just understand that either selling at the very top or buying at the very bottom is more luck than skill. Just plan your course when you are not emotionally involved and then stick to what you've planned when it begins to hit the fan.

Jeff
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