Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 25
Say I follow the Mungofitch 99 day rule and get out of the market near the top. Down only 10%, I watch amusedly as Bogleheads feel the wrath of the bear and lose 50% of their money.
Now what? When do I get back in? Do I wait Jim to post his overbearing ("we are over the bear") indicators?


Any number of answers.

You can get back in any time the market is lower than when you sold, and you're better off. (assuming you've adjusted for any applicable taxes).

You can wait for me to post something about a likely market bottom : )
Or calculate a somewhat similar omen yourself.
If you see a HUGE spike down on this graph, that's a very strong sign.
https://stockcharts.com/h-sc/ui?s=%24NYHL&p=D&yr=3&a...
Note that this graph has a couple of big spikes downwards.
Note that (a) those were both good times to buy, and (b) it doesn't matter much if you were a week or two too early or too late.

If it's a fairly long bear that you intend to sit out, and really only want to get back in when it's good and safe, you can wait till there is a fresh recent high.
e.g., any day that the market is the highest it has been in the last X months.
Numbers for X in the range 3-5 work nicely.
You'll be buying long after the bottom, but on the other side you'll be that much more certain that it WAS the bottom.
Not perfectly sure, but better odds.
(but back to the comment above: any re-entry price lower than where you sold is just fine, right?)

Another one, particularly long cycle, is to buy when there is a Coppock buy signal.
This won't happen until the market has been flat or down for over a year or so, but makes a good long term "all clear" for a good entry point.

As always, any time you see a good security at a price that offers a nice return with a reasonable margin of safety, go for it.
You don't have to buy at a market bottom.

Jim
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.