The Golden Cross occurs, you invest, and then missing the last leg of a long-term Bull (figuratively) — selling early — is one of the costlier mistakes in investing, that’s why we use Rules. The Death Cross occurs after the true Peak. And obviously STOP-LOSSes are utilized, depending upon your entry position, are an important consideration as well.
Stock timers find big risk is leaving early
Link: Stock timers find big risk is leaving early
Quote1: In 12 market cycles, the final year produced a median gain equaling one-fifth the rally’s return – enough to overcome losses in the next year 67 per cent of the time.
Quote2: Consider an investor who got out of the market 12 months before stocks peaked in 1987. Selling in August, 1986, would’ve missed a 40-per-cent return as the S&P 500 climbed to a then-record on Aug. 25, 1987. Sure, the seller was spared the pain of the index’s 20-per-cent plunge over the next 12 months, but enduring that would’ve been better than selling early. Bank of America’s study is meant as a lesson in the perils of market timing more than an account of anyone’s real-world experience.
Calendar years are random intervals and an investor who sold stocks early and stayed out of the market in several cases was spared much deeper losses. <– The assumption is in italicize (used for both quotes and the entire article). Please see the charts in the Commentary of CIC Course Session 4 to visualize.
