I2, thanks for your input. I realize Bob's model doesn't look too far into the future, but I was thinking if a market did enter a prolonged sideways move at what point would it have been a better strategy to have been invested in a money market fund for that period?
I guess a good ole spreadsheet could calculate the opportunity cost and the breakeven point of not paying cap. gains taxes and getting a 0% return on your money versus paying taxes today and getting a fixed return on your remaining balance...
If I recall correctly a bear market is preceded by an intermediate correction, so even though Bob's timing model doesn't look 2-5 years into the future a bear call could come because the probabilities favor a potential bear market. The length of the bear market wouldn't be known, but a buy signal wouldn't come until the probabilities favored a bull market. Can't a similar thought process be used for this hypothetical "sideways" market? Bob's model would show little upside potential, but limited downside risk. There would be no way to know how long the "sideways" market would last, but the probabilities would favor that type of market.
So having said that, Bob clearly states what would be the proper action to take in a bear market, what do you think he would say is the proper action to take in a prolonged "sideways" market? Should you ride it out, reduce some of your exposure, write covered calls, write puts, maintain all positions but stop adding new money to the market, a combination of this list, or _________?
Best Regards.
Rillinois |
