I’ve often stated that closing your eyes and hoping for a good outcome (the equivalent of doing nothing) from an investment is not a good idea and that ‘hope’ is not a strategy.
Agreeing with that idea, Jack writes: “Having a plan and waiting for more information, however, is indeed a legitimate strategy in this turbulent world…He wants to wait for the odds of success to become easier to asses, which, unlike doing nothing, IS an investment strategy.”
The above quote refers to Bill’s (unfortunately, there’s an annual fee for Bill’s commentary) refusal to jump in now, during the current rally (Market up strongly two out of the last three days).Everyone likes to pick market bottoms, but Bill’s thought is: “I personally would rather pay up down the road — having a little better understanding of how so many of our problems are going to work themselves out. And, there’s always the possibility that one might not even have to pay up. To sum up, perhaps this will be a decent rally or perhaps the start of something bigger. However, for my money I still don’t like the risk/reward landscape in the aggregate.”
The market has fallen a long way, and if you don’t catch the exact bottom, as a long-term investor that should not be a problem.Bill believes that’s better than jumping in too early.
“I make fun of all these “bottom” and “bottoming process” calls, but then it occurred to me. My book comes out in 6 month’s or so and I’m going to have to plug my expertise like crazy. And what better way than to call a bottom accurately.
And what better way to call it accurately than to call it every day. Starting today.
Now remember, it’s a process. So by “bottom” I mean “process”. I may be exactly correct or I may be 20% and 6 month’s early. Doesn’t matter, I called it right in my mind.”
As for me, I have no idea whether we have seen the lows.