Valuation-Informed Indexing #608: Market Timing Is a Mindset

I’ve posted Entry #608 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Market Timing Is a Mindset — So Is Failing to Practice It.

Juicy Excerpt: A market timer would respond very differently. The purpose of market timing is to keep risk constant. So a market timer would have been aware that a price crash had become likely before it arrived. He would be aware that valuations had gotten out of hand and that it is high valuations that cause price crashes. So there would be no feelings of panic. Quite to the contrary. The market timer would be going with a lower stock allocation at the time prices collapsed. So he would lose less money in the crash. And he would be acutely aware that the lower prices brought on by the price crash presented an opportunity to invest in stocks at a time when their long-term value proposition was much stronger.