Valuation-Informed Indexing #645: Does Market Timing Become Less Important the Longer Irrational Exuberance Remains in Place?

I’ve posted Entry #645 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Does Market Timing Become Less Important the Longer Irrational Exuberance Remains in Place?

Juicy Except: So the losses caused by failing to engage in market timing are usually much bigger than what the Buy-and-Holders anticipate. The other miscalculation they make is to underestimate the benefits of market timing. Stocks purchased when the CAPE value is 8 offer a 10-year annualized return of 15 percent real. You want to have as much money invested in stocks at CAPE values like that as possible. But of course those who followed Buy-and-Hold strategies may have seen their stock portfolios depleted by a good bit more than 50 percent before those juicy long-term returns become a live possibility. Because the market timers retained more of their assets when prices were crazy, they have more to invest in stocks when prices are amazing.