Not jumping off a bridge!
If you can't/won't wait, what are your plans?
I realized that may have come off like I'm ending it all, unable to wait anymore, but that's not what I meant.
I have no pretense of being able to call any sort of a bottom or top, so barring that type of omniscience, I intend to closely monitor market trends (e.g. 1-4 mo. moving averages), peaks and valleys, all relative to the mean trend line, and systematically trim my exposure on the way down, while increasing it on the way up. Again, this is NOT market timing. Instead, I'm letting the trend dictate what I do. I back-tested this somewhat using the Schiller data and it seems to work reasonably well at preserving principal during sustained downward periods, and increasing equity exposure during sustained upswings. In no way, shape or form does this get you all-in or all-out at absolute tops and bottoms, nor is it any good at all for daily/weekly volatility trading. It only works for detecting secular trends and reacting with relatively small adjustments at a time.
Had this been in place last year, for example, I would have started reducing equity exposures right at the start of this year, while the SP500 was still above 1,300, after detecting the sustained downward trend signal that started late last year. This would have continued throughout the year, and by now, I would probably be under 50% equities, but having sold at an average much (and I mean much) higher than what I actually "panic" (I didn't really panic but it was a tough period) sold at without this system.
Think of it as a graded, progressive/regressive, stop-loss, cost-averaging strategy (long-winded name I know). I'm not talking major single all-in/out style moves, but more like retargeting a few % points each trigger. However, in a period during which a trend is sustained, the small steps can accumulate and result in major changes to equity exposure over the period. The magnitude of the step-ups, or step-downs, are related to the distance from the trend line, because history shows that risks correlate to how far the market deviates from the mean.
This is what I meant by "cannot/ will not wait". I meant having a system and acting in a disciplined fashion, to mitigate, but certainly not eliminate, my risks. I aim to preserve what I have left after this year's destruction with the utmost of tender loving care. "Shoulda, woulda, coulda" will become "must, can, will". If there is a bailout-induced rally, this will allow me to enjoy a good part of it, before what I fear may be a truly sustained secular downslide.
The past year was very humbling for me, but the good thing that came out of it is that it focussed my mind like never before. Like I said, I dropped everything and spent days/weeks staring and playing with data, and I've really learned my lesson. To my mind, it's foolish to be married to an investing and SWR paradigm when the whole world has obviously changed. Again, 10, 20, 30 years of watching my hard-earned nest egg decay just won't work for this retiree. If you're young or this works for you, then you shouldn't even be reading this.
I do hope I'm wrong, but objectively speaking, this one sure seems to be "different" from all the run-of-the-mill recessions I've experienced in my lifetime. Yes, they all felt apocalyptically bad at the time, but this one... this one... feels, smells and looks like the mother of all those.
Sorry about the long-winded posts. Tough days for me. Thanks for reading if you still are.
