grayfox wrote:This is not making much sense to me.
Why would you buy every time it went down -2%? Suppose that last week the market rose +10%. Now on Monday it's down -2%. It's still up +8% in a week. That's like a store having a big 50%-Off Sale after doubling their prices the day before.
I don't think you can conclude anything for this simple-mided "study".
It is hard to come to any conclusions here.
What about when you put your current years new money in at 52 week lows? Or if you rebalance from bonds to stocks when stocks have slumped and when bonds appear to be at all time high valuations? It would be interesting to see the results of these actions.
I think the point of the article is to just invest the money you have when you have it to invest or in other words to stay fully invested. Its saying to follow your allocation and rebalance. There have been obvious times looking back, like going all in during 2000 or 2007 that would have burned someone. Likewise, 2009 was a great year to put it all in, but only hindsight would showed that.
How many of us bogleheads are sitting with all of our portfolios in cash waiting for a 2% dip to buy in? I personally do try to time my ROTH Deposits for down days or days like this past Thursday. I know others who get their 401K money deposited into money market accounts and then try to time their equity purchases on dips. I can't see either of these things causing much harm, but they are small portions of portfolios.
Allocation: 55% Equity, 30% fixed income, 15% TIAA real estate. If the book Thousandaire Next Door was ever written, then it would be about a cop who posts on bogleheads while drinking good beer.