marco100 wrote:Valuations matter.
I would say where the market is right now is probably fairly valued. When it was over 11,000 DOW I believed it to be over valued but didn't do anything about it. Behavioral finance again--fear of making a mistake.
If the DOW goes below 9,000 then I will believe it to be the market to be somewhat undervalued.
That's it. One has to determine what is needed in terms of market momentum or valuation to make it worth the time or effort to invest at certain levels. . .
I can't believe that bogleheads are sitting back not wanting to double their money over time. DOW will have to hit 20,000 in order for the average Index investor to double their money over time . . . and what are the reasons for that to occur?
In my opinion, we might be in a trading range (6,000 - 14,000) for decades. One way to "make money" would be to contribute in a Periodic way, making more purchases when the market is below 10,000 and finally sell when the market peaks at the 14,000 range. Another way to make money would be to short the DOW when it reaches 10,000 or 11,000 and keep making short bets as the DOW goes to 12,000 or 13,000...buying more short shares at a lower price and SELL when the DOW goes below 9,000.
I often view the faith that Bogleheads have on Index Investing funny because the only way an Index investor can make money is that their average purchase NAV is less than the current NAV. It's a bet that the market always goes up. "ALWAYS" is a prediction . . . but unfortunately Past performance is not indicative of future results.