During the last 100 years, or so, there appears to be, by my anecdotal calculations from memory, only one non bubble period, where you were not better off staying in the market long-term, if you owned high quality businesses and just bought more shares every month. That would of course be the Great Depression.
But we can examine this even further, because the 1920s produced a bubble reminiscent of the Internet bubble of 1999-2000. As such, from the framework I gave for when to sell, that would be a real and legitimate reason to get out of your stocks because of a real bubble.
If you look at market returns during the Great Depression, some of the best years on record for annual market gains occurred during the Great Depression itself. Sure, they may have given back the next year, remade their gains the following year and such, but if you were not in the market during the bubble, your Great Depression returns (assuming you were lucky enough to have sufficient wealth to invest at the time, and so many of the masses were not thinking of such things by that point in time) your returns would probably not have been all that unusual at all. In fact by the end of the decade your long-term returns, holding the best quality businesses would probably be rather outstanding.
Here are some myths about the 1930s that support my position on it:
And I am sure there are charts out there you can find showing annual returns. I went over those in separate paper materials and studied it.
If you followed the rules, and got out in a true bubble (and my rule on true bubbles, is you stay invested as it bubbles, until the bubble is just not supportable by any real means you can legitimately think of, and then stay invested a little bit longer, and then get out), you would have been able to get back in the market in the 1930s and had some very nice returns, or at minimum returns that were not much different from any other period of time.
The next “horrific” bubble (that was actually very fun to be a part of and I was an idiot then, having first invested in 1998 with a double in Oracle) was 1999-2000. We all know, that had you sold out in the bubble, your returns from 2001 to 2016, including the “great recession” as it has been called, would be quite superb, IF you invested in high quality and market leading companies.
Conclusion, draw your on. I think they strongly support staying in the market, except when specific times to sell (as I described and have described for years) occur, and you own a basket of quality, market leading, growth companies that do not otherwise have the “sell” signs. Holding through market up and market crashes, and just buying more every month that is not a sell time.
Yes, cynicism is healthy, and perhaps this is stupid, but it is supported even during the most traumatic stock market periods of the last 100 years, including through Depression, World Wars, and two historical market crashes.
Such information is not healthy for the industry that requires market churn and anxiety to make its money (brokers, whether human or internet).
If you are much better at market timing, more power to you. And like many here, I am talking about investing in stocks, not markets.