[breezeTrowel]

I don't think it's that hard. Just ask - is the S&P500 lower now than it was three months ago? If the answer is "yes" then maybe stay in cash and put that money in when the answer is "no".

Alternatively, if you want to get "fancy", you can use the 50/200 SMA crossover to determine entry and exit points. It's a much safer bet than "buy and hold" since it avoids massive drawdowns.

[funklute]

Your first suggestion is basically momentum investing [1]. But as the wikipedia article alludes to, there are some issues with this, such as a potentially high risk, that one would need to carefully consider.

I think there is a big difference between merely applying critical thinking, versus investing the necessary time into essentially becoming a semi-professional day trader.

[1]: https://en.wikipedia.org/wiki/Momentum_investing

[breezeTrowel]

Hence my focus on an index instead of trying to pick individual stocks. It's more like index investing with guard rails.

[JW_00000]

> is the S&P500 lower now than it was three months ago? If the answer is "yes" then maybe stay in cash and put that money in when the answer is "no".

Wait, isn't that the wrong way round? You're waiting when it's low and buying when it's high?

[breezeTrowel]

"Buy low and sell high", while sounding good, is generally terrible advice since you only know what was "low" and "high" in retrospect. A stock (or an index, in this case) might hit a new low only for the price to crash even further. The same thing goes for highs. A stock or index making a new high may very well continue to rise.

So, instead of "buy low and sell high" it tends to be a lot easier to "buy into strength and sell into weakness".

[momirlan]

it is actually easy to figure "high" and "low", based on price vs value of a certain stock. Warren Buffet has been doing it for a while. most people don't have that discipline and prefer momentum.

[breezeTrowel]

Correct me if I'm wrong but wasn't Warren Buffett an activist investor who'd find undervalued stocks from companies that had poor management and, once his partnerships gained enough control, fire the current management and replace it? Sounds like a far cry from "buy low, sell high".

[Arch-TK]

The person you are replying to is buying when the derivative is positive and waiting when it is negative.

[JW_00000]

But you only know the derivative in retrospect, hence, he buys when the price has gone up (over 3 months) and stops when it has gone down. To me, it seems better to buy when the market has gone down for three months.

[maest]

That doesn't work, lol