But once that is over, timing the market peaks and troughs becomes less important in the larger scheme of things. For example, during the Great Financial Crisis, I spent countless hours as a journalist talking to so-called experts about when the stock market was expected to rise or fall. Looking back, I think it was a waste of time.
Suppose you had the market cycles as wrong as possible, yet decided to become a long-term stock investor, and actually stuck with it despite huge losses. That means buying at the market peak on October 9, 2007. By the spring of 2009, we would have lost most of our money, but then we would have regained it and then some. According to FactSet, the S&P 500 returns from October 7, 2007 to January 18, 2007 are:
Considering prices alone, the index rose 7.1% annually and 207% cumulatively.
With dividend reinvestment, the index rose 9.3% annually and 325% cumulatively.
I'll readily admit that I could have gotten better results if I bought and sold at the “right time”.
That requires knowing in real time when the market is going up and when it's going down, and no one can know that with certainty over long periods of time. You could have bought and sold the appropriate stocks. For example, if he owned only Apple and nothing else during the same period and did not sell, his total return would be 3,760 percent. If you can do that, bravo.
But what are the right stocks to buy over the next 15 years, and when is the best time to buy or sell? Some of you will definitely be right.
I'm not even going to try it. This market peak means many things to many people. I take this as further confirmation of the wisdom of long-term, low-cost buy-and-hold investing. Let's get through this peak and look forward to many more.