One can obviously make a profit in an exhuberant market, but mostly short lived, that is exhuberance may run for months, but not years, so it's good for short term traders, but not good for the economy. When dumb money (a term in this instance for non sophisticated and unexperienced participants) are sucked into buying stock due to media hype, when the top rolls over, they become bag holders. At a market top which has no fear, when the top comes, most participants are convinced 'stronger for longer', "we have years of profit up ahead". On the first dip, often more money is thrown in, BTFD. As support collapses, bag holders still won't sell for two reasons, (a) convinced in their wisdom they are right, (b) won't accept a loss, will not sell at a loss, "I may sell out when price gets back to breakeven". As the market continues to fall, losses mount. In a full blown bear market, confidence is totally sapped, years of savings disappear, bag holders sell at the bottom, on a market recovery their trauma is so great they will not enter at bottom bargain prices, with the little money they have left over from the hammering.
%% That; + what IF its a typical pre-election year= super strong up trend?? Having said that; with liquid stuff like SPY,QQQ, easy to sell+buy. Most of the millions / money made in stocks has been on the long side; so even when the bears get it right, anything can happen on a 5 minute chart/noise Even 191% debt loaded , mostly down trend/bear trend TSLA, could fly up, 4th quarter like feathers. LOL ,NOT a prediction + sure not a stock tip LOL,
Those who are very bearish, often forget about central bank interventions and the ongoing purchases by pension funds and others which help keep stock values high. The question is: do we still buy an asset which is clearly overvalued? I wouldn't because the risk of prices going nowhere for a very long time is high but many others will jump in thinking that there is still money to be made and there could well be some money there to be taken or they just want to get in for the dividend.
Both could happen but unlikely to happen any time soon. So this only leaves us with the possibility of a market plunge due to a major event and we should be cashed up and ready to buy?
Interesting to read through the views on this thread. Provoked my first post for few years. FWIW In main trading account I'm always long the main indexes it's just a question of to what extent. Normally ranges from x0.5 to x3 leverage. So neither all in or out. Near x0.8 now. Still very much net long but been selling covered calls and buying a few cheap puts. If it goes up more then great I will just decrease leverage further towards x0.5. Lots of things can happen but no escaping that buying high is more risk than buying low, hard bit is actually doing it !
I think your whole philosophy is mistaken, I see two reliable ways to make money from the markets - invest over multiple decades (not years or months) using FA or trade over days (not weeks or months) using TA A very few people can also trade over minutes using TA but this group is too select to be taken as a serious option.
Your position depends on your strategy, goals, risk tolerance etc. If you are talking about investing or portfolio allocation, the time to be "cashed up" is when you expect an imminent decline, not near the start of a cyclical bull run in an ongoing secular bull.
Hmmm, strange reply, either invest over decades or trade in days and nothing inbetween? I'm surge the very large majority of smart money trade stocks from several months to maybe a few years holding individual positions.