It’s fairly common and simple to exit the market when the price goes below it’s 200 day moving average, and re-enter when it goes back above. It will incur losses if the market keeps bobbing up and down around the average though, but the rule keeps you out during the big crashes and keeps you in during the big bull runs. Some also require a rising unemployment rate to reduce false positives. We are currently way above the 200 day moving average. If I remember correctly, long term returns are slightly worse than simple buy and hold, but portfolio volatility is reduced a lot, because bear markets are more volatile. You will never know how high it can go at the top or how low it can go at the bottom.
It’s fairly common and simple to exit the market when the price goes below it’s 200 day moving average, and re-enter when it goes back above. It will incur losses if the market keeps bobbing up and down around the average though, but the rule keeps you out during the big crashes and keeps you in during the big bull runs. Some also require a rising unemployment rate to reduce false positives. We are currently way above the 200 day moving average. If I remember correctly, long term returns are slightly worse than simple buy and hold, but portfolio volatility is reduced a lot, because bear markets are more volatile. You will never know how high it can go at the top or how low it can go at the bottom.