Its so simple no one believes
Quote:
Originally Posted by
Buffett Jr
.......... Why do you think you can beat the market index when so many can't?
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Most is a better word than many...
The reason why most investors fail to beat the market index is they overthink then apply pre-emptive behaviour. Investors forget Mr Market is a product of collective intelligences and they try to compete on Mr Markets strengths (intelligence& knowledge) rather than on Mr Markets weaknesses (irrationality and panic)
Investing in index funds is boring and no fun but one has to stay focused for a brief time only to beat the market index...exit during a capitulation phase of a bear market cycle then at some later stage after the drop has ended and everyone thinks your nuts buying back in do exactly that...It may not be the bottom so ride it out....Timing is an advantage but no one can exit at the top or enter at the bottom...so don't try ...Remember, any brief time out of a dropping market (Bear Market Cycle) guarantees an out-performance of that market.......so don't be greedy..
Very loose rule of thumb:.. On average we are in the market index fund for 5 years, out for 6 months, back in for 5 years, out for 6 months, and so on..
I'm not a great fan of Elliot waves but the basic wave pattern is all you need to visualise...its either 3 wave or 3 multiplied.. The last NZX50 bear cycle was 6 wave (3x2)..but we are now overthinking....Keep it simple.. don't sell out on a possibility... wait for that C (3)wave you will know for sure when a "C Wave" happens as it is a major irrational crisis event, with the feeling of extreme pain and nowhere to hide including that pessimistic doubtful feeling about your banks which are holding your cashed up money.
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