Little long post but need to set the table straight here when there is so much misinformation floating around on this subject supposedly from people who should know better.
Over the long long run, stock markets have to go up - why ?
Inflation
population growth
productivity growth (right now, this part is low)
It is just mathematical -- doesn't matter who is president or what policies are being implemented - now the rate of change can be fast or slow depending on what part of the cycle we are in.
Now try telling that to somebody who invested money in Nasdaq QQQ in March 2000 but couldn't recover it until 2016 -- now if that person needed any of this money for say a medical emergency, he or she is SOL
So entry and exit points matter -- doesn't take a genius to figure that out
Financial advisors who tell their clients just to buy and forever are doing their clients great disservice. They are also proven right over long periods of time - doesn't mean they are smarter than others - just that this math works in favor of stocks over that long period. You dont need to pay a financial advisor to tell you that simple fact.
Now could someone have earned income using bonds (whatever variety) and which would have perhaps been safer ? Yes and this is why stocks need to have a risk premium over bonds -- stocks don't just need to return positive upside but they need to beat bonds by a wide margin to really make it worth their while
and to get their meaningful upside, it helps to be a bit more nimble with your money
Dont believe the adage that you cannot ever time the market - thats a lazy answer from someone who doesn't want to put in the effort
What you cannot do (or cant repeatedly do) is perfectly time the top or the bottom - but to make money you dont need to do that. You need to be able to use the trend to your advantage, thats it
There are many passive investors in the market hostage to their investment process - pension funds, insurance companies, large institutional investors , who always have to have a certain percentage in stocks all the time
As an individual investor, you don't have to follow that herd, you can be a bit more savvy.
That means looking at charts, prices, momentum. When you have every single mainstream publication telling you to buy stocks, maybe its time to pull back a little and book some profits . When CNBC is telling you nonstop the worlds coming to an end , maybe time to put some more of your capital back in the game. But it does mean you need to pay attention to what is going on, at-least on a weekly basis, if not daily.
Now back to the current topic. Trump's actions so far in 2017 have done nothing but added fuel to the fire, so tactically it made sense to remain invested. the topping out prices happened in Jan when tax cuts fully got priced in. When the market sold off but then bounced back off its 200 day moving average in mid Feb it was a good signal liquidity is intact and time to add more risk (which I did myself) .
What Trump has done recently is put a damper on the liquidity trend line. If global trade retrenches, doesnt matter how attractive multiple your favorite stock is trading at, we will continue selling off till we find a new circuit breaker ...
