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You bet that it becomes increasingly likely to regress to the mean as prices diverge and step in/out as you factor those odds into your bet. The solution isn't
by SeanAnderson 1y ago
You bet that it becomes increasingly likely to regress to the mean as prices diverge and step in/out as you factor those odds into your bet.
The solution isn't binary. You don't have to be fully exposed/unexposed to the market all the time.
- andsoitis 1y agoSorry, I mean what do YOU personally bet specifically.
- SeanAnderson 1y agoI keep the vast majority (~90%) of my money in total market index funds and do my best to forget about it. The other 10% I play around with trying to time the market, taking active bets against specific stocks, etc. to sate the desire to feel in control / gamble and I rebalance the positions every couple of years. The active positions have overperformed my buy-and-hold strategy for as long as I've been doing it. Our economy seems to be driven more on vibes than fundamentals and reading human emotion is more tractable than predicting the future, but it's also really stressful (and fun!) to do. I feel one of the biggest reasons to earn money is so one can spend less time thinking about money. So, I'm averse to having large, active positions since I start to think about my trades all the time and that feels innately unhealthy.