Subject: Re: What constitutes success?
All financial advisors strongly advocate for being invested 100% of the time. Hmmmm.... I wonder why?

Well, it could be a number of reasons, and they could even have a point in some situations, but never ask the barber if you need a haircut. "Broker economics" at work: it's always time to buy!

I don't really try to dodge bear markets as such. I used to, but that was mainly because my portfolio used to be more aggressive. Now I mostly just try to keep a handle on the valuation level of the assets I own. When they seem richly priced, I sell a little: the upside is lower and the downside is bigger, so a smaller position allocation makes sense. Sometimes I write a few calls, turning a long position into a covered call. This lightening is rarely near a market top, but that's OK, there's nothing wrong with having some dry powder for a rainy day.

When something I like gets cheap, I go shopping. Sometimes this is during a bear market, sometimes not. Sometimes my purchases even work out!

Jim



From an article by Mr Smithers in the FT in 2006 about stockbroker economics:
"The FT reports regularly on the views of economists and stockbrokers. Readers might be intrigued by the conflicts between them but they should not be surprised. The purposes of the two groups are completely different. Economists are in pursuit of the truth and stockbrokers of commissions.
"The first principle of stockbroker economics is that all news is good. In a weak economy, interest rates tend to fall and in a strong one profits usually rise. It has therefore become an item of stockbroker faith that falling interest rates and rising profits are both good for stock markets. Neither theory, however, seems robust under testing. For example, the US stock market has moved in the same direction as profits only 54 per cent of the time. As both shares and profits have a long-term tendency to rise, this suggests a purely random relationship.
"The second principle is that the stock market is always cheap. This requires more flexibility than the first principle and is achieved by inventing meaningless measures of value, such as the bond yield ratio, and using whichever one of these absurdities happens to give the most bullish answer at the time..." [and so on]

Probably requires a subscription
https://www.ft.com/content/9a3...