quote:
Nope, what I'm advocating for is the elimination of ridiculously broad brush strokes in these types of threads. I've explicitly highlighted multiple times that buy and hold has been a winning strategy the majority of the time. I'm simply saying that anyone with an investment horizon as short as the OP's should go into his twilight working years as wide-eyed as possible. We're at valuation levels that have historically resulted in poor risk-adjusted returns for stocks, and that's relative to prior periods when the Federal Reserve and Federal Government each had much more monetary / fiscal capacity available at their disposal.

It is easy to say "valuation is high so your 10 year prospects for return are low." You have to carry it to its logical extension if it is to be of any real value. If now is not the time to invest, when is? Using your 1929 value, when would Ol’ Grandad have gotten in? To keep things simple I will keep using September values.

Would it have been Sept. 1930, when the CAPE was 21? First year of the Great Depression. Hmmm, probably not. Good thing, he would have underperformed the cash savings approach over the next 10 years.

How about Sept. 1931, CAPE is at 15 then, looking better! Ooof, unemployment is over 16% and the US is experiencing the Dust Bowl. Darn. Another good miss, as he would have underperformed cash again.

1932,1933,1934, all the same. Underperform cash, all while looking at an attractive CAPE ratio value of just over 10.

For Grandpa to beat the "stick it in the bank" approach over 10 years, he would have had to wait to put his money in until 1935. In 1935, CAPE is now over 14, higher than the average of 13.5 starting in 1900 up to that point. Germany is beginning to marshal an army as fascism spreads across Europe. Put it in the year that FDR passes the Social Security Act, when unemployment is still over 20%. Or, more likely, he does what people do when they fall prey to these behavioral biases, and he stays on the sideline, waiting for the perfect time to get in.

Point is, you can say it isn’t timing, but it is. The approach necessitates buying back in at some future date.

This post was edited on 10/28/20 at 4:46 pm