Pardon my lack of stock market knowledge, but wouldn’t it be better to sell and then buy the same stocks again when the prices have hit the bottom?
Yes, but only if you knew exactly when prices are going to drop and when they are going to rise (and when they actually hit bottom). And no one does. The only (fairly) safe bet is that over the long run they will rise.
That strategy is called timing the market. It almost never works. No one can tell when a correction will happen. The government may continue with infinite stimulus and you’ll miss out on the chance to stay even with the inflation this causes.
If you look at how the big players do it, they keep a significant cash reserve and then buy more on the dips. If you sell at a high, you owe capital gains taxes which is huge hit when it comes to reinvest because you are investing significantly less money. Balancing the loss from the market going down versus the amount you lose to taxes when you cash out, means the stock has to go up much more to recover not only from the drop, but from the tax loss.
The best strategy for those of us not actually in a position to know anything is to buy well-run companies with a solid looking future and hold on to them until you must sell them. It’s a good idea to keep cash on hand so you don’t have to sell something on a dip to pay your mortgage.
Yes. That’s a common technique for capturing losses.
Sounds logical. Except they don’t ring a bell at the ultimate bottom. Like the article says there will be multiple bottoms in a bear market. No one has been able to forecast the lowest bottom consistently yet. And no body will in the future.
Yes, but you have to listen really diligently, otherwise you might overhear it when they ring the bell to signal that the Market has hit bottom, and that it's now time to start buying again.
Regards,