- In Trade Chatter
- Last Updated: 10 December 2012
- By LA Little
There are many who will tell you that market cycles cannot be timed. They will tell you that 2008 was an aberration and that trying to time it is futile. They are wrong. The fact that there are cycles leads one to conclude that there are tale-tell differences in how the technicals look when the market is strong versus weak. There are subtle changes that occur when the market is moving from one bent to the other. It's not always crystal clear and in fact it isn't all that clear when it is happening but the point is you don't have to be certain to become more cautious - you just need to know that risk is elevated. When that's the case, one should be come more cautious. When its not, less cautious. That's how you time things. You don't go all in or all out on the perturbations on the short term time frame. You wait for the set-up that comes along telling you that a change in qualified trend is likely and you either increase or decrease exposure as a result of it. If it gets worse, you get safer. If the worries lessen, you get more aggressive.
We have been forced to be safer for some time now. That really hasn't changed. That doesn't mean we do nothing. It means we do less. It's just the way the game is played. If you didn't lose your shirt in 2008 then you are far ahead of the game even if you trailed the index returns the last four years. That's a fact and I'm living proof of it.