No. of Recommendations: 12
As we just had a fresh all time market high, it's definitely a bull market at the moment. Monday I'll be allocating a little capital to a "roll your own index" approach.
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When the bull market ends per the simple test, how will this affect the "roll your own index" approach? Do you plan to shelve the approach and channel the proceeds into other investments/approaches when that day comes? We'll see. The intent is to keep doing it. It's about 3/4 conservative, but also includes abotu 1/4 for aggressive things. I may cut back on the aggressive allocation over time if it's no longer plainly a bull market.
Generally I use the "state" of the market mainly for deciding at the margin on new capital allocations. In an ongoing raging bull market, buying nice stuff on dips is nice and I'm a little quicker to pull the trigger. If it isn't a bull market there is rarely a hurry to deploy new cash as there may be even better sales coming soon.
Besides, even if I decide to do change anything, there is no great hurry. Most bull markets end pretty gradually. It's extremely rare of the market to drop, both meaningfully and in a lasting way, shortly after a fresh market "recent high". If you go back through time and pinpoint the absolute cyclical market tops, looking at a typical week about 5-6 months later the market is down only around 8% on average. An average can hide a whole lot of variation, but it is a bit of comfort: there is no need to panic. (there isn't anyway, but it's always nice to have more reasons to remind yourself of that)
This table gives an idea of the gradual nature of the way the "recent high" effect wears off
http://www.datahelper.com/mi/search.phtml?nofool=y...Jim
