I told Peggy in May that I was so pessimistic about stocks that it was all I could do to stay in the market. She said that maybe I shouldn’t, but my market philosophy came from John Bogle (the father of indexing), and I felt that I would be disloyal to him if I sold. So it is that I’ve received yet another lesson in the fact that, when I get screwed because I trusted an expert, the expert seldom if ever gets screwed with me.
So what did Bogle say that caused me to stay astride a horse that was running pell-mell toward a cliff? He demonstrated to my satisfaction that no market guru has ever demonstrated anything close to a consistent ability to time the market, and that effective market timing requires getting it right twice—once when you sell and again when you buy back (bull markets typically post their highest gains early on). I know he’s right, yet I don’t recall a single instance in which my own hunches were wrong. I have regretfully avoided buys because they seemed risky only to see them soar while my less volatile buys dropped. Now I’ve lost a third of our savings because I trusted John Bogle more than I did myself.
The trouble is that I don’t know if my hunches were a matter of intelligence or luck. Since I didn’t record them, I can’t even prove to myself that I was right as often as I think I was. It could be that I simply remember the times I lost money because I didn’t listen to my hunches while forgetting the times I made money because I listened to John Bogle. After all, no one remembers the thousands of times he drove to the supermarket safely; he only remembers the one time he had a wreck.
Having ignored my correct hunch to sell, let’s see how right I am over the coming months about my belief that now is the time to buy. Sure, the market looks risky, but if you wait until things have quieted down, you’ll miss out on its biggest gains.