Most people average in, and out, over many years. Marking to market and even with bonds there will be point to point volatility and where if you measure the peak-to-trough worst case that is inclined to be deep, but that's only real if you actually sell (change) at that point, otherwise its just a transitory paper figure. When instead just left to run, averaging averages out and the average tends to be good-enough. A better approach to selling low, if you must time, would instead to be to sell-out (change) after draw-up's, when above average/high upside volatility.To clarify it is how much loss you take before you change your plan.
If marking to market is a concern - a risk that you may capitulate, then your asset allocation is likely wrong, should include elements that reduce the point to point volatility. In addition to averaging in and out over many years you might also employ averaging-down the average cost, such as via a stock/bond blend and periodic rebalancing (that is inclined to sell some bonds to add more stocks after downside volatility, reduce stocks add to bonds after upside volatility).
Less interest can be a advantage, those that just buy and hold, rarely looking at their investment values often do better than most who monitor their portfolio value regularly and end up capitulating (where in such cases they would have been better off having just held T-Bills).
Statistics: Posted by seajay — Mon Jun 10, 2024 4:11 am — Replies 42 — Views 3530