Better to act after the fact

There is no way to tell when the recession will happen per Warren Buffet. He said that he doesn’t based on his buying or selling decision on how the economy, or the market is going to behave. He said he is not good at marketing timing.

I believe him on this. Therefore, it is better to act after the facts rather than predicting.

In the past several days, the stock market got crushed. That’s usually the case. It is either over-sold or over-bought because there is so much emotion involved. Just use this as an opportunity to buy when you have the cash to invest regularly.

What if one day you don’t have money to invest and you have to take money out? Same principle. You have to have a well-diversified portfolio. That means it includes many different securities that performs differently. Just like planting flowers or vegetables in the garden. You would plant variety of them that bloom in different seasons so that you can have nice flowers to see and vegetables to harvest all year around.

Therefore, I don’t believe in all-in-one ETF or mutual fund because you can’t sell a component of it. It looks like you diversify but you actually don’t. It defeats one of the key purpose of diversifying. It looks like you simplify your portfolio, but drawback outweighs the benefit.  If you invest for the long term rather than trade frequently, you don’t really need such all-in-one ETF to simplify. Buy and hold variety of securities that are ow-cost and perform differently across business cycles. Then, wait and see. On each business cycle or situation, at least one of your securities perform well or better than the rest. Then you can wait for it to happen then sell it or reap the good dividends or intersts. At that time you will make decision based on facts because it is already happen rather than time the market which is essentially gambling.

The difficult part is that on major national financial TV, so many investment/economics professionals with years of experience and prestigious credential debate daily among themselves when the market bottom will be and when recession will happen. It gives the false idea that we can predict that or we can argue ourselves to one. Those are super smart people indeed. However, there are always smart people on opposite sides of opinions. I guess that the TV stations really have to protect themselves and to show a “balanced” view. Please be very aware of this. Market timing is gambling.