Here's the thing about this Recession

 Here’s the thing about this recession.

Well, several things, actually.

1. I don’t know how long it will last.

2. I don’t know what the bottom price is going to be.

3. I don’t know what the price action will look like on the way down, or on the way back up

4. I believe it will recover and go up

So from my perspective, the best decision I can make is to go long, keep buying all the way down, buy the bottom, buy on the way back up, come out ahead, have no regrets about my decision making along the way (because I didn’t jump in and out at the worst times trying to guess the bottom or price action patterns)

Your original question (Whatcha think about stocks? Continues up or temporary?) reminded me about the stress I don’t have to deal with, in trying to decide what to do.

Here’s my perspective on the difference. I’ll call this System 1 and System 2.

Market is doing well
System 1 keeps buying
System 2 keeps buying

Market starts to fall
System 1 keeps buying
System 2 has to decide if it’ll fall enough “this time” to justify a short position

Market is now in free fall
S1 keeps buying
S2 took a short position, but is still down almost as much as system 1 because market fell far enough during the decision making process

Market shows signs of turning around
S1 keeps buying
S2 has taken some losses on the short position and is stressing about what decision to make

Market continues up
S1 keeps buying
S2 exits the short after more losses, and goes long

The turnaround was false, recession continues and market goes down more
S1 keeps buying
S2 regrets exiting the short position so soon, and ate more losses on the new long position, and after more deliberating and stress about decision making, goes short again because they “knew it wasn’t over yet”

Market turns up again
S1 keeps buying
S2 decides it’s another fake out and stays short

Market recovers most of the losses
S1 keeps buying
S2 realizes it’s finally recovering, decides to go long again.

During all this time, they both lost money on the way down. That’s a given. S2 might have gotten lucky a couple times with all the switching and been on the right side, but the gains are so minimal that they aren’t worth talking about. The losses S2 took vs S1 were much worse, because sometimes S2 was short during recovery mode.

Advantages of System 1

1. No decision making stress, no regrets about making the wrong call. You always know to keep buying. Smooth sailing in any market.
2. You’re guaranteed to buy the bottom and come out ahead as a result
3. Better results with less effort. No charts, news, market watching, decision making, etc.

Advantages of System 2

1. You might get lucky
2. You can brag to your friends later about how you “called the bottom” as you confuse luck with skill

Me? I like System 1, since I don’t know the future yet.
System 2 only looks good after the fact, as a hypothetical “what if you could have?”
What if I could have gotten lucky with System 2 and got in and out perfectly? Yeah, “woulda coulda.” I know I couldn’t predict the future, so I didn’t try to.