My short answer is hell no!
Some people are waiting to get into stocks in the next bear market. They have read that many people have achieved unbelievable returns when they invested in the bear market that accompanied the Great Recession. So, they want to wait for that perfect time to come again. Unfortunately, most perfect things in life are unrecognized in the present and only become clear in hindsight.
One of the major problems of this mode of thought is when everything is down, many of us get wrapped up in the doom and gloom that spreads among the general populace. To be successful, requires independent thought. We are wired for herd behavior in these types of situations. Everyone, at that point, is talking about how dumb it is to invest in stocks. But, in hindsight, it is ALWAYS the best time to add to stock holdings.
You don't have to wait for the next bear market to start building a stock portfolio and you actually shouldn’t. You could be waiting a long time. Even bull markets have stocks that are a bargain opportunities, they are just harder to recognize and they are much fewer in number.
No one knows when the next full blown bear will rear its ugly head! If someone says they can tell you when the next bear market will start, run away as fast as you can. No one, no matter how much they know or position they have can determine when the next bear will be since no one has a crystal ball.
There are always those who are lucky enough to predict an economic event such as a bear market, but those are "one hit wonders." Their future predictions are almost always wrong. If you reviewed all the predictions they made BEFORE the bear market prediction, you would find their batting average was lower than a major league pitcher! You’ll see many, many incorrect predictions! Or, in terms of baseball, they struck out 80% to 90% of the time that they came to the plate.
Different industries are at different points in their economic cycles at any time. So some industries could represent nice buys now, even in a general bull market, while others are priced to perfection. There is no reason to wait until ALL stocks are down in a widespread bear market. In fact, it is foolish to do so.
While I am negative on the next several years of this economy, I am looking at situations where well-run companies are getting beaten down. Maybe it’s the economics of their industry or tariff effects that causes the “beat down”, but my eye is how they are dealing with the current adversity and what they will be doing 3 to 5 years out. Viewing the environment with a short term perspective is a sure way to make bad decisions.
So if you see companies that are relatively cheap, are handing current adversity well and are building for the future, you might have a bargain now.
The most important concept in finance is the time value of money. When you wait for the next bear market to come along, you are using that precious resource called “time”. On the other hand, if you jump in now, but the opportunity isn’t great, you are using the precious resource called “money”. Striking a balance between time and money is never easily assessed in investments, just like other areas of our lives. There is no formula to calculate it either.
In my experience, I have found that a balance between extremes of anything is the right position to take. While this is my view of life in general, it is just as applicable to investments as well.
Stay balanced, stay well-read, and keep a sharp eye out for bargains . Remember that life is a constant educational process. You'll make some mistakes along the way, but mistakes are the main ingredient of experience. It is essential that mistakes are kept to the minimum level, but there WILL be some mistakes to learn from.
