No Strategy Works All Of The Time

by: Roger Nusbaum

Charles Kirk has a post up about sharing trades (or not) via social media. Included was the following:

All strategies will require making tough and unpopular decisions at times.

The message I take from this has to do with staying disciplined and faithful to a strategy you believe is best for your long term goals.

As we've talked about many times since the beginning of my site, no strategy can be the best for all times but many strategies can get the job done in the long term. This has been a great year for indexers; really the last couple of years have been. The previous decade was lousy for indexers. In the future there will be periods that are again not good for them and periods like now that are.

Indexers know they will have a tough time in decades like the 1970s and 2000s and even during fads/manias. The 2000s were tough because not much progress was made in terms of equity gains, which can lead to impatience. The late 1990s were tough for indexers because other people appeared to be getting rich buying stocks like sock-puppet dot com and making 1000% in two months which again can lead to impatience.

Any strategy with a reasonable basis for working will at times be the best and at other times seriously lag. Once you figure that out, it will make it easier to remain focused on whatever is important to your long term goals.