I totally agree, I don’t rely on predictions, I rely on price action to tell me what to do, and I religiously stick to technical indicators. They always acts with a lag, you’re always behind the curve getting in and out, but you avoid most of the bear market and you ride up on most of the bull market. Having said that — these are advanced techniques. I don’t recommend for just anyone. You have to be quite mathematical. And disciplined.
Here’s a backtest from 1970 of a tactical approach which is in the public domain. Google or ChatGPT on “Gary Antonacci GEM portfolio rules” and you will be served up the instructions on how to implement this for free using ETFs like VOO, VEU, and BND. Shown is GEM BLUE vs S&P500 GREEN, logarithmic price scale. Notice it did not participate in the withering bear markets, which is how it won. “Win by not losing”. But… it has underperformed recently. So, you can’t have it both ways. You have to decide if you’re willing to put up with bull market drag in order to not get killed in bear markets. That’s my choice.
This is conceptually what Wall Street does in-house for their own internal profits. They sell “buy and hold” to the masses, but they do sometimes the opposite internally. This conflict of interest has gone on… forever, basically.
Starting with $10000 on 1/1/1970, the S&P gave you back $3 million, the tactical portfolio $17 mliion.
Long term stock market returns forecasts are not useful for trading, but they do inform my overall risk appetite, which now is no more than 60% equities ever (I’m almost 64 anyway, so that’s not too cautious).
Tactical approaches are morally equivalent to, “if it starts raining put on a raincoat. If the sun comes out, take it off”. Nothing more complex than that.