He got me thinking about my own evolution as an adviser. Back when I started (mid-80s), my mentors at the time (who were, frankly, much more about asset gathering than they were asset managing) pounded into me the notion that one should never -- ever, under any circumstances -- attempt to time the stock market.
Well, of course, per the quote below, market timing means different things to different people, having been intimate with everything the market delivered over the past 35 years (which, btw, captured the greatest one-day decline in history, various currency crises, investment fund implosions, the tech bubble of the '90s and its implosion, the Greatest Recession Since the Great Depression, and more), I now wholeheartedly reject the well-intentioned teachings of my earliest tutors.
That is, if market timing means constantly assessing current conditions and always investing in accordance with what I view to be the present risk/reward setup, a market timer I be!
Here's John on the topic: emphasis mine...
"... you ought to be ready to field some defense when the going gets rough; before the going gets rough that is. I think this idea that market timing is somehow not a reputable idea, I think that's crazy. I think you have to engage in market timing, you have to recognize times when the risks are increasing and the dangers are building up; especially these days with all this indexing going on and all these securities welded together."
"...it's an essential discipline. I don't think that means that you buy 100% today and sell 100% tomorrow -- which is what some people think market timing is -- I think good market timers recognize when risks are increasing and some money ought to be taken off the table, or as we often say on the street, we ought to get a little closer to home."And with regard to the Fed and current conditions:
"...in this last interest rate cycle, with zero interest rates, I think that don't-fight-the-fed has been called into question pretty dramatically. We've found that in certain environments falling interest rates are in fact not a good scenario for stocks, and that in fact rising interest rates might be a good scenario for stocks; that's sort of the opposite of the perceived wisdom."
"I think these are very challenging times in which you need to look at the realities of the marketplace and keep yourself attune to them."
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