Cowardly Lion markets

[drfrink24]

Hello all. I was wondering about your thoughts on the concept of a "cowardly lion market". Unlike a bull or bear market, a cowardly lion market, also called "range bound", in that there are run up gains, followed by selloffs, netting a flat or slightly positive or negative gain.

From Vitaliy Katsenelson:

The bottom line: Remember those long-term double-digit returns you were
promised by stock market gurus during the last bull market? Well, an average
passive buy-and-hold investor will be lucky to have very low single-digit returns for the long term. In fact, during the last 1966-1982 range-bound market, investors received almost zero real total returns.



I've been moving more to index based funds, because of their low cost, and their % chance of beating actively managed funds in the long run...

However, if this is true, then an active fund may in fact be the way to go.

Thoughts?

[Broken Arrow]

Hey, thanks for sharing! Very thought-provoking.

Well, I don't know. I didn't know we're in a sideways market. I thought we're in bear country. A lot of fear and blood for someone to consider this sideways....

Even if it is sideways, the whole statement hinges on the assumption that professional fund managers know how to navigate it. I'm sure many know how, but then, you have to contend with the issue of how much ER you're paying for his services, and whether the end result is still worthwhile to you.

But my biggest question is wondering if certain fund managers really do know how? A sideways market is tough for anyone, even professionals, and not all fund managers are of the same caliber.

I would much prefer if they could come up with specific examples rather than broad statements such as this. The market isn't homogeneous. There are several markets, each with several sectors that have several industries and sub-industries that have lots of individual companies, each with their own story to tell.

Yes, it is possible that a fund manager could out-perform the (sideways) market. However, that's not guaranteed. The only guarantee we have is how much we're going to pay him.

I submit that you'll still be fine if you stick with index funds. However, if you want to go with certain fund managers, please be sure to do your homework on this individual before investing into them. But that's true for any fund manager, regardless of which way the market is going.

[jIM_Ohio]

IMO we have been in a bear since 2000 and when we come out I want to be all in.

The market is going to go up and down a lot- if you buy and hold at any one given point, that is a considerable amount of risk. The best thing to do is keep buying- if you only plan to buy once then I would not advise getting in at all.