Several Minyans have expressed regret at having missed the 26% move in the market over the last nine months (I have allowed for not picking the exact low). If this is how you feel, I respectfully recommend that you shouldn’t be trading (Mr. Practical has recommended not trading at all no matter what).

I say that you shouldn’t be trading first from a psychological point of view. A trader must have the mindset of not looking back, but looking forward. This does not mean that she shouldn’t use historical data, nor use past performance (losses and gains) in deciding how much risk to assume going forward. This means that regret is an emotion (like all emotions in trading) that is more than useless, it is counter-productive. Emotions cause mistakes and one mistake could erase several right decisions.

Secondly, this mindset illustrates a complete lack of understanding of trading. Trading is about risk. If someone said to you that the market has a 50% probability of being up 25% and a 50% probability of being down 50% over the next six months, would you go long? Those that went long near the market lows, first are few in number: by definition the masses do not participate in market moves. Second, they took a certain degree of risk that was perhaps imprudent; looking back ignores this point.

Timing is important, but it is important for investing not trading. When markets get extremely undervalued (which it wasn’t on the lows using normal measurements), some cash can and should be allocated to equities. When markets are overvalued, cash (or bonds) should be increased relative to equities.

Some may disagree, but I believe Minyanville is not about "trading" the market, but about education. I am a trader, but I trade completely differently than most others. I believe I have an edge; if I didn’t I wouldn’t be trading. I use my trading examples to help others understand risk and apply it personally to their situation.

If you are a trader and it helps, great; if you are not a trader, I believe that these things can apply to investing and saving.