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It depends on your investment approach.
Dollar cost averaging over decades is a very valid and proven strategy. But the time to recovery is unknowable. We’ve seen up to 14 years between ATH before and this could be another one of those very long periods. It takes discipline to stay with it.
There are some ways to understand the market and try to avoid drawdowns. They are not perfect and they take effort. The marginal return on that effort is probably not worth it for most people. But if you can avoid large draw downs when the market tanks AND you can get market returns in up years you can see very good wealth creation. This also takes discipline - more discipline and more work.
Unfortunately what usually happens when people go active is they loose their discipline. Emotions are hard to manage so you end up selling at the bottom or chasing at the top. A decent trading system will help you understand trading setups, but if you don’t have the discipline to execute appropriately you’ll get chopped up.
Regardless, people should keep putting money into savings. Even if it sits in cash for a while get it out of your consumption accounts. Eventually we’ll get a generational market bottom and you’ll want to be invested in financial assets. If you’ve DCA’d on the way down, that’s fine. If you’ve timed the market with some alacrity that’s good too.
Just know that your approach will be far from perfect regardless. Learn to embrace adverse selection.
Do some research on when the best days of the market occur. They are often during bear markets. And if you miss those days your returns are going to be impacted over the long term. It sucks losing money everyday the market is open but if your time horizon is 5+ years most data points to DCA vs trying to find a bottom. People who sell during bear markets also very often don’t match the returns of those who stayed invested.
Not to mention the record inflation which makes this one of the worst times to sit on cash.
This is spot on.
Cash loses value, firms that make money pay high comps in mostly options and grants. They control the corporate til, can buy shares to make their options and grants worth more with corporate cash and do, and in a downturn will be encouraged to do so. Say you owned X amount of shares in 08, didn’t sell but most did. 2 years later the total percentage of outstanding is much lower, you own more are a result of reduced float too. Reducing float means shares are worth more. The problem is you must play the var and value game. Return on capital not growth matters under that environment