If you are/were a full time trader competing with full resources, yes a strategy like that might work. But most of us are working folks who are educating ourselves.
There are too many cliches to try and stick with for a strategy in the market. It seems every academy has a theory and every trader has a cliche:
Buy and hold
Dead cat bounce
Let your winners run, sell the losers
Rebalance
Cant time the market
Buy the dip
Insert your own flavor of the talking head cliché.
At a certain point, it’s all contradictory and just noise to generate revenue for the analysts, brokers and traders.
Disregarding all the distractions, we should focus on simplifiying and staying the course.
80% of our energy should be focused on making money in our careers by increasing our value, spot bonuses, raises.
10% of our energy monitoring spending plan/budget to not let it rise as income rises
10% reading, educating and making purchases for the long game of 7-10 years or likewise.
We (working folks) can’t compete at a high level against the professionals with teams of folks with various buying/selling strategies out there such as options, calls, sells and various strategies that sound great in a vacuum.
It’s easier to dollar cost average plow into S&P500 funds, pick a few winners and let them run for the long game. There is no “play money”. We’re playing for keeps making every single dollar count.
Ages
52-55: Still full time or part time employed but eyeing an exit sooner rather than later
Goal is hitting the Freedom Number within 18 months of 55 +/-
1)Focusing on paying off the house
2)Prepare the first bucket of the three bucket strategy.
3)Fully understand current spending plan, historical data and sketching out spending plan at 55 or hitting the freedom number
55-59.5: Sunsetted career, not working, or working but having fun in the game
1)Finish setting up “3 Bucket strategy”
a.Start focusing on the first bucket and understanding tax implications
2)Tapping bridge accounts.
Composed of individual stocks and S&P500 mutual funds
59.5-62: Enjoying Life
3) Tapping various retirement accounts
Evaluate based on tax implications for future Required Minimum Distributions (RMDS).
ROTH accounts and Traditional accounts
4)Use bridge account sparingly
5)Filling up Bucket “2” as needed
6)Evaluate taking Social at 62+
62+
1) I'll be taking Social security as soon as it's an option
2) Tapping various retirement accounts
Evaluate based on tax implications for future Required Minimum Distributions (RMDS).
ROTH accounts and Traditional accounts
3)Use bridge account sparingly
4)Filling up Bucket “2” as needed
70+,
1)Tapping RMD’s as needed and required
2)Setting up future money for future generations or giving
Hence why our play is heavy S&P500 funds and winners which we are letting run for the next 7+ years. I don’t have the time, energy and distraction to try and constantly move money around for an edge. We’ve got ~1,750 days until my freedom number so I invest my energy in the 80% of what I can control to maximize the machine.
The 3 Bucket Strategy completely trumps the 4% rule due to 1 thing: emotion vs volatility!
ymmv but as an engineer, discipline is our strength. over thinking things can be a weakness too.