This does not account for dividends, which, if reinvested, would have produced a 22% gain during this time period, which is not too bad when "everything was selling off"

Not spectacular, but you also need to compare this to whatever alternate investments you would have chosen at that time, and would have kept until now. Gold, Cash, small caps, real estate, multi-factor, managed futures, ?

You also need to consider why you have chosen these to points in time.

Looking backwards, there were probably better things to do with your money during that specific time period, but would you have chosen them in 1996 ? And would you have kept them until today ? And, if not, would the changes you would make have also done well ? You would need to be right in both investment selection and timing many times to have done better than the SP has done.

I wasn't accounting for reinvested dividends, but inflation from 1997 to 2009 was 34%.

I'm choosing those points because I remember hearing from retirees in 2008 that they had followed all of the advice and they are worse off than they were 10+ years ago. I saw too many cases of people being upside-down on their mortgages, while losing their jobs, while losing their retirements. In that situation, it's pretty hard to keep saying "don't worry, it'll come back, just keep dollar cost averaging in". If you were retiring in 2008, you might not be able to keep averaging with the market, even if you had the stomach to do it. Time in the market is still timing the market.

We've only had modern portfolio theory since 1952. In the last few decades, we've done some really experimental monetary policy. I won't be shocked if we experience some event that brings us back to 2008 levels. I also won't be shocked if we see hyperinflation. The one thing I know is that you're always trying to time the market, it's just a question of if you acknowledge it or not.

I think it's a good idea to max out your tax-advantaged retirement plans and dump them in indexes as sort of a safety net because your MPT advice is probably "too big to fail" at this point, but that only accounts for less than 20k/year of investment advice (for most employed people). After that, investing in a residence makes a lot of sense because of the tax advantages. If you happen to be in a situation where you can engineer more tax advantages (like owning a business or moving to a lower-tax state), then definitely do that. Once you've got all that sorted, it's pretty much just gambling.

> If you were retiring in 2008, you might not be able to keep averaging with the market, even if you had the stomach to do it.

That is why you need to risk-adjust your portfolio before you hit retirement and see to it that you have other assets to fall back on in case of market implosions. Landing in a ditch with your stocks as the only possible income during 2008 means your assessment of your risk tolerance was wrong and you found that out the hard way. Staying in stocks means accepting the risk that things go south in exchange for high potential returns. As we saw, the markets climbed back (I think the average is 2-3 years of misery in past crises before it gets back up) and had a 10-year bull run before Corona hit.

A fully paid off house can help sit out crashes, too, sure. Investing in stocks while still paying your house off, well... some people like to live on the edge :-)

> Time in the market is still timing the market.

No. Timing the market is making decisions in between about getting in and out for other things than rebalancing, adjusting your risk or for some rational tax purpose.

As mmmrk responded, you need to settle on a risk profile.It is not all or nothing.

You should assume the "market" will go down 50% at any given time, and ask yourself how that would effect you. You need how much to keep in "safe" assets, such as quality bonds and/or cash.

If you are retired and your assets drop in half, will you be ok ? If not, reduce equity exposure until you reach a point where you will be ok.

I aim to own my house outright, and have no more than 50% in equities. That's me, that's my risk tolerance. If the market goes down by 50%, I am still fine, from a financial perspective. So I would not feel the need to sell in a panic. If I had a large mortgage, all stock, I would probably panic.

Owning a business, imo, is much riskier. You can go out of business and also end up in debt. Imagine if you owned a bunch of restaurants right now.

Again, what is the alternative ? Managed futures, minimum volatilty, small cap, factors, oil rigs, private equity - none of these have shown to work when the st hits the fan. Maybe gold.

And on other dates, it was not $773. So what? Long term, the world market (more than the US) historically averaged to 6-8% growth p.a. with dividends before inflation iirc, and the last 120 years were certainly no walk in the park for the world. If you look at the MSCI World in the past 30 or 40 years, you would have made no loss in any time window if you bought and held at least 15 years. The key is time in the market. 12 years isn't much. Think 20, 30+ or until you die. Psychological pain in downturns is the price you pay for far superior returns in the long run to any other asset class.

Switching between VTI and single shares is market timing and therefore gambling. If you want to reduce the maximum drawdown, ramp up the allocation of less risky assets like bonds or cash on a savings account.

While I largely agree with your post, you are forgetting about the total return, yes the S&P was like for like on a net basis, but dont forget about dividends in the intermediate period.