My New Strategy for Investing During Market Declines

I read an article that stated since 1950, the market has had 35 declines of 10% or more.  In all 35 instances, the market passed the previous highs.  Sometimes within a few weeks, other times a few months, and in a couple cases a few years.  But the recovery happened 100% of the time.  I would include a link to the article, but I can no longer find it.

Of course, one issue is timing.  If it takes 5 or 10 years to recover, it may be challenging for those who have no other source of income.   A second issue is stock risk.   Inevitably, some stocks keep going down after a 10% decline and don't recover to new highs. A third issue is the decline may continue past 10% to 20-40% as it has in the past.   It seems to be a no brainer decision to invest something, if one has time and other sources of income.

Here's my plan for the next 10% decline:

• In retirement accounts, invest up to 50% of cash available.  These funds won't be needed for the next 5 years of living expenses.
• Scale in the investments.  For example, 10% of funds at 10% decline, additional 20% at 15% decline, 25% at 20% decline (bear market).
• Invest in market index ETFs instead of individual stocks.  My current choices are VOO (S&P 500 index) and MGK (Large Cap Growth Stock index.)
• Buy and mostly hold.  I will evaluate some options for scaling out gains in the future.

For reference, I feel the market is extremely high and a correction is inevitable, but who knows when.  However, I do know that it will be difficult to invest new money when the market declines.   Hopefully, I will be disciplined and follow this plan.

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This is not financial nor investing advice. Please consult a professional advisor.

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