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And conversely, if you try to preempt the crash, you might end up sitting out most of the run up. Lots of people called the dot.com bubble in the late 90s and got out, only to end up worse off than if they'd just held through the whole boom, crash, and recovery. (Of course, I'm sure there were also some that managed to time the market successfully! Not sure I'm that lucky though.)

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Yes, you'd like to try to benefit from some of the run up, but the numbers of the dot-com boom are worth considering. The NASDAQ increase in 5 years preceding the crash was 600%, then the index lost 80% in the crash, so if you'd held through all of that you would have been left with 0.2 (100%-80%) x 7.0 (100% + 600%) of your original investment = 1.4 (140%), so you'd have been up 40% overall (OK for 5 years, but not amazing).

However, say you got onboard late and were "only" up 300% before the crash, then post-crash you'd have been left with 0.2 x 4.0 = 0.8 (80%), so you'd have ended up having lost 20% of your original investment, and of course the later you got onboard the worst off you'd have been.

I'd say you're biasing the analysis by ending at the bottom after the crash though. Certainly if you managed to time your capitulation for the market bottom you would have lost out, but if you're buy-and-hold long term, you'd catch all of the recovery too. The person who sold early, on the other hand, would most likely miss some of the recovery as well.

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