On average, if you decide to wait until employment bottoms to go long equities, for a ‘confirmation’ that the lows have been turned in, you only missed 20% of the total bull market; there was still 80% left to go. Missing that first 20% isn’t the end of the world as long as you are putting cash to work prudently. For example, investment-grade corporate bonds typically generated a total return of nearly 10% (and 5% for Treasuries) during that interval between the equity market bottoming and employment finally doing likewise. Keep in mind that it is always nice to use perfect hindsight — there is more than one occurrence when the market thinks that employment is set to hit bottom … and gets it wrong. That is why it pays to wait just to make 100% sure that the employment backdrop does improve, at the cost of missing one-fifth of the bull market. What you get in return is a piece of mind that the rally has legs, and you still have 80% of the run left to go!
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