The Little Book of Sideways Markets: How to Make Money in Markets that Go Nowhere

Chapter 17. I Could Be Wrong, but I Doubt It

Maybe the sideways market i've described is not in the cards. Maybe we are about to embark on the biggest bull market in U.S. history. We can study the conditions that preceded different markets, learn from them, and thereby form an educated forecast. Although conditions that preceded previous sideways markets are firmly in place and the probability of a sideways market unfolding over the next decade is high, it is clearly not certain.

Every strategy should be evaluated not just on a "benefit of being right" but, at least as importantly, on a "cost of being wrong" basis, and so let's do just that with Active Value Investing.

	Look for your choices, pick the best one, then go with it.
	--Pat Riley

In the unlikely case that a secular bull market will unfold in the near future (especially unlikely with stock valuations still at the level where the previous sideways market started), Active Value Investing will not punch the lights out, and no, it will not get you inducted into the hall of investing fame, but it should produce solid returns. After all, you own high-quality companies that are growing earnings, maybe even paying fat dividends, and you bought them at the right prices—with appropriate margin of safety.

Although we do have one-half of the components in place for a bear market to start—high valuations—chances are that, unless there is a tremendous long-term deterioration in the economy, a bear market will not show its sharp claws.