Index Funds

Well, I finally did it.  On March 1st, I bought into my first index funds (SPY & IVV).  And since that time, I've doubled down to the point where almost 25% of my investable funds are in two S&P 500 ETF's. 

Although I've bought in, I'm not entirely sure what my strategy will be for these investments.  My original intent was to simply buy and hold.  But, I'm not sure if I'm happy with that approach.  In fact, the stock market correction from the recent earthquake/tsunami/nuclear crisis has made me quite skeptical of a buy and hold strategy because this strategy becomes a victim of a bear market, and does not allow you to take advantage of it.  As you might guess, the share I bought on March 1st have dropped significantly.

So I'm thinking that I should simply use these shares in the same way that I've I've used individual company stocks in the past.  So the strategy would look something like this.

• Funds would be invested with 40% of the index funds bought at a premium, 20% bought at a fair value and 40% bought at a discount...or some other similar breakdown.
• Profits will be taken as I see fit.  I will probably revert back to my greedy model and try to squeeze 10% out. 
• Sell in stages, do not sell out of entire position at once.  TO allow profits to be tracked, it would make sense to use multiple ETFs and/or multiple accounts.
• Maintain a lot of cash in preparation of a correction.  This will leave a lot of money uninvested during a bull run, impacting overall percentage return.  But this would carry less risk that investing 100% in an index with a buy and hold strategy.

I'd love to completely eliminate the individual stork portion of my portfolio in favor of this approach as it would improve diversity and eliminate the risk that an individual company might have a catastrophic event.  But I'm not sure that I could stay invested enough to earn the returns I'm used to.  As with my current strategy, only market volatility can drive my desired results.