I was recently reading a question regarding protecting your 401K from stock market drops and I got me a bit more curious about timing the market.
We know that at some point there will be a large stock market drop when the next big issue/correction arises and based on my observations will almost certainly bottom out 2-5 years after that, but never sooner.
If I could correctly guess (within a small margin of error) where the peak was and shifted my 401K funds into something like a cash account (not withdrawing) and then shifted it all back into funds after a couple of years, is there a downside?
As I see it: If the market is near bottom when I move back in, I am getting in at the best time; if it still has three more years of falling, I would still be better off than I was had I kept it in. Is there something I'm not considering?
I understand that timing the market is difficult if not impossible. I'm just trying to figure out if there is a hidden cost to successfully doing this like a tax or penalty or something.