Focus on the emotional cycle

The market goes through four emotional cycles :

Pessimism, Skepticism, Optimism and Euphoria

Market commentators during times of pessimism and skepticism tend to advise their pubic that they should trade the market. Articles appear about how the buy and hold strategy is dead. The rapid swings of the market make their arguments convincing and because the period is characterized by a great deal of fear, the strategy offer's a feeling of safety and for a few profitability. In reality thou executing successfully is almost impossible. The irony about the advise is the fact that stocks offer the greatest margin of safety during these periods. Just about nothing creates the best prices then fear. It is precisely during these times that the buy and hold strategy should be applied.

Optimism and euphoria have the opposite effect. Stocks lose their margin of safety due to inflated prices. It is because foolishness can go on for what feels like eternity, especially if you are out of the market, that the buy and hold strategy takes hold backed by advice from those in the know. In reality the sensible thing to do, during this period, is to sell and trade. By reducing stocks and moving into other assets you then prepare for the eventual decline.