A while back I attended some live seminars at the local Charles Schwab office. The broker said it is always the same: market goes down, people come into the office wanting to get more defensive. Market goes up, almost everyone wants to be more aggressive.
A recent article by Howard Gold at Marketwatch (link) echoes this. The article also cites this:
Extensive research using data from millions of trading accounts found that 99% — that's no typo — of active traders lost money ...
This isn't to say that a top is imminent. There continue to be cries of wolf, telling people to prepare for a 1929 style crash (link2).
Readers can see that my trading activity has increased. Am I what the study says is an "active trader?" Hmmm. Sometimes less is more.
As always for the average person that doesn't thrive on learning about the markets and trading, some kind of exchange traded fund or mutual fund strategy is what will work out best. The Vanguard forum (aka Boglehead forum) on the sidebar (link3) is where those folks hang out. The philosophy is simple: live under your means, save a lot, set an age and risk appropriate asset allocation, stick with it.
Buy, hold, rebalance, means a person is always buying low, selling high. However, they never go all in, or all out, just modest small changes. Again, for average folks this is the best road. For folks that have no idea what asset allocation, 50/50 isn't the worst idea, 50% total stock market, 50% total bond market. Those with a bent towards precious metals perhaps 50/40/5, with 5% in physical gold.
Keep in mind, that the Bogleheads advocate a cash reserve of about six months in living expenses for minor emergencies (car breaking down, new roof for house, dental work, the list is long). For middle class people ramping up, that cash will skew the allocation for more like 40/40/20, 20% cash (40% in stocks and bonds).