Traders know that being long means when the market goes up or sideways they win. This forms the basis for carry trades. That’s winning two times out of three. The edge comes from the asset’s income exceeding the cost of financing. Short sellers have a harder time. The cost of borrowing can be hugely expensive. Timing is not a luxury they have.
Timing is also in our minds when we think about central bank tightening. When will it happen and how rapid will it be? In the meantime zero and negative rates make sitting on the side lines similar to running short. But nearly eight years have elapsed so the compounded effect is painful.Â
There is no simple answer but it's probably better to stop trying to guess the next policy move and accept that being invested is the only answer. Albeit that at this point in the cycle your bias may prefer keeping leverage down and hope that time is on your side.