Fires are once again raging in California and air quality in one of the most populated metropolitan areas in the country (the San Francisco Bay Area) is quite poor. This map show current air quality in the Bay Area. For more information see the EPA’s Air Quality website.
EPA has assigned a specific color to each AQI category to make it easier for people to understand quickly whether air pollution is reaching unhealthy levels in their communities. For example, the color orange means that conditions are "unhealthy for sensitive groups," while red means that conditions may be "unhealthy for everyone," and so on.
|Air Quality Index
Levels of Health Concern
|Good||0 to 50||Air quality is considered satisfactory, and air pollution poses little or no risk.|
|Moderate||51 to 100||Air quality is acceptable; however, for some pollutants there may be a moderate health concern for a very small number of people who are unusually sensitive to air pollution.|
|Unhealthy for Sensitive Groups||101 to 150||Members of sensitive groups may experience health effects. The general public is not likely to be affected.|
|Unhealthy||151 to 200||Everyone may begin to experience health effects; members of sensitive groups may experience more serious health effects.|
|Very Unhealthy||201 to 300||Health alert: everyone may experience more serious health effects.|
|Hazardous||301 to 500||Health warnings of emergency conditions. The entire population is more likely to be affected.|
For more information and additional maps see the EPA’s Air Quality website.
The stock market has been on a bull run (hitting numerous all time highs) for the last 8+ years and it’s not clear when it will end. Whenever there’s been an extended bull run, one question that comes to mind “Should I invest in the market now, or wait until a pullback?” The question comes about because of fear and loss aversion: fear that the market will drop right after they invest and the observation that people want to avoid losses more than they value gains. However, historically, the correct answer, at least over the last 68 years, has been to invest and not to try to time the market.
This was also demonstrated in the Market Timing Game; that people are pretty bad at predicting the direction of the markets and given the upward trend of the market, it’s simpler and more likely than not, better to just stay invested in the market. The corollary to this is that when you have additional money to invest (e.g. from regular savings from your paycheck or a one-time event like the sale of a house), it makes sense to invest the money and not worry about whether the market is at a high or low point. Some graphs that look at the distribution of returns when the market is at an all time high (ATH) can help answer this question of whether you expect to see worse returns than investing at other times.
The Market Timing Game simulation is premised on the idea that buying-and-holding index investing and index funds are a no-brainer investment strategy and market timing (i.e. trying to predict market direction and trading accordingly) is a less than optimal strategy. The saying goes “Time in the market not timing the market”. In this simulation, you are given a 3-year market period from sometime in history (between 1950 and 2018) or you can run in Monte Carlo mode (which picks randomly from daily returns in this period) and you start fully invested in the market and can trade out of (and into) the market if you feel like the market will fall (or rise). The goal is to see if you can beat the market index returns.