Let's say I have $500k primarily in a Total Market Index Fund in my 401k, and the current dip continues downward for another couple of weeks at a steady pace. Maybe we're in for a crash, maybe it will recover, we don't know, but it's a larger dip than usual.
What if I exchanged all my US stocks for a money market fund, and also kept making regular contributions by buying a total market fund. So I preserve the value of my current account but otherwise keep contributing as I was. Then I make a plan to buy back into the index fund with the rest of my account when the price is back up to the price I sold it for. (Or, if the decline is significant, at some point lower than what I sold for, so I'd experience some additional gains when it recovers.)
Wouldn't the result be that I don't lose any of my current value, but that I still experience gains on everything I buy during the downturn?
In other words, what's the point of riding the market down with half a million dollars?
The worst case scenario I can think of for this plan is that as soon as I sell, it turns around and starts rising and I miss out on a few days or weeks of growth. It's a small risk compared to losing 30-50% of my value as has happened multiple times in the past 30 years.
Whenever people talk about staying in the market it seems that they want to experience the rebound period, but as I see it that only applies to the new money being put in while it's down. If it was up, then falls, then bounces back you're just back where you started.
Can someone explain why this isn't a good move for, let's say, a once in a decade strategy when it becomes clear we're declining?