Amazon.com ( AMZN) from 1998 until present:

The bottom line: Most investors do not have the tools to play this bottom-guessing game. They lack the ability to wait for lows, and they lack the skill set to see the bottom when it's there. Too few employ stop losses or risk management. Worst of all, even when they do, they lack the discipline to follow their own rules.

So you ask: Is it safe yet?

Unless you know -- and can avoid the dentists drill -- waiting for a major downtrend to be broken is the best way to preserve capital and redeploy cash intelligently.

One of the key differences between individual investors and institutions is their respective job descriptions. Mutual funds, pension plans, hedge funds get paid to take extraordinary risks in order to improve their returns.

Individuals, on the other hand, do not...

Might today be the bottom? My best guess is that we are getting nearer a tradeable low -- the oversold point where a rally can run a few days to a few weeks. But my instinct is that we are nowhere near the 2008/2009 recession bottom. But why guess? Why not wait until the downtrend is decisively broken?

The advantages of nailing a bottom precisely right for the individual are quite minor, especially relative to the disadvantages of being too early and losing precious capital.
At the time of publication, Ritholtz had no positions in stocks mentioned, although holdings can change at any time.

Barry Ritholtz blogs at the popular The Big Picture, offering up his macro perspectives on the capital markets, the economy, technology and digital media.

He is CEO and director of equity research of Fusion IQ, a quantitative research firm.

Ritholtz holds a bachelor's degree in political science (with a concentration in philosophy) from the State University of New York at Stony Brook, and a J.D. from the Benjamin N. Cardozo School of Law, where he studied corporate law and economics.

Ritholtz appreciates your feedback; click here to send him an email.

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