I find this somewhat dubious. If you buy-and-hold for a lifetime, you'll face at least a once-in-a-lifetime level of shock at some point.
The possibility that this shock will happen just when you need the funds occurs fairly regularly to generations of retirees: but always seems to be forgotten by gold-standard financial advice.
That said, I'm honestly deeply confused as to what you think the alternative is It's impossible to reliably predict crashes or their extent so by selling you're generally just locking in your losses. I personally know multiple people who liquidated during the Great Recession, and... well, not only did they sell at rock bottom prices during the fire sale, but they also failed to get back in to the market during the incredible rally of the last decade.
I know multiple people who got out during the Trump administration, expecting total financial meltdown. Those people are materially worse off than if they'd simply held. I know several who panic sold when the markets took a hit at the beginning of the pandemic. Yet again, they've locked in their losses and missed out on the positive returns that have occurred since then.
So, barring access to a crystal ball, what exactly do you think is the alternative?
Now generally timing the market is not recommended; however, if the market has been going up for 5% a year for the previous 10 years versus going up for 20% a year (assuming same levels of inflation), it paints a very different picture, so at least in broad strokes you should be able to estimate where we are in a market cycle (telling the difference between 1998 and 2000 might be hard, but telling the difference between 1998 and 1994 should be fairly straightforward)
http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valua...
- Never sell. Ever. (Until retirement). [1] The natural extension of this is... always buy. Buy now. Buy.
- Keep a pool of cash on the side (whatever you can afford) to be ready to capitalize on any "fire sale" of stocks. This should be about 10% of your portfolio as a very liquid non-volatile asset (cash).
[1] Obviously life hits you hard sometimes and you HAVE to sell to cover unexpected bills. I am obviously not suggesting in those situations that you hold your stock to the detriment of your healthy, of a family members health, etc.
Positive expected value is positive expected value. This works great, as long as you have plenty of bankroll and can ride out any losses.
As you say, this advice doesn't apply to people who might need the money.
If you might need the money, it needs to be somewhere safe like a savings account or a CD. Once you have an emergency fund, you can start saving in higer-risk/higher-reward +EV investments like index funds.
Suppose a shock happened right before I planned to shift into a safer portfolio. What do I do then?
The only really correct answer is: "well, I didn't need that money anyway."
If you are 45 you might be at 50/50 (safe/risky growth) by 55 25/75 by 60 90% is safe.
If something happens at 60 where you lose 50% of the 10% in growth stocks stats show that a 5 year recovery to base levels is likely.
Again, Target Retirement funds handle this completely transparently for you and require literally zero hands-on involvement.
This is quite simply nowhere near as hard as you're making it out to be.
I'm going to quote a (sarcastic) reply to another of your comments:
"This is easy. Just find a job that pays you $350,000 a year."
If you have plenty of wealth and income, then it's easy.
But then, if you have plenty of wealth and income, it doesn't really matter what you do.