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I Am Not Calling The Bottom, Says Ritholtz–But I Am “Scaling In”

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Wall Street's wildest week since 2008 continued with another 400-plus point move for the Dow on Thursday. The Dow Jones industrial rose as much as 549 points, or 5.1%, before closing the day up 423 points or 4%. The S&P 500 and Nasdaq both gained more than 4.6%.

Is the worst over?

With the market yo-yoing wildly, investors and pundits have become obsessed with "calling the bottom"--trying to find the exact moment when the last panicked seller flees and the market soars.

With a 500-point drop last week and 500- and 600-point drops this week, as well as a 400-point up day in between, trying to pick the exact bottom is tempting.

But it's a fool's exercise, says Barry Ritholtz, the chief investment strategist at FusionIQ and the writer of economics blog The Big Picture.

Ritholtz doesn't think we've hit bottom yet, but he has begun "scaling in"--moving money into the market gradually, in tranches.

Ritholtz actually regards the obsession with trying to call the bottom as a sign that the bottom has yet to arrive: When we hit the real bottom, he says, the folks who have called it prematurely will have lost their shirts, and no one will be interested in trying to call it anymore.

Ritholtz also notes that you don't have to call the bottom to make a lot of money. You can wait until the market has rebounded 10% or 20% and then going ahead and step in. The folks who did this after the recent low, in March 2009, did quite well.