"Perhaps then we can ask the question, if one sold DODGX when value fell to $90, and then bought it back after it crossed $100 again, ... "
That's a surefire way to lose money. You're selling on dips, and buying back when the price is higher than when you sold. For the money you got by selling your shares at $90, you get fewer shares back when you repurchase at $100.
I can make this concrete. I'm glad you mentioned 2000-2002. (All data from Yahoo finance.)
The first time in that time frame that the fund price dipped to $90 or below was 2/25/2000, at $89.44. (It had last been over $100 on 1/19/2000.) The lowest it got after that before going back over $100 was $89.36 on 3/7/2000. It reached $100 on 5/12/2000 ($100.09). Selling at virtually the bottom and buying back at $100 would have cost about 11%. Not to mention the missed dividend. (DODGX pays quarterly dividends, or at least it does now.)
The next time it dipped to $90 or below was 9/20/2001, at $87.95. The lowest it got after that was the next day, at $86.51. It went back over $100 on 11/26/2001, at $100.34. Selling low ($86.51) and buying high ($100.34) would have cost around 14%, again plus quarterly dividends forgone.
The final time it dipped to $90 or below might make you feel a little better. It dropped to $89.22 on 7/16/2002. It got as low as $75.03 on 10/9/2002, before passing $100 again on 6/12/2003 ($100.15). By being out of the market, you would have avoided some discomfort at watching your shares drop another 16%. Ultimately though, you'd still have paid $100.15 to buy back shares that you sold at $89.22.
A more effective strategy is to use
trailing stops, which may be what you had in mind. I think you're trying to clip off the worst of the loss (by selling when it seems the fund is on its way down), and conversely, to pick up most of the gain (by selling when it looks like the fund is on its way to recovering). Trailing stops help you do that.
You want to reenter once the fund starts moving up, say from that low of $75.03 to a price "just" 10% higher, rather than wait for it to blow past the price you sold it at only to repurchase at a higher price.
An issue with this strategy is that corrections (10% moves) are more common than bear markets (20% moves). So if you sell when the fund drops 10%, you'll likely be selling into a correction, not a bear. In those cases, the fund won't drop 20%. Let's say the fund drops 15%. When it then
gains 10% and you repurchase, its price will still be higher than the price you sold it at.
With 10% trailing stops, the only time you come out ahead (and it could be far ahead) would be in bear markets.
Peace of mind comes at a price. I prefer the strategy that BobC and others have suggested - keeping enough in cash and short term bonds to wait out market gyrations.
