Author Topic: Welp, I'm going to take a stab at timing the market  (Read 21542 times)

sol

  • Walrus Stache
  • *******
  • Posts: 8372
  • Age: 42
  • Location: Pacific Northwest
Re: Welp, I'm going to take a stab at timing the market
« Reply #250 on: May 13, 2019, 11:49:49 PM »
"What makes me think that" is his post in this thread in which he said he was converting it to cash.

He never said that he pulled his money out and put it under his mattress. FDIC Ally savings accounts are yielding 2.2% right now. I'm pretty sure that in the vernacular of the peasantry that is still "cash."

Hey, I would love for junioroldtimer to come back and enlighten us as to where he's holding his cash.  I'm guessing it's not at Ally bank, but until he chimes in I guess we'll never know.

Full_Beard

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Welp, I'm going to take a stab at timing the market
« Reply #251 on: May 14, 2019, 12:27:41 PM »
I suspect the tone of this thread deters him from coming back.

I'm not an advocate of trying to time the market, and I don't think there are pro's who should have done it last week. Undoubtedly, there are some pro's/gamblers who did. The jury is still out on the wiseness of that move.

That said, if one is having difficulty sitting idle given the current economic or political indicators, or both, I would treat "market timing" like selling a stock short and select boundaries on your gain/loss from the start (e.g., I get back in if there's a 10% drop or a 15% gain, or the Schiller PE ratio drops to 25, etc. -- whatever numbers reflect your willingness to accept loss and reasonable expectation of gain). Maybe that's what the OP did. I can't say.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3174
Re: Welp, I'm going to take a stab at timing the market
« Reply #252 on: May 14, 2019, 12:55:39 PM »
Hilariously, I sold $100k or so of stock last week to pay off my mortgage. Market timing FTW!

Of course, in 30 years, come ask me how that worked out...

-W

the_fixer

  • Pencil Stache
  • ****
  • Posts: 510
  • Location: Colorado
  • mind on my money money on my mind
Re: Welp, I'm going to take a stab at timing the market
« Reply #253 on: May 14, 2019, 09:51:11 PM »
$69.98 5/13/2019


Sent from my Pixel 2 XL using Tapatalk


ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1314
Re: Welp, I'm going to take a stab at timing the market
« Reply #254 on: May 15, 2019, 07:42:05 AM »
I suspect the tone of this thread deters him from coming back.

I'm not an advocate of trying to time the market, and I don't think there are pro's who should have done it last week. Undoubtedly, there are some pro's/gamblers who did. The jury is still out on the wiseness of that move.

That said, if one is having difficulty sitting idle given the current economic or political indicators, or both, I would treat "market timing" like selling a stock short and select boundaries on your gain/loss from the start (e.g., I get back in if there's a 10% drop or a 15% gain, or the Schiller PE ratio drops to 25, etc. -- whatever numbers reflect your willingness to accept loss and reasonable expectation of gain). Maybe that's what the OP did. I can't say.

To some lessor extent, internet mockery is a bet on market timing too. The majority of the time, the market goes up, so it is a safe bet to criticize someone who is going short or neutral. You will be right the majority of the time. However, just like holding a long position opens you up to the risk of the occasional bear market, criticizing those predicting a bear market opens you up to the risk of them being right and you being wrong at some particular time. The majority of us have watched buy-and-hold work wonders for our entire lives, but the tail risk is out there and we've never experienced it. We have experienced the consistent validation of being right, over and over again, about preaching time in the market, but this is not some infallible natural law. it only worked 90+% of the time. If the future of the U.S. resembles Turkey, Venezuela, or Argentina, the rules may change. Consider how many regulations put in place after the Great Depression to protect against an over-leveraged financial sector have been removed in the last 20 years.

There are bullish options trades you can take right now with a 10% probability of a very large payoff and a 90% probability of total loss. That doesn't mean it's a mark of knowledgeability to mock the long shot bet.

sol

  • Walrus Stache
  • *******
  • Posts: 8372
  • Age: 42
  • Location: Pacific Northwest
Re: Welp, I'm going to take a stab at timing the market
« Reply #255 on: May 15, 2019, 08:17:49 AM »
To some lessor extent, internet mockery is a bet on market timing too.

I think we've mostly avoided the mockery.  It just looks like mockery because it has turned out to be a losing bet thus far.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3174
Re: Welp, I'm going to take a stab at timing the market
« Reply #256 on: May 15, 2019, 08:28:51 AM »
Well *some* of us are old enough to have experienced a couple of major crashes...

Sheesh, I feel like a geezer, but I do remember the 1990s and 2000s. My pitifully small retirement money (generated entirely by an automatic contribution situation from a DOE grad student job I had) cratered a couple of times in the intervening 20 years. Yet somehow I kept putting money in and now I'm a rich guy.

I honestly hope JuniorOldTimer does great. I really do. And I actually suspect he might (though not for the reasons he pulled the money in the first place). But the underlying mindset of folks who do this is basically never going to lead to long term success.

-W

tyort1

  • Handlebar Stache
  • *****
  • Posts: 2232
  • Age: 47
  • Location: Denver, Colorado
Re: Welp, I'm going to take a stab at timing the market
« Reply #257 on: May 15, 2019, 08:37:55 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:


EvenSteven

  • Stubble
  • **
  • Posts: 138
  • Location: St. Louis
Re: Welp, I'm going to take a stab at timing the market
« Reply #258 on: May 15, 2019, 09:09:15 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



That's a nice graph for the most part, but I don't think Dennis Miller leaving the cast in 1990 was all that bad, and certainly not a crisis. But even if it was a crisis, I don't see how a late night sketch comedy show would affect the stock market all that much.

tyort1

  • Handlebar Stache
  • *****
  • Posts: 2232
  • Age: 47
  • Location: Denver, Colorado
Re: Welp, I'm going to take a stab at timing the market
« Reply #259 on: May 15, 2019, 09:16:44 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



That's a nice graph for the most part, but I don't think Dennis Miller leaving the cast in 1990 was all that bad, and certainly not a crisis. But even if it was a crisis, I don't see how a late night sketch comedy show would affect the stock market all that much.

Right, the point is there's no correlation.  Like who would have predicted that a recession would co-exist with strong market performance (but there it is in 1959 and 1991) or that rising interest rates would also co-exist with strong market performance (but there it is in 1966-1970 and 1994), or that the Korean and Iraqi wars had zero affect on the market.  Or that Y2K would correlate with a massive dip.  It's all just random. 

The sooner people realize there's no way to correlate current events with market performance, the sooner they will stop making mistakes like the one made at the start of this thread.

talltexan

  • Handlebar Stache
  • *****
  • Posts: 2326
Re: Welp, I'm going to take a stab at timing the market
« Reply #260 on: May 15, 2019, 09:46:26 AM »
I love these threads.  They are fun.  Although they are usually more fun when the timer is overconfident and strutting around -- love when those types slip on the banana peel.  The OP in this thread seems like a nice guy so it's not quite as enjoyable (maybe it's because he used the word, "Welp"? )

 At some point, I'm sure I'll try to time it again, and the next time I do, I'll try to remember to start a thread.  I'll take my turn on the banana peel... :)

Note: the banana peel could surprise those of use who've been Bulls on this thread so far. Indeed, that would be an amazing irony!

Psychstache

  • Pencil Stache
  • ****
  • Posts: 775
Re: Welp, I'm going to take a stab at timing the market
« Reply #261 on: May 15, 2019, 10:14:14 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



That's a nice graph for the most part, but I don't think Dennis Miller leaving the cast in 1990 was all that bad, and certainly not a crisis. But even if it was a crisis, I don't see how a late night sketch comedy show would affect the stock market all that much.

Obviously as the additions of Chris Farley and David Spade panned out, the market called it a wash.

Psychstache

  • Pencil Stache
  • ****
  • Posts: 775
Re: Welp, I'm going to take a stab at timing the market
« Reply #262 on: May 15, 2019, 10:18:17 AM »
BUT: I also believe some of the flak comes from Mustachians working out their own angst at staying the course in the market.  It is painful to stay the course sometimes, isn't it?  Even when, historically and mathematically, you believe you're doing the right thing.

Is it? I'm not trying to be snarky, I just want to understand this mindframe. I feel no angst about my choice. I did the research, which did cause some angst as I grew and learned, but since then I have felt no reservations about my decision. Do you think it is something that is unique to money allocation or more a component of an overall personal mindset?

I think of it just like I do any other product research. Did I spent countless hours looking at couches, sitting on them in showrooms, measuring and remeasuring my space when I was trying to find the right furniture for my living room? Yeah. Did I immediately forget all of that knowledge and never think about couches again as soon as I bought it? Yes.

Edit: spelling and grammar are hard.
« Last Edit: May 15, 2019, 11:48:15 AM by Psychstache »

tyort1

  • Handlebar Stache
  • *****
  • Posts: 2232
  • Age: 47
  • Location: Denver, Colorado
Re: Welp, I'm going to take a stab at timing the market
« Reply #263 on: May 15, 2019, 11:59:53 AM »
BUT: I also believe some of the flak comes from Mustachians working out their own angst at staying the course in the market.  It is painful to stay the course sometimes, isn't it?  Even when, historically and mathematically, you believe you're doing the right thing.

Is it? I'm not trying to be snarky, I just want to understand this mindframe. I feel no angst about my choice. I did the research, which did cause some angst as I grew and learned, but since then I have felt no reservations about my decision. Do you think it is something that is unique to money allocation or more a component of an overall personal mindset?

I think of it just like I do any other product research. Did I spent countless hours looking at couches, sitting on them in showrooms, measuring and remeasuring my space when I was trying to find the right furniture for my living room? Yeah. Did I immediately forget all of it knowlegde and never think about couches again as soon as I bought it? Yes.

In terms of the angst and the flak... Certainly I was projecting based on my own personal experience, but it wouldn't surprise me to find out that the way I've been thinking about things is not common and not optimal.  I know I feel the need to dance in and out of the market -- even when I know I shouldn't -- but maybe I'm the only one.

I like your approach a lot better.

Why do you feel the need to dance in and out of the market?  No snark, I'm genuinely curious.

Maenad

  • Bristles
  • ***
  • Posts: 448
  • Location: Minneapolis 'burbs
Re: Welp, I'm going to take a stab at timing the market
« Reply #264 on: May 15, 2019, 03:02:24 PM »
BUT: I also believe some of the flak comes from Mustachians working out their own angst at staying the course in the market.  It is painful to stay the course sometimes, isn't it?  Even when, historically and mathematically, you believe you're doing the right thing.

Is it? I'm not trying to be snarky, I just want to understand this mindframe. I feel no angst about my choice. I did the research, which did cause some angst as I grew and learned, but since then I have felt no reservations about my decision. Do you think it is something that is unique to money allocation or more a component of an overall personal mindset?

It can be, depending on mindset and circumstances. I'm thisclose to FI, and the recent market dip due to tariff angst has at least doubled the time left to FI for me. It felt like someone jerked away a beautiful dream just as I was about to reach out and touch it.

Logically, I know that a few months is nothing in the long run, but damn if I didn't feel like Charlie Brown and that football. So sometimes there can be angst - what if he's right? I mean, eventually one of the Big Scary Bear Market predictions will be right, but if it's now, the timing is absolutely horrible for me in the short term. And this is after being invested through the dot-com crash and the great recession - I think I wasn't as worried then because I had years to go yet.

My actions are driven by logic, so I'm investing for the long term and sticking to my AA, but logic isn't too good at dealing with the emotions. For that I spend time outdoors and time with friends and family. And my cats, cuz pets are awesome and make everything better.

Full_Beard

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Welp, I'm going to take a stab at timing the market
« Reply #265 on: May 15, 2019, 03:20:15 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3174
Re: Welp, I'm going to take a stab at timing the market
« Reply #266 on: May 15, 2019, 07:21:10 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

That's a great article, but it can be misleading since it assumes a lump sum going in, then a lump sum coming back out.

The lump sum in might for some people be a realistic scenario (inheritance) but the bulk withdrawal is something basically nobody would do.

If you're putting money in starting in any of those years, and continue putting it in for 20 years, you'll have done just fine. OP has very little money right now, so he's in a great spot to just plug it in every month.

-W
« Last Edit: May 15, 2019, 07:24:38 PM by waltworks »

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1713
  • Location: Seattle, WA
Re: Welp, I'm going to take a stab at timing the market
« Reply #267 on: May 16, 2019, 11:57:39 PM »
It can be, depending on mindset and circumstances. I'm thisclose to FI, and the recent market dip due to tariff angst has at least doubled the time left to FI for me. It felt like someone jerked away a beautiful dream just as I was about to reach out and touch it.

Doubled?  Were you a month away and now you are two months away?