NYT Article - "Disciplined" Investor Broken over Coronavirus

[maisymouser]

https://www.nytimes.com/2020/03/27/business/stock-market-pandemic-coronavirus.html?action=click&module=Top%20Stories&pgtype=Homepage

"I figured that if I bought every time the market average declined by 10 percent from its previous high — the standard definition of a correction — and then bought some more after each subsequent decline of 10 percent, then I’d never be buying at the top of the cycle. I didn’t think of this as market timing, since I made no prediction where the market was headed. My strategy was a variation of the now-widespread practice of portfolio rebalancing — selling some asset classes and buying others to maintain a steady allocation... My strategy for trading isn’t meant to be rigid, only to be rational."

It's not exactly rational to create arbitrary rules based on how far down the market is. Am I wrong for summarizing this as "market timer stressed out over volatile stock market" or is there a deeper, possibly more Mustachian message I'm missing?

As for myself, I plan to continue my periodic and equal contributions to my tax-advantaged accounts (following the investment order) through this thing. Stay strong y'all, it's no time to panic.

[GuitarStv]

He claims that he was rebalancing, but explained a strategy of buying based on what the market does rather than he predetermined asset allocations.  So . . . not rebalancing at all.  Yes, he was absolutely timing the market.

[Vertical Mode]

I agree that "market timer stressed out over volatile stock market" seems like a pretty good summary of this situation. He appears to be trying to cherry pick the benefits of a dollar-cost-averaging strategy while avoiding downside/risk. He sounds like he'd benefit from reading "A Random Walk Down Wall Street" by Malkiel.

What this piece suggests to me also is that by following this rigid set of rules, he would be buying in less frequently, missing out on reinvested dividends and compound growth relative to a completely agnostic dollar-cost-averaging approach. Time in market > Timing the market, over the long term (which I think it's safe to say a 40-year time horizon qualifies as long term).

Actual discipline would be continuing forward despite discomfort.  This is just more journalistic weak cheese designed to create an emotional response.  They will never write an article about the benefit of buying and holding forever because it is boring. 
 

"I am so disciplined, I run 6 miles a day! 

Except when it's raining, or my shorts are not clean, or I am hung over, or I have an owie." 


On a positive note, anyone who gets the NYT in print will never run out of toilet paper. 

+1, especially for use of the expression "weak cheese". I might need to borrow that turn of phrase.

[ducky19]

On a positive note, anyone who gets the NYT in print will never run out of toilet paper.

The Times are rough.

[SwordGuy]

On a positive note, anyone who gets the NYT in print will never run out of toilet paper.

The Times are rough.

My local paper is the Observer.  You don't want to see it in use.

[GuitarStv]

On a positive note, anyone who gets the NYT in print will never run out of toilet paper.

The Times are rough.

Bahahahahahahahaha!  Thank you.

[englishteacheralex]

I'm not a savvy enough investor to even understand what this guy was going on about. I read the article and then headed over here to see if anyone had created a thread--sure enough, here it is!

I've been wondering why the stock market plunging hasn't bothered me at all or made me want to sell...I think we must have lost ~$50k by now, which actually isn't that much, I guess, compared to people with huge stashes. At the peak, ours was around $230k. My husband has frozen the accounts updating in Mint, so I don't have a way of seeing how much they've dropped (too lazy to log into the accounts directly).

While I was reading the article I was trying to figure out what he was talking about--buy when the market goes to -10% or something? This is not how we function over here. We just buy boring Vanguard funds with percentages of each paycheck. It's done automatically. I realized that I think of the money as though it were in a time capsule waiting for us about 20 years from now. It doesn't belong to now us.

If our emergency fund went down, I'd be freaking out big time, because that is our now money. But that's in a money market account, so no danger of that happening.

It's funny, I watched my mom lose her mind over her retirement accounts for my whole childhood, making every investing mistake in the book. I guess I must have internalized not getting emotionally involved in retirement accounts as a reaction to Mom's volatility.

[Dicey]

I'm not a savvy enough investor to even understand what this guy was going on about. I read the article and then headed over here to see if anyone had created a thread--sure enough, here it is!

I've been wondering why the stock market plunging hasn't bothered me at all or made me want to sell...I think we must have lost ~$50k by now, which actually isn't that much, I guess, compared to people with huge stashes. At the peak, ours was around $230k. My husband has frozen the accounts updating in Mint, so I don't have a way of seeing how much they've dropped (too lazy to log into the accounts directly).

While I was reading the article I was trying to figure out what he was talking about--buy when the market goes to -10% or something? This is not how we function over here. We just buy boring Vanguard funds with percentages of each paycheck. It's done automatically. I realized that I think of the money as though it were in a time capsule waiting for us about 20 years from now. It doesn't belong to now us.

If our emergency fund went down, I'd be freaking out big time, because that is our now money. But that's in a money market account, so no danger of that happening.

It's funny, I watched my mom lose her mind over her retirement accounts for my whole childhood, making every investing mistake in the book. I guess I must have internalized not getting emotionally involved in retirement accounts as a reaction to Mom's volatility.

This is a beautiful post @englishteacheralex. Keep on doing what you're doing and you'll weather the storm.

[mozar]

I saw it and didn't read it because I didn't want to waste a free article on it. It seems I made the right decision.

[OtherJen]

Yeah, I couldn't make sense of this one. But then, I don't understand the appeal of market timing. I'm not a gambler by nature.

[fuzzy math]

I saw it and didn't read it because I didn't want to waste a free article on it. It seems I made the right decision.

Quarantine free article rationing... I get it! NYT and WaPo have made some of their CV19 stuff free at least

[Abe]

That was a long rambling nonsense opinion piece. I couldn’t finish it to get to the end. He’s a fool, and too much of a fool to realize he is one.

[LWYRUP]

Seems like he thought he was just buying and holding but he was actually engaging in a risky, active strategy.  And choosing a 10% drop was bound to lead to hurt.

I actually have a similar "variable asset allocation strategy" but it wouldn't kick in until a bear market (20% down) and would only be small until we get to 40% down.  And it would involve me putting my money where my mouth is at 40% down and not writing a whiny NYT article about it.