Author Topic: Market timing  (Read 1372 times)

Kroaler

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Market timing
« on: February 29, 2020, 11:18:35 AM »
I see alot of people asking about selling and market timing.

Is anyone doing the opposite and buying more than they normally would?  I suppose it's still market timing, but it'll have to go back up eventually....

Telecaster

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Re: Market timing
« Reply #1 on: February 29, 2020, 11:24:30 AM »
I have no idea what the market will do next.  Neither does anyone else.    Both those statements were true a year ago, and will be true a year from now as well. 

Alternatepriorities

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Re: Market timing
« Reply #2 on: February 29, 2020, 01:08:39 PM »
After a correction that takes us all the way back to six months ago? No. If however the market were to be 35-50% lower than the high I might skip a few spendy pants indulgences to buy more shares... on the other hand a lot of those spendy pants things get cheeped in a bad economy too...

TomTX

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Re: Market timing
« Reply #3 on: February 29, 2020, 02:34:49 PM »
I see alot of people asking about selling and market timing.

Is anyone doing the opposite and buying more than they normally would?  I suppose it's still market timing, but it'll have to go back up eventually....

I've put some thought into this. To me, reacting to a drop by buying is no more "market timing" than putting money in any other time. You are just relying on the same projection the rest of us do: Over the long term, the market will go up significantly.

if you're holding back investing just to wait for a drop - that's market timing.

Maybe the difference is subtle, but it makes lots of sense to me. It's recognizing opportunity and scraping up spare change (or maybe home equity) to throw into the market.

Alternatepriorities

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Re: Market timing
« Reply #4 on: March 01, 2020, 02:13:30 AM »

if you're holding back investing just to wait for a drop - that's market timing.

Maybe the difference is subtle, but it makes lots of sense to me. It's recognizing opportunity and scraping up spare change (or maybe home equity) to throw into the market.

I agree. I also wouldn’t be inclined to call it market timing if market was higher than average and someone felt a little richer so the sold some stock about bought something earlier than they had originally planned. I think there is a subtle but important difference between taking advantage of good opportunities and market timing. 

TomTX

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Re: Market timing
« Reply #5 on: March 01, 2020, 05:01:10 AM »

if you're holding back investing just to wait for a drop - that's market timing.

Maybe the difference is subtle, but it makes lots of sense to me. It's recognizing opportunity and scraping up spare change (or maybe home equity) to throw into the market.

I agree. I also wouldn’t be inclined to call it market timing if market was higher than average and someone felt a little richer so the sold some stock about bought something earlier than they had originally planned. I think there is a subtle but important difference between taking advantage of good opportunities and market timing.

I thought of a grocery analogy.

Lets say I enjoy almonds as part of a balanced diet, so they're on the regular grocery list. Prices vary week-to-week, but generally trend up over time. Almonds only go on sale rarely and irregularly - maybe once a year, maybe no sale for 5-6 years. When almonds go on sale 30% off, I'm likely to buy an extra bag or two.

Joe Schmo

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Re: Market timing
« Reply #6 on: March 01, 2020, 06:45:45 AM »
I thought of a grocery analogy.

Lets say I enjoy almonds as part of a balanced diet, so they're on the regular grocery list. Prices vary week-to-week, but generally trend up over time. Almonds only go on sale rarely and irregularly - maybe once a year, maybe no sale for 5-6 years. When almonds go on sale 30% off, I'm likely to buy an extra bag or two.
And then if they went 40% off the week after that you would buy even more extra bags and so on...worst case scenario you end up with shitloads of bags of almonds...which you love. I can dig it.

Buffaloski Boris

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Re: Market timing
« Reply #7 on: March 01, 2020, 02:01:17 PM »
I don’t get this obsession with whether or not people are engaging in “market timing.” Last I checked, it wasn’t a criminal act. It’s not a good idea from an investment perspective to jump in and out of the market constantly. But in the end, each person has to be comfortable with how they’re invested.

In my case I continue to think that US equities are overpriced in general. So I don’t invest much in them. The prices have dropped a lot in the last week. They’re a better deal. I might buy some if the prices continue to drop and reallocate investments as well. So am I market timer? Yes?  I don’t really care one way or the other. Heck, add it to the list of my various evils.

Davnasty

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Re: Market timing
« Reply #8 on: March 02, 2020, 09:26:14 AM »
I don’t get this obsession with whether or not people are engaging in “market timing.” Last I checked, it wasn’t a criminal act. It’s not a good idea from an investment perspective to jump in and out of the market constantly. But in the end, each person has to be comfortable with how they’re invested.

In my case I continue to think that US equities are overpriced in general. So I don’t invest much in them. The prices have dropped a lot in the last week. They’re a better deal. I might buy some if the prices continue to drop and reallocate investments as well. So am I market timer? Yes?  I don’t really care one way or the other. Heck, add it to the list of my various evils.

I don't think the intention is to attack anyone for market timing because it's evil or criminal. Posters are just trying to remind potential market timers that the fundamentals haven't changed. It's done to help them out, not punish them.

The phrase "I'm not a market timer, but..." becomes all too common at times like this. A little reminder of the cognitive dissonance in that statement can be useful.

waltworks

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Re: Market timing
« Reply #9 on: March 02, 2020, 10:26:02 AM »
Nobody who criticized market timing is trying to "punish" anyone, or make anyone feel bad. We're trying to *help*.

The mindset that stocks sometimes go on "sale" and you should wait for those events is one that will lead you to shoot yourself in the foot over and over and over. We have reams and reams of evidence that trying to purchase stocks only when they seem like a good deal doesn't work as well as just dumping money in anytime you have it.

I want you, and me, and everyone else on the forum to make money AND not stress about it too much, because the whole point here isn't money, it's making the life you want by not having to worry about money.

Spending a lot of time reading financial news and obsessing about stock valuations is a waste of both your money and your life/happiness.

-W

MustacheAndaHalf

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Re: Market timing
« Reply #10 on: March 03, 2020, 05:33:50 AM »
I did some market timing Friday.  With SARS markets lost -8%, but before last week COVID-19 hadn't reached that level.  Which is odd, since entire provinces in China were on lockdown, with no consumer purchases (besides food and medical supplies)... and dozens of factories shut down.  Last week the market caught up with reality.

But Friday was all bad news.  Online and on TV everyone wondered how long this would go on, and wanted out of the market until then.  The markets reflected that too, at -3.3% before lunch on Friday.  That's when I knew it was a panic - that nobody was considering good news, and too few people were buying.  But what about next week?  I can't predict what happens next week - and that's true of any time in the market.  But Friday was clearly a day of panic, and I didn't need to predict it - the price drop seemed exaggerated, since it was driven by so much selling, and not enough buying.  Any good news could spoil it.

I wound up buying index funds from 11:15 - 11:30 am on Friday.  Sometime after that, people reflected... and probably even more over the weekend.  After I bought, US stock index (like VTI) rose about +2.5% (from -3.3% to -0.7%) and on Monday another +4%.  From what I can tell, I bought at the local market bottom.