Author Topic: Market Timing  (Read 6030 times)

Roboturner

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Market Timing
« on: August 21, 2015, 09:54:45 AM »
First I'd like to say I know the general wisdom is DO NOT TRY TO TIME THE MARKET.

That being said my investments have gone sideways if not down this year - with all the hub-bub about China, commodities, and a potential interest rate hike in Sept, should I wait to throw my ~20k into Vanguard until Q4 - say Nov or something?

Thanks in advance for any advice/discussion

Roboturner

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Re: Market Timing
« Reply #1 on: August 21, 2015, 10:18:13 AM »
Oh and one further tid-bit, this will be going into my i401k (employee/employer), so tax loss harvesting isn't a consideration for this allotment

EricP

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Re: Market Timing
« Reply #2 on: August 21, 2015, 10:36:09 AM »
So if you know that you shouldn't try to time the market, why are you trying to time the market?

Time in the market beats time in the market.  Sure the market could go down more today or on Monday, but it could also go up.  Don't wait, put it in NOW!

trailrated

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Re: Market Timing
« Reply #3 on: August 21, 2015, 10:45:18 AM »
You are 26... ride it out

tomq04

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Re: Market Timing
« Reply #4 on: August 21, 2015, 11:02:04 AM »
As said, you're 26...keep buying...quit worrying.

matchewed

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Re: Market Timing
« Reply #5 on: August 21, 2015, 11:05:41 AM »
You already answered your own question.

seattlecyclone

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Re: Market Timing
« Reply #6 on: August 21, 2015, 11:20:13 AM »
I love these posts where people start out by saying "I know trying to time the market is bad" and then continue to say "do you think it might be a good idea to try and time the market right now?" The answer is generally no. Stocks go up in the long term. Nobody knows what will happen in the short term, but up is always more likely than down.

forummm

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Re: Market Timing
« Reply #7 on: August 21, 2015, 11:32:52 AM »
When you're 40 or 50 and want to take the money out, it will be worth a lot more then regardless of whether you bought last week, this week, or in November.

Eric

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Re: Market Timing
« Reply #8 on: August 21, 2015, 11:49:22 AM »
I love these posts where people start out by saying "I know trying to time the market is bad" and then continue to say "do you think it might be a good idea to try and time the market right now?"

But what if I just try to time the market a little.  Would that be better?  :)

Roboturner

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Re: Market Timing
« Reply #9 on: August 21, 2015, 11:51:41 AM »
When you're 40 or 50 and want to take the money out, it will be worth a lot more then regardless of whether you bought last week, this week, or in November.

Yes, but when you want to FIRE within 5 years or so the timeline is considerably condensed - shouldnt "short term" be considered in the least?

Roboturner

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Re: Market Timing
« Reply #10 on: August 21, 2015, 11:52:44 AM »
Also apparently this is being debated likewise here: http://forum.mrmoneymustache.com/investor-alley/ready-for-a-correction/

interesting that the sentiment is a little less "DO IT NOW IDIOT!"

matchewed

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Re: Market Timing
« Reply #11 on: August 21, 2015, 12:00:49 PM »
When you're 40 or 50 and want to take the money out, it will be worth a lot more then regardless of whether you bought last week, this week, or in November.

Yes, but when you want to FIRE within 5 years or so the timeline is considerably condensed - shouldnt "short term" be considered in the least?

No because you don't pull all your money out in five years when you FIRE. You're an investor for 60 years when you FIRE, not five years.

CorpRaider

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Re: Market Timing
« Reply #12 on: August 21, 2015, 01:52:47 PM »
Scale in if you're more comfortable. 

thd7t

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Re: Market Timing
« Reply #13 on: August 21, 2015, 02:13:45 PM »
Also apparently this is being debated likewise here: http://forum.mrmoneymustache.com/investor-alley/ready-for-a-correction/

interesting that the sentiment is a little less "DO IT NOW IDIOT!"
That discussion is a little more about playing devil's advocate.  You've already hit a decent drop.  Most corrections are only around 10%, so buying now is a reasonable decision, even if you really want to time this.  You don't want to miss the way back up.

milesdividendmd

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Re: Market Timing
« Reply #14 on: August 21, 2015, 02:24:16 PM »
You are concerned with the anticipated pain of loss, which is rational. Losing money is about 2X as painful as gaining it is pleasurable.

If you want to be rational about timing your investment in light of your concerns, you can dollar cost average, which should make market movements less painful, or you can wait for your investment to move above its 200 day moving average before investing. (In the mean time at least put it in short term treasuries.)

Roboturner

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Re: Market Timing
« Reply #15 on: August 21, 2015, 02:26:55 PM »
Thank you all appreciate the responses, and yes this is also meant to be a bit of a thought experiment, glad to hear differing options rather then just a "yes" or "no"

GoldenNeko

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Re: Market Timing
« Reply #16 on: August 21, 2015, 02:45:48 PM »
You are concerned with the anticipated pain of loss, which is rational. Losing money is about 2X as painful as gaining it is pleasurable.

[...]

At least, being a Mustachian means you have the luxury to see your investments go down (and up...).
Before, all my money was spent and lost anyway...
But yeah, don't time the market and simply keep on with buying regularly.

milesdividendmd

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Re: Market Timing
« Reply #17 on: August 21, 2015, 02:51:15 PM »

You are concerned with the anticipated pain of loss, which is rational. Losing money is about 2X as painful as gaining it is pleasurable.

[...]

At least, being a Mustachian means you have the luxury to see your investments go down (and up...).
Before, all my money was spent and lost anyway...
But yeah, don't time the market and simply keep on with buying regularly.

A proven high percentage play!

sol

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Re: Market Timing
« Reply #18 on: August 21, 2015, 03:03:03 PM »
Rather than trying to time the market with timing your buys, consider scratching that itch with asset allocation rebalancing.

If you're scheduled to put in few thousand dollars and you normally buy 90/10 stocks/bonds, and stocks are down this month, buy all stocks and no bonds until you get back to 90/10 overall.  You still get the feeling of responding intelligently to market fluctuations, but you're fixing rather than risking your nest egg.

milesdividendmd

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Re: Market Timing
« Reply #19 on: August 21, 2015, 03:55:44 PM »
That's effectively value cost averaging by feel.

sol

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Re: Market Timing
« Reply #20 on: August 21, 2015, 04:01:09 PM »
That's effectively value cost averaging by feel.

VCA would actually swing the AA, I'm just suggesting rebalancing it back to your target more frequently.

milesdividendmd

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Market Timing
« Reply #21 on: August 21, 2015, 04:34:55 PM »
That's effectively value cost averaging by feel.

VCA would actually swing the AA, I'm just suggesting rebalancing it back to your target more frequently.

Not really.  Value cost averaging increases funding of an asset in down markets and decreases funding of that same asset in rising markets.

Changing portfolio allocation is nowhere in that equation. In fact if VCA were used for all contributions there would be less need for rebalancing at all.

http://www.investopedia.com/terms/v/value_averaging.asp
« Last Edit: August 21, 2015, 04:38:54 PM by milesdividendmd »