Author Topic: Not timing the market but if it drops....  (Read 2381 times)

merlin7676

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Not timing the market but if it drops....
« on: March 15, 2017, 08:13:22 AM »
Every two weeks on payday, vanguard automatically deducts money from my account to purchase shares of my investments. 
But if the market were to drop say 4000 points tomorrow I'd be inclined to scrounge up some extra money to throw a few more dollars at it.
I don't see this as timing the market. More like it's on sale so I can get more shares cheaper than "usual".

Is this considered timing the market as well then? 

TheAnonOne

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Re: Not timing the market but if it drops....
« Reply #1 on: March 15, 2017, 08:16:55 AM »
Every two weeks on payday, vanguard automatically deducts money from my account to purchase shares of my investments. 
But if the market were to drop say 4000 points tomorrow I'd be inclined to scrounge up some extra money to throw a few more dollars at it.
I don't see this as timing the market. More like it's on sale so I can get more shares cheaper than "usual".

Is this considered timing the market as well then?
It kind of IS market timing overall, but if every time the market drops 5 or more % you say... pick up overtime that you couldn't normally stand on a regular basis, that could only be a positive thing in stache terms.

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Kaspian

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Re: Not timing the market but if it drops....
« Reply #2 on: March 15, 2017, 01:52:10 PM »
"Buying the dips" (or "on the dips"), as it's called, sort of works out okay in the long run. (Just Google that  expression.) Though it certainly should never be a regular part of your strategy!  If you can scrape and scrounge a few extra bucks to do it occasionally, when the market goes super-sour, it can't really hurt.  But you might want to ask yourself--is it the same strategy as "sell the rallies"?  :)

TheAnonOne

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Re: Not timing the market but if it drops....
« Reply #3 on: March 15, 2017, 01:54:59 PM »
"Buying the dips" (or "on the dips"), as it's called, sort of works out okay in the long run. (Just Google that  expression.) Though it certainly should never be a regular part of your strategy!  If you can scrape and scrounge a few extra bucks to do it occasionally, when the market goes super-sour, it can't really hurt.  But you might want to ask yourself--is it the same strategy as "sell the rallies"?  :)
Like I said above, if it motivates you to take a side job or two for a few weeks/months it can only help.

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Heckler

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Re: Not timing the market but if it drops....
« Reply #4 on: March 15, 2017, 01:56:21 PM »
although I'm happy to buy the dips with cash on hand, it's only if the dip happens to coincide with an already planned purchase.

i.e. I got lucky with Brexit.  I was planning to buy anyway, and tweaked the days a little to catch a low point.  I missed the real bottom, but was holding some cash anyway.  I can really see why "not timing the market" means "don't buy and sell and buy and sell in the illusion you can forecast what will happen". 

Trump was for sure going to crash the market, but instead it just kept going up.  I held a bit of cash waiting for that crash - didn't happen.  But I sure didn't sell in the hopes of rebuying at a lower point.

Kaspian

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Re: Not timing the market but if it drops....
« Reply #5 on: March 15, 2017, 02:40:53 PM »
I skipped beer money, fancy groceries, and non-essential items to buy on the pre-Brexit, then pre-Trump slump weeks.  While it only resulted in a few hundred "extra" getting thrown into the market (on top of my regular contributions), I'm fine with it.  I knew full well that the markets could have swung the other way--it's a mad beast.  Those things are generally non-events in the long run and people who bail are the ones who really get hurt.  Think of all the "crises" in just the past few years since the housing bubble which were going to destroy our investments--Greece defaults, the US fiscal cliff (x 2), a Ukraine-Russia war, Iceland bank collapse...

ChpBstrd

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Re: Not timing the market but if it drops....
« Reply #6 on: March 15, 2017, 03:06:44 PM »
Market timing involves making decisions about the short-term future. If the market crashed or doubled tomorrow, and you made a decision tomorrow based on the present fact that yields/risk are cheaper, that would be a decision based on current information, not expectations of the future. This decision would be indistinguishable from value investing or DCF valuation.

Yes, all long-term investments are held under the expectation of long-term future returns and/or appreciation. The operative word is long-term.

moof

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Re: Not timing the market but if it drops....
« Reply #7 on: March 15, 2017, 05:02:42 PM »
Yes, it is market timing.  You have either idle cash you've left on the sideline, or are slacking off in your money making today.

And for what?  If you are lucky you get an extra 5-20% on this little extra investment.  Why not just work harder all the time, or keep even more of your money in the market all the time?  By all accounts this is the better strategy.

After all, if you won't buy the market today, you should sell everything you have in stocks and sit in cash/bonds.

My luck is too crappy, so I just let it ride with my 80/20'ish allocation while accumulating.

MoonLiteNite

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Re: Not timing the market but if it drops....
« Reply #8 on: March 16, 2017, 04:57:59 AM »
Every two weeks on payday, vanguard automatically deducts money from my account to purchase shares of my investments. 
But if the market were to drop say 4000 points tomorrow I'd be inclined to scrounge up some extra money to throw a few more dollars at it.
I don't see this as timing the market. More like it's on sale so I can get more shares cheaper than "usual".

Is this considered timing the market as well then? 

That IS timing the markets. You could look at it like this on a day traders side of things

"Every 10mins i make a buy trade, but if i just wait 13 mins this one time the market will drop and i will buy in at a lower price."
"in 48 hours i will sell all my stocks and call it a week [life for FIRE],  but if i just sell after 1 hour during the peak i can get my profits and then buy after my next 10min wait is up"

yeah it is timing the market :D
I personally am doing that, i am putting anything that is unmatched on my 401k on hold and paying down my house for now. Also getting out of my ESPP (tech companies are wayyyy over valued right now) and other things. Nothing wrong with trying to time it, some people can do it. Just know that there is always the chance you may be wrong. I could be wrong. Maybe there won't be a down turn and this year the markets will go up 29%, followed by another 20%.