Author Topic: Stock Market - should I be concerned?  (Read 35844 times)

NewPerspective

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Stock Market - should I be concerned?
« on: January 26, 2015, 03:50:22 PM »
DH apparently had an interesting conversation with his boss today (who seems to be successful and financially savvy).  He told DH that we should definitely sell when the market is going down and then get back in on the market rebound.

We have been much the types to hold and just keep investing no matter what is going on in the market (and we really don't pay too much attention to the market in general). 

Now my husband is wondering if we shouldn't sell as he thinks the market will be going down again soon(ish).   He did lose half the value of his 401k in the last recession and I think it is only now  that it has just about recovered.  His boss was telling him how much better off we would be if we had of gotten out before the big crash, held our cash and then gotten back in in the upswing (even if it wasn't "timed" exactly).

I'm sure this has been discussed on the forums and I would welcome any links.  I have read the JCollins stock series and felt the just stay in no matter what approach was the best.

DH's boss sent him this chart as an illustration of how much better off it is to sell when things start going down.

http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#%7B%22range%22%3A%22max%22%2C%22scale%22%3A%22linear%22%7D

Thoughts?

Edited to add: His boss must have been quite convincing because my husband is really feeling this is what we should do.  (That is my concern part). 
« Last Edit: January 26, 2015, 03:57:11 PM by NewPerspective »

mxt0133

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Re: Stock Market - should I be concerned?
« Reply #1 on: January 26, 2015, 03:58:51 PM »
It's not really an argument that if you can sell before the market goes down and buy on the rebound you will do much better than holding.

The trick is knowing when to sell and when to buy back in.  If you know then go for it, but there are armies of people that do this full-time, with advanced degrees from prestigious schools that still can't predict when the market will go down and when it will come back.

So odds are that retail investors will not be able to time the market consistently.  Ask your husbands boss when the market will go down and when does he think it will come back up, if he can do it consistently for over a 10 year period then I'd consider investing 10% of my money based on his recommendations.

3okirb

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Re: Stock Market - should I be concerned?
« Reply #2 on: January 26, 2015, 03:59:10 PM »
If you could time the market, there would be a lot more rich people.  The billion dollar investors take a different approach.  They buy when the market it down and sell when the market is up.  You can do the same thing by reallocating.

Eric

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Re: Stock Market - should I be concerned?
« Reply #3 on: January 26, 2015, 04:02:12 PM »
Just google "Market Timing" and read the number of articles from Forbes, Market Watch, Wall St Journal, Charles Schwab, Kiplinger, etc all explaining why it's a bad idea.  Unless you have a crystal ball (you don't, right?), the chances of you successfully pulling this off are pretty slim.

NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #4 on: January 26, 2015, 04:08:21 PM »
Thank you everyone.  I agree and I'm concerned because DH feels really strongly that this makes sense.   And on the surface, it does make sense. Obviously sell when it's high, you make money and buy when it's low. 

I think the fact that the boss told DH this is what he has been doing since the  90s (basically) and it has worked out much better for him than just staying in, has really gotten my husband's attention.

mxt0133

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Re: Stock Market - should I be concerned?
« Reply #5 on: January 26, 2015, 04:10:42 PM »
If it's work out for him, why does he still work?

NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #6 on: January 26, 2015, 04:12:41 PM »
If it's work out for him, why does he still work?

My question too!  He says because he wants to and is FI but enjoys working.  (I know he also owns a franchise business on the side and maybe one other business).


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Re: Stock Market - should I be concerned?
« Reply #7 on: January 26, 2015, 04:21:55 PM »
Buy high and sell low!

Or never sell, but instead buy on a set schedule or when you see stocks on sale (ie down).

Dodge

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Re: Stock Market - should I be concerned?
« Reply #8 on: January 26, 2015, 04:37:35 PM »
Thank you everyone.  I agree and I'm concerned because DH feels really strongly that this makes sense.   And on the surface, it does make sense. Obviously sell when it's high, you make money and buy when it's low. 

I think the fact that the boss told DH this is what he has been doing since the  90s (basically) and it has worked out much better for him than just staying in, has really gotten my husband's attention.

If there's anything I've learned from conversations like this...any normal person who claims to have beaten the market over a long period of time (90's in this example), does not know how to calculate returns.

Putting 1990-today in IndexView:



http://www.mrmoneymustache.com/2014/08/25/indexview/

We see the market returned an annualized 9.52%, with every single dollar invested in 1990, being worth $9.08 today.  Ask DH to sit down with the boss, and watch as the boss uses this Time Weighted Return Calculator on his personal portfolio, starting from the 1990's.  Make sure to start from the beginning, and not to cherry pick the starting date from when he started performing well.  It takes deposits and withdrawals into account, so make sure to put them in:

http://www.rateofreturnexpert.com/time-weighted-return-calculator/

So if you went from $1000 to $2000 in a year, your annualized return would be 100%:



But if you made a $1000 deposit on that same day, you're annualized return would be 0%:



It's pretty straight forward.  If DH can't watch him as he does it, I'd say something like, "Hey I found this investment calculator online, and I want to see how much better than the market I could be doing.  Can you fill this out and tell me what your number is?"  If it's filled out correctly, you'll see he isn't beating the market at all.
« Last Edit: January 26, 2015, 04:39:24 PM by Dodge »

skyrefuge

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Re: Stock Market - should I be concerned?
« Reply #9 on: January 26, 2015, 04:42:02 PM »
He did lose half the value of his 401k in the last recession and I think it is only now  that it has just about recovered.

If this is true, then just tell DH that since he is dumb, he will not be making any more investment decisions.

An 80/20 stock/bond mix would have surpassed its 2007 peak in mid/late 2012, around two-and-half years ago. Today its value would be more than 30% greater than its 2007 peak.

And that assumes no contributions were made since 2007! If he had continued making regular contributions, the return to 2007 levels would have happened much earlier, and the current value would be much greater.

So, DH either:
  • had a dumb asset allocation to begin with.
  • already has tried market timing, and failed.
  • failed to contribute since 2007.
...or some combination of all of the above, all of which are dumb.

Ok, I guess when you give him this "bad news", you can phrase it a little more gently. :-)
« Last Edit: January 26, 2015, 04:48:37 PM by skyrefuge »

NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #10 on: January 26, 2015, 05:54:40 PM »
He did lose half the value of his 401k in the last recession and I think it is only now  that it has just about recovered.

If this is true, then just tell DH that since he is dumb, he will not be making any more investment decisions.

An 80/20 stock/bond mix would have surpassed its 2007 peak in mid/late 2012, around two-and-half years ago. Today its value would be more than 30% greater than its 2007 peak.

And that assumes no contributions were made since 2007! If he had continued making regular contributions, the return to 2007 levels would have happened much earlier, and the current value would be much greater.

So, DH either:
  • had a dumb asset allocation to begin with.
  • already has tried market timing, and failed.
  • failed to contribute since 2007.
...or some combination of all of the above, all of which are dumb.

Ok, I guess when you give him this "bad news", you can phrase it a little more gently. :-)

Hahaha - he just informed me it is up quite a lot since 2007 and more than broken even.  So that was my fault for misstating it.  (And we weren't contributing for two years because we were living internationally).

He seems hell bent on selling our Vanguard now though.  :-(

NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #11 on: January 26, 2015, 06:08:19 PM »
Thank you everyone.  I agree and I'm concerned because DH feels really strongly that this makes sense.   And on the surface, it does make sense. Obviously sell when it's high, you make money and buy when it's low. 

I think the fact that the boss told DH this is what he has been doing since the  90s (basically) and it has worked out much better for him than just staying in, has really gotten my husband's attention.

If there's anything I've learned from conversations like this...any normal person who claims to have beaten the market over a long period of time (90's in this example), does not know how to calculate returns.

Putting 1990-today in IndexView:



http://www.mrmoneymustache.com/2014/08/25/indexview/

We see the market returned an annualized 9.52%, with every single dollar invested in 1990, being worth $9.08 today.  Ask DH to sit down with the boss, and watch as the boss uses this Time Weighted Return Calculator on his personal portfolio, starting from the 1990's.  Make sure to start from the beginning, and not to cherry pick the starting date from when he started performing well.  It takes deposits and withdrawals into account, so make sure to put them in:

http://www.rateofreturnexpert.com/time-weighted-return-calculator/

So if you went from $1000 to $2000 in a year, your annualized return would be 100%:



But if you made a $1000 deposit on that same day, you're annualized return would be 0%:



It's pretty straight forward.  If DH can't watch him as he does it, I'd say something like, "Hey I found this investment calculator online, and I want to see how much better than the market I could be doing.  Can you fill this out and tell me what your number is?"  If it's filled out correctly, you'll see he isn't beating the market at all.

Thanks Dodge.  I don't think that his boss will fill this out.  Not sure exactly what he said to my husband but he seems completely convinced we should sell our Vanguard funds now.  He says he doesn't understand how we can go wrong, since he is very confident a crash is coming our way soon.

I'm not super well versed in finances (perhaps that is obvious) but I've been diligently reading for about the last year and half and trying to educate myself.  However, my knowledge isn't very deep so I really don't know what exactly to say to him.  His boss also invests in gold.  Thankfully DH said he didn't think he wanted to invest in gold. 
It is all a little frustrating (for me) to say the least.

innerscorecard

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Re: Stock Market - should I be concerned?
« Reply #12 on: January 26, 2015, 07:31:19 PM »
It's not good to talk to foolish people. It might rub off on you.

AlexK

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Re: Stock Market - should I be concerned?
« Reply #13 on: January 26, 2015, 07:31:56 PM »
What will your husbands plan be if he sells the stocks and the market keeps climbing for a year? 4 years?

Dodge

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Re: Stock Market - should I be concerned?
« Reply #14 on: January 26, 2015, 07:33:02 PM »
Ask your DH what it would take for him to decide against doing this.  What type of evidence would sway his opinion?

EarlyStart

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Re: Stock Market - should I be concerned?
« Reply #15 on: January 26, 2015, 07:39:09 PM »
Thank you everyone.  I agree and I'm concerned because DH feels really strongly that this makes sense.   And on the surface, it does make sense. Obviously sell when it's high, you make money and buy when it's low. 

I think the fact that the boss told DH this is what he has been doing since the  90s (basically) and it has worked out much better for him than just staying in, has really gotten my husband's attention.

If there's anything I've learned from conversations like this...any normal person who claims to have beaten the market over a long period of time (90's in this example), does not know how to calculate returns.

Putting 1990-today in IndexView:



http://www.mrmoneymustache.com/2014/08/25/indexview/

We see the market returned an annualized 9.52%, with every single dollar invested in 1990, being worth $9.08 today.  Ask DH to sit down with the boss, and watch as the boss uses this Time Weighted Return Calculator on his personal portfolio, starting from the 1990's.  Make sure to start from the beginning, and not to cherry pick the starting date from when he started performing well.  It takes deposits and withdrawals into account, so make sure to put them in:

http://www.rateofreturnexpert.com/time-weighted-return-calculator/

So if you went from $1000 to $2000 in a year, your annualized return would be 100%:



But if you made a $1000 deposit on that same day, you're annualized return would be 0%:



It's pretty straight forward.  If DH can't watch him as he does it, I'd say something like, "Hey I found this investment calculator online, and I want to see how much better than the market I could be doing.  Can you fill this out and tell me what your number is?"  If it's filled out correctly, you'll see he isn't beating the market at all.

Thanks Dodge.  I don't think that his boss will fill this out.  Not sure exactly what he said to my husband but he seems completely convinced we should sell our Vanguard funds now.  He says he doesn't understand how we can go wrong, since he is very confident a crash is coming our way soon.

I'm not super well versed in finances (perhaps that is obvious) but I've been diligently reading for about the last year and half and trying to educate myself.  However, my knowledge isn't very deep so I really don't know what exactly to say to him.  His boss also invests in gold.  Thankfully DH said he didn't think he wanted to invest in gold. 
It is all a little frustrating (for me) to say the least.


I have to second what Dodge said. The VAST majority of active investors who talk about their "impressive returns" actually don't know what their annualized returns are. As Dodge said, ask your DH, "Well, what are the returns? Can we see them?" A lot of people have very selective memories with regard to their investments, too. I'd bet half my meager net worth that your DH's boss didn't account for the dividends he missed at the times when he wasn't in the market.





DavidAnnArbor

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Re: Stock Market - should I be concerned?
« Reply #16 on: January 26, 2015, 07:59:23 PM »
I'm not sure why DH has to sell unless he has moved significantly away from his asset allocation model. After all if someone has been diligent about continuous investing, even through the 2008/9 market crash ( the worst economic crisis since the Great Depression ), one would be way ahead. Instead of trying to time when the next stock market route will occur, why doesn't DH simply check to make sure he's maintained his asset allocation? If DH is overinvested in stocks based on his asset allocation model then he can sell that portion to reallocate. 

I think the fear of the stock market can be understood if one looks at the Nikkei 225 stock market graph of the last 30 years. As the stocks kept climbing to such extreme highs in Japan in the late '80's one would have been converting gains into bonds. The other point is that hopefully by diversifying (geographically) one can shield against such destructive changes in the stock index. 

Dodge

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Re: Stock Market - should I be concerned?
« Reply #17 on: January 26, 2015, 08:39:26 PM »
Thanks Dodge.  I don't think that his boss will fill this out.  Not sure exactly what he said to my husband but he seems completely convinced we should sell our Vanguard funds now.  He says he doesn't understand how we can go wrong, since he is very confident a crash is coming our way soon.

I'm not super well versed in finances (perhaps that is obvious) but I've been diligently reading for about the last year and half and trying to educate myself.  However, my knowledge isn't very deep so I really don't know what exactly to say to him.  His boss also invests in gold.  Thankfully DH said he didn't think he wanted to invest in gold. 
It is all a little frustrating (for me) to say the least.

Seriously, go through IndexView with him:

http://www.mrmoneymustache.com/2014/08/25/indexview/

Put in any two years.



Then put in two different years.



Then two different years again.



You'll see, no matter which years you put in,



it looks like ***OMG A CRASH IS COMING***, because the line is so much up and diagonal to the right, it looks like it has no where to go but down!  This year is no different,



Had you sold it all every year it looked like a crash was coming...you'd never be in the market.  Let's not argue about whether a crash is coming or not, let's agree that it feels that way right now. Like there's been a turning point, a division between an old era and a new era, and therefore past history is no longer a guide to the future.

And here's my point: it always feels that way. That's always what it feels like. It's not a number, it's a sense that there's been a break, the ground has shifted, the rules have changed.

This is why it's so hard to stay the course.  Your investment plan needs to be in tune with your own personal willingness to take financial risk.  When you're deciding what your risk tolerance is, it's not a tolerance for the number 10 or the number 15 or the number 25. It's not a tolerance for an "A" turning into a "+". It's a tolerance for accepting genuinely-scary, nothing-like-this-has-ever-happened-before, heralds-a-new-era news events.

When the stock market is falling, you can't cut back on your stock market risk without locking in a loss.  If your DH is afraid of a market crash, and that fear is causing him to want to change allocations, that fear will only be stronger when real market risk shows up.  It might be a good time to re-evaluate your position, and add more bonds.  If you're 100/0, go to 80/20.  If you're 80/20, to go 60/40...etc.

Then when stocks fall at some point in the future, you can sell bonds to buy back into stocks.  But it won't be called market-timing.  It'll be called rebalancing.

skyrefuge

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Re: Stock Market - should I be concerned?
« Reply #18 on: January 26, 2015, 08:42:55 PM »
He seems hell bent on selling our Vanguard now though.  :-(

That sucks, particularly since someone with such a seemingly-volatile decision-making approach is even more-likely to get his ass handed to him by the stock market over the long term.

Maybe some concrete examples of how hard market-prediction actually is would help?

Here's one from the middle of 2013 that predicted "an 87% chance" of a market crash by the end of that year.  And includes support from 10 people way more into the markets than DH's boss. Since then the S&P 500 is up 26%. Whoops.
Here's one where 67 out of 67 actual economists were wrong about the direction interest rates would go in 2014.

The S&P 500 has currently been on an upward trend for 6 years. At the end of 1996, it had also been on an upward trend for 6 years. It stood at ~750, up from ~320. Great time to sell and wait for the crash, right? Too bad you would have been waiting 13 years for it to drop below 750 again, and then, you had less than a month to "buy low" before it went shooting to new heights. Brilliant strategy!

If that doesn't help, maybe another approach: why? What is the motivation to play such market-timing games? Is there some goal you expect to fall short of with a simple buy-and-hold strategy? If so, would simply increasing your savings rate be a more reasonable way to achieve your goals?

Just as a fairly-meaningless point of comparison, I, like DH's boss, am FI. But I've never done anything besides a basic buy-and-hold strategy. Probably unlike his boss, I have all the records and math and can say that I've had a 9.3% annualized time-weighted return over my 1998-present working career. My pre-crash investment peak in September 2007 was $374k. I had already surpassed that peak again by February 2010, and am currently over $1M. Well before that 2008 crash, I had set my goal to reach FI by 2018, and here I am already, a few years ahead of schedule, even with that crash, no market-timing necessary.

TreeTired

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Re: Stock Market - should I be concerned?
« Reply #19 on: January 26, 2015, 08:52:34 PM »
Maybe you can persuade him to sell only half.   That way he can compete with himself (the passive fully invested other half)  and see how it works out. 

Why now?   Why didn't he sell when the S&P reached it's old high of 1575ish ?    Many didn't think it could go much beyond that.   Now we are at 2057 and the bull market is very "old in the tooth" and the bears are predicting an imminent crash.... just as they have been doing for the past 2 years. 

I think I know this "boss" guy.   He went to 100% cash in October 2007 and went all in, bought 2x leveraged S&P 500 etf in Feb 2009 at the lows... and told you all about it 1 year later.

Personally I am ready to lighten up my equity positions considerably, but I am an old guy.
« Last Edit: January 26, 2015, 08:56:53 PM by TreeTired »

neil

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Re: Stock Market - should I be concerned?
« Reply #20 on: January 26, 2015, 08:52:45 PM »
Swing trading:
http://www.investopedia.com/articles/trading/06/dayofswingtrader.asp

Ignoring the odds of success, it's a full time job to do it right.  Doing less means you are behind the people who do this as their full time job.  There is a lot of implied effort involved.  There's a lot of data that shows many people fail, even after spending all this effort.

I'm not really going to bother arguing the merits because I think others have done that.  But a swing trader at least has a thesis on how he is going to make money.  It sounds like the thesis here is to sell because the boss said so.  Are you going to ask him when to buy back in?  He's not responsible for your retirement.  The job of managing your money is on you.

Dodge

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Re: Stock Market - should I be concerned?
« Reply #21 on: January 26, 2015, 09:15:48 PM »
Everyone below is significantly more knowledgeable about the markets than your DH's boss:

Quote
What Experts say about Market Timing

"The stock market will fluctuate, but you can't pinpoint when it will tumble or shoot up. If you have allocated your assets properly and have sufficient emergency money, you shouldn't need to worry." AAII Guide to Mutual Funds

"Endless tinkering is unlikely to improve performance, and chasing last period's stellar achiever is a losing strategy." Frank Armstrong, author and adviser

"It must be apparent to intelligent investors--if anyone possessed the ability to do so (market time) he would become a billionaire--quickly--." David Babson, co-author of Investing for a Successful Future

"What it really takes to improve your returns and diminish your risks is a willingness to stop focusing exclusively on the movement of the markets." Baer & Ginsler authors of  The Great Mutual Fund Trap

"If we haven't said it enough, we'll say it again: Market timing is dangerous." Barron's Guide to Making Investment Decisions

"Only liars manage to always be "out" during bad times and "in' during good times." Bernard Baruch, famed investor

"You have to keep reminding yourself. We don't know what's going to happen with anything, ever." Peter Bernstein, author of 10 finance books.

"There are two kinds of investors, be they large or small: Those who don't know where the market is headed, and those who don't know that they don't know." Wm Bernstein, author and adviser

"After nearly 50 years in this business, I do not know of anybody who has done market timing successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently." Jack Bogle

The Boglehead Contest began in 2001. Of 99 Diehard guesses that year, only 11 even guessed the direction of the stock market.

"If you're determined to succeed at investing, make it your first priority to become a buy-and-hold investor." Jack Brennan, former Vanguard CEO and author of Straight Talk on Investing)

"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." Warren Buffet

"Market timing is an ineffective strategy for mutual fund investors." CDA/Wiesenberger

"Any investment method that relies on predicting the future is doomed to fail." Chandan Sengupta author of The Only Proven Road to Investment Success.

"A successful investor has a good knowledge base, a well-defined investment plan, and nerves of steel to stick with it." (Andrew Clarke, financial adviser)

"Dalbar research has found that both stock and bond investors tend to overreact to events, moving money in and out of mutual funds with breathtakingly bad timing." Consumer Reports

"Most investors are unable to profitably time the market and are left with equity fund returns lower than inflation." 2003Dalbar Study

"Take my word on it. Buy-and-hold is still your best long-run strategy." Jonathan Clements, author & Wall Street Journal columnist

"Market-timing is bunk." Pat Dorsey, former Morningstar Director of Fund Analysis."

"The performance of 185 tactical asset allocation mutual funds was compared with buy-and-hold strategies and equity mutual funds over the years 1985-97. Over this period the S&P 500 Index increased 734%, average equity funds increased 598%, and tactical asset allocation funds increased 384%." David Dreman, author of Contrarian   Investment Strategies

"Market timing is a wicked idea. Don't try it-ever." Charles Ellis author of The Loser's Game

"Forget market timing in any form." Paul Farrell, CBS Marketwatch.com

"The best practice for investors is to design a long-term globally diversified asset allocation based on present and future financial needs. Then follow that plan religiously, through all markets good and bad." Rick Ferri, adviser and co-author of seven books including The Bogleheads' Guide to Retirement Planning.

"Benjamin Graham spent much of his career trying to devise a goodformula for when to get into--and out of--the stock market. All formulas, he concluded, failed." Forbes

"Buy and hold. Diversify. But your money in index funds. Pay attention to to the one thing you can control--costs." Fortune Investor's Guide

"Dont' sell out of fear or buy out of greed. Just keep making investments, and let the market take its course over the long-term." Norman Fosback, author, researcher

"The only function of economic forecasting is to make astrology look respectful." John Kenneth Galbraith, Economist

"I've learned that market timing can ruin you." Elaine Garzarelli, Wall Street's best known strategist until fired by  Lehman Brothers

"Staying on course may be just as difficult in bull markets as in bear markets." Good & Hermansen, authors of Index Your Way to Investment Success

"For most investors the odds favor a buy-and-hold strategy." Carol Gould, author &  columnist

"If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting that's going to happen to the stock market." Benjamin Graham

"From June 1980 through December 1992, 94.5% of 237 market timing investment newsletters had gone of business." Graham/Campbell Study

"Your very refusal to be active, and your renunciation of any pretended ability to predict the future, can become your most powerful weapon." Graham & Zweig, The Intelligent Investor

"Even in a bear market, market-timing and actively managed mutual funds generally hurt investment performance more than they help it." Mark Hulbert, Editor of Hulbert Financial Digest

"After receiving the Nobel Prize, Daniel Kahneman, was asked by a CNBC anchorman what investment tips he had for viewers. His answer: "Buy and hold."

"Timing the market is for losers. Time IN the market will get you to the winner's circele, and you'll sleep better at night." Michael Leboeuf, author of The Millionaire in You

"No one is smart enough to time the market's ups and downs." Arthur Levitt, former SEC Chairman)

"It never was my thinking that made the big money for me. It always was my sitting." Jesse Livermore, author & famed investor

"Nobody can predict interest rates, the future direction of the economy or the stock market." (Peter Lynch)

"Buying-and-holding a broad-based market index fund is still the only game in town." Burton Malkiel, author of the classic Random Walk Down Wall Street

"At the peak of the bull market in March of 2000 only 0.7% of all recommendations on stocks issued by Wall Street brokerages and investment banks were to "Sell." Source: Miami Herald 1/26/03 edition

"If you can't handle the short term, if the uncertainty is stressful and the headlines are unbearable, then the markets are too hot for you: get out of the kitchen." (Moshe Milevsky, author & researcher)

"We're not keen on market-timing. It just doesn't work." Morningstar Course 106

"We've yet to find anyone who can accurately and consistently predict the market's short-term moves." Motley Fools

"Odean and Barber tested over 66,400 investors between 1991 and 1997. Their findings: "The most active traders earned 7% less annually than buy-and-hold investors."

"Forget trying to time the market and do something productive instead." Gerald Perritt, financial author

"The market timer's Hall of Fame is an empty room." Jane Bryant Quinn author and syndicated columnist

"Countless studies have proved that no one is able to time the market effectively." Mary Roland, author of Best Practices for Financial Advisors

"Trading is based on the rather arrogant belief that the trader knows more than the buyers and sellers with whom he is trading." Ron Ross, author of The Unbeatable Market

"In the long run it doesn't matter much whether your timing is great or lousy. What matters is that you stay invested." Louis Rukeyser, famous (deceased) TV host

"For the 10 years that ended 12-31-2000, only one newsletter out of the 112 that Timers Digest follows managed to beat the S&P 500 Benchmark." Jim Schmidt, Editor

"I have learned the hard way that market timing and trying to pick a fund that will out-perform the market are both losing strategies." Bill Schultheis, adviser and author of The Coffeehouse Investor

"I'm a strong advocate of buying and holding." (Charles Schwab)

"It turns out that I should have just bought them (securities), and thereafter I should have just sat on them like a fat, stupid peasant. A peasant however, who is rich beyond his limited dreams of avarice." Fred Schwed Jr., 'Where are the Customers' Yachts?

"If you are not going to stick to your chosen investment method through thick and thin, there is almost no chance of your succeeding as an investor. Chandan Sengupta, financial author

"Investors should look with a jaundiced eye at any market timing system being peddled by its guru-creator." W. Scott Simon, author of Index Funds

"Buying and holding a few broad market index funds is perhaps the most important move ordinary invests can make to supercharge their portfolios." Stein & DeMuth, authors of Yes, You Can Get A Financial Life!

"It's my belief that it's a waste of time to try to time any market decline, or try to pinpoint a market bottom." James Stewart, Smart Money columnist

"It's a staple of personal finance advice: Buy-and-hold, because trading the stock market is a sucker's bet." Larry Swedroe, author and adviser.

"People should stop chasing performance and just put together a sensible portfolio regardless of the ups and downs of the market." David Swensen, Manager of Yale Investments

"Trust in time and forget market timing. Allow time to work its compounding magic for you. Let market timing inflict its miseries on someone else." Tweddell & Pierce, financial authors

"Stay invested. Not only does buy-and-hold investing offer better returns, but it's also less work." Eric Tyson, author, Mutual Funds for Dummies.

"Few if any investors manage to be consistently successful in timing markets." Wall Street Journal Lifetime Guide to Money 

"If you're considering doing your own market timing, the best advice is this: Don't." John Waggoner, USA Today financial columnist

"If you buy, and then hold a total-stock-market index fund, it is mathematically certain that you will outperform the vast majority of all other investors in the long run." Jason Zweig, author and Wall Street Journal columnist

Source: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=156499

One Noisy Cat

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Re: Stock Market - should I be concerned?
« Reply #22 on: January 27, 2015, 03:39:11 AM »
    I am curious when the OP says her husband lost half his 401 (k) in the 2008 crash and has probably gotten back to where it was now.  I keep about 80% of mine in equity mutual funds and looking back at my monthly records (which date back to 2000).

11/2007 (peak)       $583,715
 2/2009 (bottom)    $325,173
 3/2011 (return)     $584,284

So the worst stock market crash was wiped away after a mere 3 years 4 months without market timing but with bi weekly payroll deductions and (mostly monthly) IRA contributions. Was that so bad?

      My advice is to politely listen but don't try to time the markets. 
     

PEIslander

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Re: Stock Market - should I be concerned?
« Reply #23 on: January 27, 2015, 04:28:34 AM »
    I am curious when the OP says her husband lost half his 401 (k) in the 2008 crash and has probably gotten back to where it was now. 

Noisy Cat - she explains later in the thread that her numbers were wrong. Their investment performance grew past the losses.

One Noisy Cat

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Re: Stock Market - should I be concerned?
« Reply #24 on: January 27, 2015, 05:00:44 AM »
    I am curious when the OP says her husband lost half his 401 (k) in the 2008 crash and has probably gotten back to where it was now. 

Noisy Cat - she explains later in the thread that her numbers were wrong. Their investment performance grew past the losses.

Oops, my bad. That's what happens when you type before the first cup of coffee. But I see these "people lost 40% of their investments in 2008 so stay out of stocks" statements without considering dividends, dollar-cost-averaging, etc it makes my head spin.
   There are people like Elaine Garzarelli who got famous for predicting the 1987 crash on television. But her later predictions were wrong.

http://en.wikipedia.org/wiki/Elaine_Garzarelli

Workinghard

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Re: Stock Market - should I be concerned?
« Reply #25 on: January 27, 2015, 05:18:16 AM »
There's a thread on Bogleheads about what the experts say regarding market timing. Maybe you should print this out for your husband. Who's the expert? These people or your husband's boss? :)

https://www.bogleheads.org/forum/viewtopic.php?f=10&t=156499

PEIslander

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Re: Stock Market - should I be concerned?
« Reply #26 on: January 27, 2015, 05:59:52 AM »
I started saving money back in 1987 when I graduated university & started my career. At that time the office's accountant was very into investments and was always offering unsolicited advice to others on how they should invest their money. He seemed impressed that I was starting to save at the start of my career. Had I been seeking an investment mentor he would have been the obvious choice. At the time I went the mutual fund route and didn't pay much attention to his "sage" advice -- with hindsight I'm glad I didn't!

His 1987 advise was to get out of the markets and buy gold bullion & coins. At the time gold was selling for almost $500/oz in USD. It started a long slow fall in value. He preached that was good. It meant you could get more gold for your dollars. Anyway, it took 18 years (!!!) for gold to get back to $500/oz. (Then over the next five years it finally did what he was predicting and shot up, eventually reaching over $1800/oz. in 2011).  Had I taken his advice I would have seen many years of steady decline & sideways movement in the value of my investments. No doubt that poor performance would have turned me off investing. Instead with the less speculative approach of investing in mutual funds I saw good years and bad, experiencing a fantastic bull market and a gut-wrenching major bear market. Although my funds during that time were not "index" funds, mutual funds were being marketed as buy & hold long-term investments just as index funds & index ETFs are promoted today. The mantra was the same - history has shown that over the long term the markets are likely to grow - so invest easy and ignore the short-term volatility. At the end of that 18-year period gold was in the same place but the S&P index with dividends reinvested was up 535%. I'm glad I didn't take the accountant's "expert" advice even if some might say he was eventually vindicated when gold eventually went to $1800/oz. -- I don't know if he was still into gold when it eventually surged. For his sake I hope so because 18 years is a long time to wait for some returns.

There will always be people like the OP's "boss" and my "accountant" who will claim to know the sure thing and they can be persuasive. Likewise, TV financial pundits, newsletter writers, and bloggers can be persuasive. It is hard to stay focused through all the noise - but stay focused we must...
« Last Edit: January 27, 2015, 06:03:37 AM by PEIslander »

NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #27 on: January 27, 2015, 06:58:52 AM »

Quote
Seriously, go through IndexView with him:

http://www.mrmoneymustache.com/2014/08/25/indexview/

Put in any two years.





it looks like ***OMG A CRASH IS COMING***, because the line is so much up and diagonal to the right, it looks like it has no where to go but down!  This year is no different,



Had you sold it all every year it looked like a crash was coming...you'd never be in the market.  Let's not argue about whether a crash is coming or not, let's agree that it feels that way right now. Like there's been a turning point, a division between an old era and a new era, and therefore past history is no longer a guide to the future.

And here's my point: it always feels that way. That's always what it feels like. It's not a number, it's a sense that there's been a break, the ground has shifted, the rules have changed.

This is why it's so hard to stay the course.  Your investment plan needs to be in tune with your own personal willingness to take financial risk.  When you're deciding what your risk tolerance is, it's not a tolerance for the number 10 or the number 15 or the number 25. It's not a tolerance for an "A" turning into a "+". It's a tolerance for accepting genuinely-scary, nothing-like-this-has-ever-happened-before, heralds-a-new-era news events.

When the stock market is falling, you can't cut back on your stock market risk without locking in a loss.  If your DH is afraid of a market crash, and that fear is causing him to want to change allocations, that fear will only be stronger when real market risk shows up.  It might be a good time to re-evaluate your position, and add more bonds.  If you're 100/0, go to 80/20.  If you're 80/20, to go 60/40...etc.

Then when stocks fall at some point in the future, you can sell bonds to buy back into stocks.  But it won't be called market-timing.  It'll be called rebalancing.

This is very very helpful.  Thank you!  This is basically what I was trying to explain to him last night.  That you can't really know when the right time to sell/buy is.  He definitely feels a market crash is coming (he works in the oil industry so the low oil prices are hitting close to home for him).

And, I totally agree about rebalancing, I think that makes sense.

I've asked him to read this thread and ask questions he might have.

Dodge

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Re: Stock Market - should I be concerned?
« Reply #28 on: January 27, 2015, 07:18:00 AM »
I started saving money back in 1987 when I graduated university & started my career. At that time the office's accountant was very into investments and was always offering unsolicited advice to others on how they should invest their money. He seemed impressed that I was starting to save at the start of my career. Had I been seeking an investment mentor he would have been the obvious choice. At the time I went the mutual fund route and didn't pay much attention to his "sage" advice -- with hindsight I'm glad I didn't!

His 1987 advise was to get out of the markets and buy gold bullion & coins. At the time gold was selling for almost $500/oz in USD. It started a long slow fall in value. He preached that was good. It meant you could get more gold for your dollars. Anyway, it took 18 years (!!!) for gold to get back to $500/oz. (Then over the next five years it finally did what he was predicting and shot up, eventually reaching over $1800/oz. in 2011).  Had I taken his advice I would have seen many years of steady decline & sideways movement in the value of my investments. No doubt that poor performance would have turned me off investing. Instead with the less speculative approach of investing in mutual funds I saw good years and bad, experiencing a fantastic bull market and a gut-wrenching major bear market. Although my funds during that time were not "index" funds, mutual funds were being marketed as buy & hold long-term investments just as index funds & index ETFs are promoted today. The mantra was the same - history has shown that over the long term the markets are likely to grow - so invest easy and ignore the short-term volatility. At the end of that 18-year period gold was in the same place but the S&P index with dividends reinvested was up 535%. I'm glad I didn't take the accountant's "expert" advice even if some might say he was eventually vindicated when gold eventually went to $1800/oz. -- I don't know if he was still into gold when it eventually surged. For his sake I hope so because 18 years is a long time to wait for some returns.

There will always be people like the OP's "boss" and my "accountant" who will claim to know the sure thing and they can be persuasive. Likewise, TV financial pundits, newsletter writers, and bloggers can be persuasive. It is hard to stay focused through all the noise - but stay focused we must...

I love it when people start talking about Gold, it gives me an opportunity to show the latest inflation-adjusted gold chart!



A few fun points:

  • Despite the recent run-up, it still hasn't reached it's 1980 high.
  • A gold investor starting in 1934, would have seen a steady decline in their portfolio for 40 years
  • If you look at your gold portfolio today, no matter when you invested during the last 100 years, the most you could possibly have in your portfolio is about 4x the original value.
  • An investor in 1913 would have just broke even after 70 years
  • Even if you had perfect market timing, bought at the 100 year low, and sold at the 100 year high, a single dollar would have only grown to $8 dollars.

Compared to the stock market over this same time period, with no market timing:



Honestly, if DH's boss is recommending selling all stocks, and putting it into gold, that alone should be enough to discredit him.
« Last Edit: January 27, 2015, 07:21:01 AM by Dodge »

lizzie

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Re: Stock Market - should I be concerned?
« Reply #29 on: January 27, 2015, 07:28:06 AM »
Wow. This whole thread is really what I needed to read right now. I've evolved from someone who was terrified of the stock market to someone who deposits almost all of her paycheck into it. Now that that amount is getting pretty big, though, I feel like I have more to lose, my old ways of thinking were starting to intrude, and I've been wondering if I can emotionally handle logging in to Mint someday and seeing huge declines in my investments. I'm commenting mostly so that I can quickly find this again and re-read it in the future! Thanks everyone.

Terrestrial

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Re: Stock Market - should I be concerned?
« Reply #30 on: January 27, 2015, 07:29:14 AM »

DH's boss sent him this chart as an illustration of how much better off it is to sell when things start going down.

http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#%7B%22range%22%3A%22max%22%2C%22scale%22%3A%22linear%22%7D


All I see when I look at that chart is that if you hadn't sold anything from the very peak of the market in 2007 you'd have ~35% more money than you did back then (even excluding dividends/buying more while low).   

What this guy 'technically' says is true...but in reality its extremely hard for even professionals to pick the right times, much less the rest of us. 

breezer74

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Re: Stock Market - should I be concerned?
« Reply #31 on: January 27, 2015, 03:37:32 PM »
Disclaimer: First time poster who quite enjoys these boards and the wise advice!

I was having similar feelings as your husband and was fully allocated using the Personal Capital allocations as a guide but I couldn't get comfy. Yesterday, I ran a few scenarios in a spreadsheet which included a 30% correction with up to three years of 12% growth in the meantime. After the correction, I modeled 6% growth per year until retirement. And while I could very well prove foolish for getting out of the market, this visualization guided my decision to exit. According to my tinkering, I'd have more money in retirement by staying out and waiting for a correction even with three more years of 12% growth. A possible dummy move? Probably. But I feel comfier knowing what my break even is in terms of time to correction.





Dodge

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Re: Stock Market - should I be concerned?
« Reply #32 on: January 27, 2015, 04:26:04 PM »
Disclaimer: First time poster who quite enjoys these boards and the wise advice!

I was having similar feelings as your husband and was fully allocated using the Personal Capital allocations as a guide but I couldn't get comfy. Yesterday, I ran a few scenarios in a spreadsheet which included a 30% correction with up to three years of 12% growth in the meantime. After the correction, I modeled 6% growth per year until retirement. And while I could very well prove foolish for getting out of the market, this visualization guided my decision to exit. According to my tinkering, I'd have more money in retirement by staying out and waiting for a correction even with three more years of 12% growth. A possible dummy move? Probably. But I feel comfier knowing what my break even is in terms of time to correction.

A visualization of fake data, made up in a spreadsheet where you can perfectly time the market, guided your decision?  Did you look at any real data to see how often your plan would have worked?  Did you calculate the missed dividends in your spreadsheet?  Unlikely, as the dividends increase as the market drops, making it difficult to calculate, but further rewarding those who stay the course.  Did you calculate how you'll know when to get back in?  Did you calculate how it will feel emotionally, when trying to get back in while you're watching the stock market fall more and more each day (catching a falling knife they call it)?

Yes, if you can time a crash perfectly, you will make more money.  No one is denying that.  What we're showing NewPerspective, is that no one can time it consistently.  Even if you got out at the perfect time, how will you know when to get back in?

How do you think the 1987 investor felt, when they correctly timed the market crash:



But expected a bigger drop than occurred, and didn't get back in:



...they're still waiting:



I still know people who are waiting for prices to get back to 2008-2009 levels so they can get back into the market.  This has severely impacted their retirement.  However you're feeing about the market today, you very likely would've felt that way in 1980, and 1946, and 1952...pretty much any year on record.  There is nothing special about today.  Statistically, your move has permanently lowered your lifetime returns.

breezer74

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Re: Stock Market - should I be concerned?
« Reply #33 on: January 27, 2015, 04:34:32 PM »
Goddamn some of you are bullies. Good riddance - off to play with my fake data/spreadsheets.

Love, Kelly
Level III Chartered Financial Analyst Candidate

rocketpj

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Re: Stock Market - should I be concerned?
« Reply #34 on: January 27, 2015, 04:57:29 PM »
That's the trouble with living in 'today' instead of 'the future'.  We are always at the far right of the graph.

I'm not sure about everyone else, but I tend to track my investments in Google finance.  Mostly because I can log into it anywhere and just see how it's doing.  I don't really need to - I have no intentions of selling anything for a very long time.  But I like to watch the graph over time. 

Any time the default graph (which shows the last few weeks at most) looks scary, I just scroll 'out' until the short term fluctuations even out into a much larger graph - which really takes the pain out of whatever happened today or this week.  But no matter what I am still at the far right hand side of the graph, which is today.  If it looks like a long, upward slope the natural inclination is to expect it to change direction and dramatically fall back down the other side.  But scroll out far enough and it always shows a gradual upward rise (with occasional dips).

But probably not.  It can help psychologically to just put 'today' in the center of the graph - which really helps show you that tomorrow's graph could really be anything.  But who really knows - we can all have a theory.  Unless you are retiring this year there isn't much point worrying about it, and if it that worrisome you probably aren't in a position to retire this year anyways.

One thing that some of the more experienced investors I have read always say is that when everybody is calling for one thing - in this case a market crash - the opposite tends to happen.  If we look at the global economy right now we see economic chaos everywhere, sovereign debt crises, instability and a bunch of other scary stuff (as usual).  Maybe more than usual.  Historically speaking, when that happens in some places, capital tends to flee to other places.

Right now North America is looking like the safest, stablest place for money to go.  Certainly lots of it is pouring in from Europe as people flee the crashing Euro and all the debt crises there.  No matter what is happening locally (which is actually fairly good as far as I can tell) money will flow to North America as long as it is ugly everywhere else.  So I don't actually expext the market to crash this year, or even next.  Certainly it will sometime, but probably not now because there is nowhere else for all that capital to go.

I could be wrong of course, maybe tomorrow will be horrible.  But it doesn't matter really.

MrMoogle

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Re: Stock Market - should I be concerned?
« Reply #35 on: January 27, 2015, 05:59:16 PM »
Personally I have moved away from 100% stocks, and moved to a more conservative asset allocation. I look at the Shiller P/E, and according to it, we are high.  There are many other indicators, this is the one I like.  It is very possible it will continue to go up for a couple years, so I'm not completely out of stocks. 

If you look historically, a high Shiller P/E corresponds to lower average returns in the next 5-10 years.  So the chance of dropping drastically is higher, and the chance of reward is lower.  No risk, no reward, but if the reward isn't there, then why risk?  Going to an 80/20 (stocks/bonds) or 60/40 makes sense to me.  Maybe I'm a big chicken :)


NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #36 on: January 27, 2015, 06:05:27 PM »
OP here - great news!!!  My husband has returned to his senses  (his boss should really go into sales!).  He read this thread this morning and is back on track with our original long term financial plan (which most definitely does not involve selling our investments right now).   

We are going to sell some of his company stock because we are holding too much and pay some toward our house.   We both feel comfortable with this.

Thank you all so very very much.  All of your input has really been invaluable.   

Dodge

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Re: Stock Market - should I be concerned?
« Reply #37 on: January 27, 2015, 06:16:20 PM »
OP here - great news!!!  My husband has returned to his senses  (his boss should really go into sales!).  He read this thread this morning and is back on track with our original long term financial plan (which most definitely does not involve selling our investments right now).   

We are going to sell some of his company stock because we are holding too much and pay some toward our house.   We both feel comfortable with this.

Thank you all so very very much.  All of your input has really been invaluable.

Great news indeed!  I'm happy to hear you and your husband are again on the same page.  Let us know if you or DH have any more questions :)

NewPerspective

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Re: Stock Market - should I be concerned?
« Reply #38 on: January 27, 2015, 06:20:24 PM »
OP here - great news!!!  My husband has returned to his senses  (his boss should really go into sales!).  He read this thread this morning and is back on track with our original long term financial plan (which most definitely does not involve selling our investments right now).   

We are going to sell some of his company stock because we are holding too much and pay some toward our house.   We both feel comfortable with this.

Thank you all so very very much.  All of your input has really been invaluable.

Great news indeed!  I'm happy to hear you and your husband are again on the same page.  Let us know if you or DH have any more questions :)

Dodge, he actually copy and pasted one of your comments and emailed it to me this morning and said it made a lot of sense. :-)

Everyone else's input was very helpful too.  I think he was just feeling panicked for a minute there.  It helped for him to read so many responses with such great information to reassure him.


Psychstache

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Re: Stock Market - should I be concerned?
« Reply #39 on: January 27, 2015, 06:58:39 PM »
OP here - great news!!!  My husband has returned to his senses  (his boss should really go into sales!).  He read this thread this morning and is back on track with our original long term financial plan (which most definitely does not involve selling our investments right now).   

We are going to sell some of his company stock because we are holding too much and pay some toward our house.   We both feel comfortable with this.

Thank you all so very very much.  All of your input has really been invaluable.

That's awesome. Score one for logic and math! Take that, popular jocks!

TreeTired

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Re: Stock Market - should I be concerned?
« Reply #40 on: January 27, 2015, 07:40:31 PM »
Quote
There are people like Elaine Garzarelli who got famous for predicting the 1987 crash on television. But her later predictions were wrong. 

Have you noticed that someone calls a market crash almost every week?   Interesting how the frequency of negative forecasts increases dramatically when the market trades down for 1 or 2 days.   So every week somebody predicts a crash, week after week.  Eventually, one of these forecasters may be right,  if we actually get a CRASH and not a sustained bear market.   At that point,  this random journalist will be celebrated as a market forecasting guru!

aspiringnomad

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Re: Stock Market - should I be concerned?
« Reply #41 on: January 27, 2015, 08:53:59 PM »
What a great thread. I'm not too surprised the CFA candidate who dropped in supports market timing. I know a few CFAs and they tend to dislike passive investing. I've never asked, since they're proud of their very difficult to attain distinction (and should be), but I suspect it sometimes has to do with its effect on the fees their employers charge.

Anyway, I'll just leave this link to add a little more support to the OP and her husband staying the course: http://awealthofcommonsense.com/worlds-worst-market-timer/


Riff

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Re: Stock Market - should I be concerned?
« Reply #42 on: January 27, 2015, 10:20:22 PM »
What if the boss was just trying to trip up his employee's road to financial independence?  A bit nefarious, yeah, but it makes one wonder.  "Hey, you should buy a bigger house and a boat, and time the market with your 'stach!"

CorpRaider

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Re: Stock Market - should I be concerned?
« Reply #43 on: January 28, 2015, 06:26:42 AM »
If you can't talk him out of it tell him he should experiment first with a small account, maybe open a Roth IRA just for that and if he outperforms the market over say a decade than you can scale into his strategy. 

RapmasterD

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Re: Stock Market - should I be concerned?
« Reply #44 on: January 28, 2015, 09:32:00 PM »
Let's say you DID want to time the market. Rather than listen to the boss at work, or looking at a P/E chart, I think you'd want to look at price charts for a holding (e.g., a total stock market fund) compared to both a shorter term and a longer term moving average of that same holding. Unfortunately I can't/won't get more specific....but when I do this looking at "the market," things still look fine to me.

In other words, I think you'd want to base your decision on a consistent quantitative analysis that tells you when to get in and out - one that you won't "break" with emotion or hearsay or 'gut.'

Again, I'm not recommending timing the market per se, but am suggesting a potentially wise course if opting to do so.

LINK: http://www.investopedia.com/articles/active-trading/052014/how-use-moving-average-buy-stocks.asp

goodrookie

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Re: Stock Market - should I be concerned?
« Reply #45 on: January 28, 2015, 10:16:20 PM »
My 2 cents: tell (Command) your husband NOT to do this
The only time you sell when price is LOW is if you think the entire market is going to crash like 2008. Even then you have to do this early.

In theory, his boss is right. Hypothetical example, XYZ stock at 200. Going to 190---180---...150...---then rebounds to 190-200s again in a few weeks. If he sells at 180s and then buy those back again at 150-160s, he may have net profit even though he sold at loss. The problems are:
1) commissions - will eat up the "potential" profits
2) most of the "mini crashes" happens quickly and also recovers quickly. It is hard to find the "bottom."
3) Just because the entire market rebounds does not mean XYZ stock will rebound at the same time or to same degree.
4) % down does not equal % up. A stock that lost 10% will need to rise more than 10% to break even
« Last Edit: January 28, 2015, 10:52:33 PM by goodrookie »

Dodge

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Re: Stock Market - should I be concerned?
« Reply #46 on: January 28, 2015, 10:20:59 PM »

The only time you sell when price is LOW is if you think the entire market is going to crash like 2008.

Quite possibly the worst advice I've ever seen on this forum.

Dodge

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Re: Stock Market - should I be concerned?
« Reply #47 on: January 28, 2015, 10:27:02 PM »

Let's say you DID want to time the market. Rather than listen to the boss at work, or looking at a P/E chart, I think you'd want to look at price charts for a holding (e.g., a total stock market fund) compared to both a shorter term and a longer term moving average of that same holding. Unfortunately I can't/won't get more specific....but when I do this looking at "the market," things still look fine to me.

In other words, I think you'd want to base your decision on a consistent quantitative analysis that tells you when to get in and out - one that you won't "break" with emotion or hearsay or 'gut.'

Again, I'm not recommending timing the market per se, but am suggesting a potentially wise course if opting to do so.

LINK: http://www.investopedia.com/articles/active-trading/052014/how-use-moving-average-buy-stocks.asp

I've used, and seen other people attempt to use moving averages in active trading for over a decade now. It's no different than any other technical analysis, it does not work. It used to be a hobby of mine to visit active trading forums, program trading robots based on the buy/sell rules of the thread, run them against decades of historical charts, and publish the results.

On a long enough timeline, they all crashed and burned.

goodrookie

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Re: Stock Market - should I be concerned?
« Reply #48 on: January 28, 2015, 10:34:13 PM »
@ Dodge: well, sweetheart, don't do anything to your portfolio the next time market crashes.   

MDM

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Re: Stock Market - should I be concerned?
« Reply #49 on: January 28, 2015, 11:55:40 PM »
...don't do anything to your portfolio the next time market crashes.
Now that actually is very good advice!

One might improve on it a bit by rebalancing instead of holding, but simply holding beats selling once the market has crashed.

Of course if one is fortunate to have foresight glasses, selling just before the market crashes is a great strategy.  Alas, my glasses work only in hindsight....