Author Topic: Welp, I'm going to take a stab at timing the market  (Read 93376 times)

sol

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Re: Welp, I'm going to take a stab at timing the market
« Reply #250 on: May 13, 2019, 11:49:49 PM »
"What makes me think that" is his post in this thread in which he said he was converting it to cash.

He never said that he pulled his money out and put it under his mattress. FDIC Ally savings accounts are yielding 2.2% right now. I'm pretty sure that in the vernacular of the peasantry that is still "cash."

Hey, I would love for junioroldtimer to come back and enlighten us as to where he's holding his cash.  I'm guessing it's not at Ally bank, but until he chimes in I guess we'll never know.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #251 on: May 14, 2019, 12:27:41 PM »
I suspect the tone of this thread deters him from coming back.

I'm not an advocate of trying to time the market, and I don't think there are pro's who should have done it last week. Undoubtedly, there are some pro's/gamblers who did. The jury is still out on the wiseness of that move.

That said, if one is having difficulty sitting idle given the current economic or political indicators, or both, I would treat "market timing" like selling a stock short and select boundaries on your gain/loss from the start (e.g., I get back in if there's a 10% drop or a 15% gain, or the Schiller PE ratio drops to 25, etc. -- whatever numbers reflect your willingness to accept loss and reasonable expectation of gain). Maybe that's what the OP did. I can't say.

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #252 on: May 14, 2019, 12:55:39 PM »
Hilariously, I sold $100k or so of stock last week to pay off my mortgage. Market timing FTW!

Of course, in 30 years, come ask me how that worked out...

-W

the_fixer

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Re: Welp, I'm going to take a stab at timing the market
« Reply #253 on: May 14, 2019, 09:51:11 PM »
$69.98 5/13/2019


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ChpBstrd

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Re: Welp, I'm going to take a stab at timing the market
« Reply #254 on: May 15, 2019, 07:42:05 AM »
I suspect the tone of this thread deters him from coming back.

I'm not an advocate of trying to time the market, and I don't think there are pro's who should have done it last week. Undoubtedly, there are some pro's/gamblers who did. The jury is still out on the wiseness of that move.

That said, if one is having difficulty sitting idle given the current economic or political indicators, or both, I would treat "market timing" like selling a stock short and select boundaries on your gain/loss from the start (e.g., I get back in if there's a 10% drop or a 15% gain, or the Schiller PE ratio drops to 25, etc. -- whatever numbers reflect your willingness to accept loss and reasonable expectation of gain). Maybe that's what the OP did. I can't say.

To some lessor extent, internet mockery is a bet on market timing too. The majority of the time, the market goes up, so it is a safe bet to criticize someone who is going short or neutral. You will be right the majority of the time. However, just like holding a long position opens you up to the risk of the occasional bear market, criticizing those predicting a bear market opens you up to the risk of them being right and you being wrong at some particular time. The majority of us have watched buy-and-hold work wonders for our entire lives, but the tail risk is out there and we've never experienced it. We have experienced the consistent validation of being right, over and over again, about preaching time in the market, but this is not some infallible natural law. it only worked 90+% of the time. If the future of the U.S. resembles Turkey, Venezuela, or Argentina, the rules may change. Consider how many regulations put in place after the Great Depression to protect against an over-leveraged financial sector have been removed in the last 20 years.

There are bullish options trades you can take right now with a 10% probability of a very large payoff and a 90% probability of total loss. That doesn't mean it's a mark of knowledgeability to mock the long shot bet.

sol

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Re: Welp, I'm going to take a stab at timing the market
« Reply #255 on: May 15, 2019, 08:17:49 AM »
To some lessor extent, internet mockery is a bet on market timing too.

I think we've mostly avoided the mockery.  It just looks like mockery because it has turned out to be a losing bet thus far.

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #256 on: May 15, 2019, 08:28:51 AM »
Well *some* of us are old enough to have experienced a couple of major crashes...

Sheesh, I feel like a geezer, but I do remember the 1990s and 2000s. My pitifully small retirement money (generated entirely by an automatic contribution situation from a DOE grad student job I had) cratered a couple of times in the intervening 20 years. Yet somehow I kept putting money in and now I'm a rich guy.

I honestly hope JuniorOldTimer does great. I really do. And I actually suspect he might (though not for the reasons he pulled the money in the first place). But the underlying mindset of folks who do this is basically never going to lead to long term success.

-W

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #257 on: May 15, 2019, 08:37:55 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:


EvenSteven

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Re: Welp, I'm going to take a stab at timing the market
« Reply #258 on: May 15, 2019, 09:09:15 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



That's a nice graph for the most part, but I don't think Dennis Miller leaving the cast in 1990 was all that bad, and certainly not a crisis. But even if it was a crisis, I don't see how a late night sketch comedy show would affect the stock market all that much.

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #259 on: May 15, 2019, 09:16:44 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



That's a nice graph for the most part, but I don't think Dennis Miller leaving the cast in 1990 was all that bad, and certainly not a crisis. But even if it was a crisis, I don't see how a late night sketch comedy show would affect the stock market all that much.

Right, the point is there's no correlation.  Like who would have predicted that a recession would co-exist with strong market performance (but there it is in 1959 and 1991) or that rising interest rates would also co-exist with strong market performance (but there it is in 1966-1970 and 1994), or that the Korean and Iraqi wars had zero affect on the market.  Or that Y2K would correlate with a massive dip.  It's all just random. 

The sooner people realize there's no way to correlate current events with market performance, the sooner they will stop making mistakes like the one made at the start of this thread.

talltexan

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Re: Welp, I'm going to take a stab at timing the market
« Reply #260 on: May 15, 2019, 09:46:26 AM »
I love these threads.  They are fun.  Although they are usually more fun when the timer is overconfident and strutting around -- love when those types slip on the banana peel.  The OP in this thread seems like a nice guy so it's not quite as enjoyable (maybe it's because he used the word, "Welp"? )

 At some point, I'm sure I'll try to time it again, and the next time I do, I'll try to remember to start a thread.  I'll take my turn on the banana peel... :)

Note: the banana peel could surprise those of use who've been Bulls on this thread so far. Indeed, that would be an amazing irony!

Psychstache

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Re: Welp, I'm going to take a stab at timing the market
« Reply #261 on: May 15, 2019, 10:14:14 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



That's a nice graph for the most part, but I don't think Dennis Miller leaving the cast in 1990 was all that bad, and certainly not a crisis. But even if it was a crisis, I don't see how a late night sketch comedy show would affect the stock market all that much.

Obviously as the additions of Chris Farley and David Spade panned out, the market called it a wash.

Psychstache

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Re: Welp, I'm going to take a stab at timing the market
« Reply #262 on: May 15, 2019, 10:18:17 AM »
BUT: I also believe some of the flak comes from Mustachians working out their own angst at staying the course in the market.  It is painful to stay the course sometimes, isn't it?  Even when, historically and mathematically, you believe you're doing the right thing.

Is it? I'm not trying to be snarky, I just want to understand this mindframe. I feel no angst about my choice. I did the research, which did cause some angst as I grew and learned, but since then I have felt no reservations about my decision. Do you think it is something that is unique to money allocation or more a component of an overall personal mindset?

I think of it just like I do any other product research. Did I spent countless hours looking at couches, sitting on them in showrooms, measuring and remeasuring my space when I was trying to find the right furniture for my living room? Yeah. Did I immediately forget all of that knowledge and never think about couches again as soon as I bought it? Yes.

Edit: spelling and grammar are hard.
« Last Edit: May 15, 2019, 11:48:15 AM by Psychstache »

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #263 on: May 15, 2019, 11:59:53 AM »
BUT: I also believe some of the flak comes from Mustachians working out their own angst at staying the course in the market.  It is painful to stay the course sometimes, isn't it?  Even when, historically and mathematically, you believe you're doing the right thing.

Is it? I'm not trying to be snarky, I just want to understand this mindframe. I feel no angst about my choice. I did the research, which did cause some angst as I grew and learned, but since then I have felt no reservations about my decision. Do you think it is something that is unique to money allocation or more a component of an overall personal mindset?

I think of it just like I do any other product research. Did I spent countless hours looking at couches, sitting on them in showrooms, measuring and remeasuring my space when I was trying to find the right furniture for my living room? Yeah. Did I immediately forget all of it knowlegde and never think about couches again as soon as I bought it? Yes.

In terms of the angst and the flak... Certainly I was projecting based on my own personal experience, but it wouldn't surprise me to find out that the way I've been thinking about things is not common and not optimal.  I know I feel the need to dance in and out of the market -- even when I know I shouldn't -- but maybe I'm the only one.

I like your approach a lot better.

Why do you feel the need to dance in and out of the market?  No snark, I'm genuinely curious.

Maenad

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Re: Welp, I'm going to take a stab at timing the market
« Reply #264 on: May 15, 2019, 03:02:24 PM »
BUT: I also believe some of the flak comes from Mustachians working out their own angst at staying the course in the market.  It is painful to stay the course sometimes, isn't it?  Even when, historically and mathematically, you believe you're doing the right thing.

Is it? I'm not trying to be snarky, I just want to understand this mindframe. I feel no angst about my choice. I did the research, which did cause some angst as I grew and learned, but since then I have felt no reservations about my decision. Do you think it is something that is unique to money allocation or more a component of an overall personal mindset?

It can be, depending on mindset and circumstances. I'm thisclose to FI, and the recent market dip due to tariff angst has at least doubled the time left to FI for me. It felt like someone jerked away a beautiful dream just as I was about to reach out and touch it.

Logically, I know that a few months is nothing in the long run, but damn if I didn't feel like Charlie Brown and that football. So sometimes there can be angst - what if he's right? I mean, eventually one of the Big Scary Bear Market predictions will be right, but if it's now, the timing is absolutely horrible for me in the short term. And this is after being invested through the dot-com crash and the great recession - I think I wasn't as worried then because I had years to go yet.

My actions are driven by logic, so I'm investing for the long term and sticking to my AA, but logic isn't too good at dealing with the emotions. For that I spend time outdoors and time with friends and family. And my cats, cuz pets are awesome and make everything better.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #265 on: May 15, 2019, 03:20:15 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #266 on: May 15, 2019, 07:21:10 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

That's a great article, but it can be misleading since it assumes a lump sum going in, then a lump sum coming back out.

The lump sum in might for some people be a realistic scenario (inheritance) but the bulk withdrawal is something basically nobody would do.

If you're putting money in starting in any of those years, and continue putting it in for 20 years, you'll have done just fine. OP has very little money right now, so he's in a great spot to just plug it in every month.

-W
« Last Edit: May 15, 2019, 07:24:38 PM by waltworks »

Telecaster

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Re: Welp, I'm going to take a stab at timing the market
« Reply #267 on: May 16, 2019, 11:57:39 PM »
It can be, depending on mindset and circumstances. I'm thisclose to FI, and the recent market dip due to tariff angst has at least doubled the time left to FI for me. It felt like someone jerked away a beautiful dream just as I was about to reach out and touch it.

Doubled?  Were you a month away and now you are two months away? 

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #268 on: May 28, 2019, 11:12:14 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

That's a great article, but it can be misleading since it assumes a lump sum going in, then a lump sum coming back out.

The lump sum in might for some people be a realistic scenario (inheritance) but the bulk withdrawal is something basically nobody would do.

If you're putting money in starting in any of those years, and continue putting it in for 20 years, you'll have done just fine. OP has very little money right now, so he's in a great spot to just plug it in every month.

-W

Very valid point. I'll quibble with "misleading" as I think the article is clear that its focus is a single investment.

JAYSLOL

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Re: Welp, I'm going to take a stab at timing the market
« Reply #269 on: May 30, 2019, 07:30:24 AM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

That's a great article, but it can be misleading since it assumes a lump sum going in, then a lump sum coming back out.

The lump sum in might for some people be a realistic scenario (inheritance) but the bulk withdrawal is something basically nobody would do.

If you're putting money in starting in any of those years, and continue putting it in for 20 years, you'll have done just fine. OP has very little money right now, so he's in a great spot to just plug it in every month.

-W

Very valid point. I'll quibble with "misleading" as I think the article is clear that its focus is a single investment.

I'll actually second that it's misleading.  Perhaps not intentionally, but by saying "It's when you start and when you finish" implies that's the only way to invest, as in you need to be able to buy and sell at exactly the right time for your investment to work out, otherwise don't bother.  Thats just not the case with a typical saver/investor and it's a misleading way to look at it for the vast majority of people that work for 20-40 year and then draw down slowly in retirement.

talltexan

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Re: Welp, I'm going to take a stab at timing the market
« Reply #270 on: May 30, 2019, 07:50:20 AM »
Now that stocks are dropping again, should some of us who were castigating the OP starting eating a bit of crow?

sol

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Re: Welp, I'm going to take a stab at timing the market
« Reply #271 on: May 30, 2019, 08:14:55 AM »
Now that stocks are dropping again, should some of us who were castigating the OP starting eating a bit of crow?

Well, let's do a quick check in. 

junioroldtimer sold 892.949 shares on February 7th at $67.59 each, converting $60,354.43 into cash.

On May 29 the closing price was $69.28, meaning that he had cost himself $1,509.08 after ~3.5 months of trying to time the market, plus $333.61 in dividends not paid is $1,842.69

That's better than the ~$5k he was out when markets were higher, but there still hasn't been a single day when he could have bought back in for a profit since he decided to go all cash.  He literally sold at the market's lowest point for the window of Feb 7 to May 29.  ANY other day in that window would have lost him less money.

So no, it doesn't look like we're quite at the "eating crow" stage just yet.  Personally I'm still hoping for a short dip below $67.59 so that junioroldtimer can rationalize getting back into stocks.  Maybe one week?  That should give him enough time to notice and then get around to making a transaction.

« Last Edit: May 30, 2019, 09:00:19 AM by sol »

Maenad

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Re: Welp, I'm going to take a stab at timing the market
« Reply #272 on: May 30, 2019, 08:26:06 AM »
It can be, depending on mindset and circumstances. I'm thisclose to FI, and the recent market dip due to tariff angst has at least doubled the time left to FI for me. It felt like someone jerked away a beautiful dream just as I was about to reach out and touch it.

Doubled?  Were you a month away and now you are two months away?

2 months to 4. At the beginning of May it looked like we may hit FI end of June. We do our month-end summary on Saturday, and I think I'm going to be grumpy. I'm trying to keep it in perspective - if there's a recession and bear market due to a trade war, a lot of people will be in much worse situations than I would. I've still made a LOT of money over the last decade.

Davnasty

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Re: Welp, I'm going to take a stab at timing the market
« Reply #273 on: May 30, 2019, 08:43:56 AM »
Now that stocks are dropping again, should some of us who were castigating the OP starting eating a bit of crow?

I don't think so. Even if OP comes out ahead with this decision, I would stand by my opinion that it was the wrong decision at the time it was made.

If someone places a bet on black, they're making a statistically poor choice. If you told them so and explained your reasoning to them but then they won, does this mean you were wrong? A 47.4% chance of something happening isn't exactly a long shot but losing is the more likely outcome. That's all that matters to me.

Not to mention the reasoning behind the expected drop in the markets has not played out as predicted.

I think the sitting president is going to be impeached and there's going to be a knock-down, drag-out fight in which the markets temporarily plummet as all this Russia stuff comes to light.

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #274 on: May 30, 2019, 08:59:25 AM »
The worse thing that can happen when someone tries to time the market is that they get lucky the first time or 2.  Because it plants the idea that they are somehow right or special and can just keep on timing the market in the future.  So they will start to lose money before too long but will NOT change their behavior and stop trying to time the market.  Rather, they will take bigger and bigger risks to "make back" their money.  It's classic gambling mentality and we as a species are VERY prone to this sort of selective bias. 

Hell, the entire gambling industry is built on this specific blindspot that humans have.  And Vegas seems to be doing pretty well :P

ChpBstrd

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Re: Welp, I'm going to take a stab at timing the market
« Reply #275 on: May 30, 2019, 09:01:15 AM »
It can be, depending on mindset and circumstances. I'm thisclose to FI, and the recent market dip due to tariff angst has at least doubled the time left to FI for me. It felt like someone jerked away a beautiful dream just as I was about to reach out and touch it.

Doubled?  Were you a month away and now you are two months away?
í

2 months to 4. At the beginning of May it looked like we may hit FI end of June. We do our month-end summary on Saturday, and I think I'm going to be grumpy. I'm trying to keep it in perspective - if there's a recession and bear market due to a trade war, a lot of people will be in much worse situations than I would. I've still made a LOT of money over the last decade.

This is exactly why I donít think we should call ourselves FIRE based on daily/monthly account balance changes. Is someone really FI on Monday because stocks went up 1% and then back to being work dependent on Tuesday when the market gives up those gains? One could spend years with oneís portfolio value going up and down around their FIRE number, all while owning the same assets!

Look at the cash flows from your investments, including hard-to-calculate index funds, to see if your expenses are covered. At a market peak, e.g. 2000, you will have lots of market value but little cash flow, and that is your warning not to retire yet. At a market low point, e.g. 2009, you might own assets with a history of earning all you need, but not qualify for retirement per the 4% rule because prices are depressed. Your FIRE number should this be stated in terms of number of shares.

sol

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Re: Welp, I'm going to take a stab at timing the market
« Reply #276 on: May 30, 2019, 11:01:28 PM »
Look at the cash flows from your investments, including hard-to-calculate index funds, to see if your expenses are covered. At a market peak, e.g. 2000, you will have lots of market value but little cash flow, and that is your warning not to retire yet. At a market low point, e.g. 2009, you might own assets with a history of earning all you need, but not qualify for retirement per the 4% rule because prices are depressed. Your FIRE number should this be stated in terms of number of shares.

Except that the 4% rule assumes you sell of some of those shares each year.  You don't need cash flows to cover your living expenses, you need share prices to be high enough that you can liquidate enough shares each year to cover your living expenses.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #277 on: May 31, 2019, 05:56:45 PM »
I think most of us subscribe to buy and hold, so I don't think anyone needs to eat crow if/when others successfully time the market. At one point, I did think the tone of the thread veered towards mockery and I don't think that's necessary or productive, but I confess that I haven't reread it and I recognize that there's no good way to reliably read the tone of anyone's comment here. So perhaps I'm wrong.

The market will dive. It is cyclical and, given the record highs, economic indicators, trade war, etc., it very well may happen this year. You can weather it and anticipate that it will recover in time, you can risk trying to time it, or you can follow some other strategy in between. Who comes out on top 1, 2, 3, or 4 years from now is anybody's guess. Ten to 20 years from now, it's a fairly safe bet that the buy-and-hold and dollar-cost averaging crowd will be more than fine. I've been doing that for 20 years and have saved $1.2M on a non-profit (10 years) and government salary (10 years).

ETA: VTSAX closed at $68.52. It's getting very close to our case study's break even point. Next week will bring new news, new dips and jumps, and new guesses.
« Last Edit: May 31, 2019, 06:30:37 PM by Full_Beard »

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #278 on: May 31, 2019, 06:09:22 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

That's a great article, but it can be misleading since it assumes a lump sum going in, then a lump sum coming back out.

The lump sum in might for some people be a realistic scenario (inheritance) but the bulk withdrawal is something basically nobody would do.

If you're putting money in starting in any of those years, and continue putting it in for 20 years, you'll have done just fine. OP has very little money right now, so he's in a great spot to just plug it in every month.

-W

Very valid point. I'll quibble with "misleading" as I think the article is clear that its focus is a single investment.

I'll actually second that it's misleading.  Perhaps not intentionally, but by saying "It's when you start and when you finish" implies that's the only way to invest, as in you need to be able to buy and sell at exactly the right time for your investment to work out, otherwise don't bother.  Thats just not the case with a typical saver/investor and it's a misleading way to look at it for the vast majority of people that work for 20-40 year and then draw down slowly in retirement.

Well, I don't mind some dispassionate, quibbling over articles. So, chart that Easterling created "shows annualized returns based on thousands of possible combinations of market entry and exit." The chart itself depicts annualized returns; the NY Times used a point in time reference for emphasis.

How often do you read, $100 invested on X date would be worth $80K today. The Times simply used that common phrase to show how Easterling's chart reveals how such statements are close to worthless. The date you pick matters. But, the chart isn't meant to discourage dollar cost averaging or any particular investment strategy.

So, again, I don't think it's misleading. I think what you're saying is that it doesn't provide the entire view, and for a one page article with a chart, I would say, "You're right; that wasn't its goal."

JTColton

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Re: Welp, I'm going to take a stab at timing the market
« Reply #279 on: May 31, 2019, 11:41:47 PM »
I'll continue to market time, every 1st and 15th.

Vicster

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Re: Welp, I'm going to take a stab at timing the market
« Reply #280 on: June 01, 2019, 05:16:40 AM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....I'm in the UK and with Brexit in Oct....I'm unsure as to whether to wait to buy some investments in the next year or so, or just invest now accepting that it'll go down, but over 10 years come back up.

Hmm, tricky.....

There is a chinese proverb about the best time for investing was 20 years ago, the second best time is now.....I just think markets all might go down in next year or so.....


BigMoneyJim

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Re: Welp, I'm going to take a stab at timing the market
« Reply #281 on: June 01, 2019, 08:33:04 AM »
I just think markets all might go down in next year or so.....

Yeah, I've been thinking that for several years. Good thing I didn't try to market time then.

FIREstache

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Re: Welp, I'm going to take a stab at timing the market
« Reply #282 on: June 01, 2019, 10:39:31 AM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....

The S&P 500 price index was down over 6% in 2018, about 8% factoring in inflation.  Then take about 2 points off that figure if you factor in dividend reinvestment.  Anyway you slice it, it wasn't up for the year last year.  At one point, it was down about 20% from the high.

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Re: Welp, I'm going to take a stab at timing the market
« Reply #283 on: June 01, 2019, 10:47:21 AM »
I just think markets all might go down in next year or so.....

Yeah, I've been thinking that for several years. Good thing I didn't try to market time then.

It's possible to have a market drop without a recession.  Shocking I know. Precisely this happened six months ago and some folks must have slept through it.  It might be happening again as we speak.

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Re: Welp, I'm going to take a stab at timing the market
« Reply #284 on: June 01, 2019, 01:11:06 PM »
buy-and-hold . . . . it only worked 90+% of the time.
I know you don't mean that literally, but I'll repost a link to this article which explains that there have been 20-year periods of negative growth and there's a fair amount of pure luck -- when you happened to get in and when you reach the age to begin withdrawing:

http://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

And for some disclosure -- I am a buy-and-hold investor, 75% in SP500 and 25% in stocks. The economic and political indicators have me nervous,  so I totally get why one would park it on the sideline and wait for change among those indicators to occur. But, I wouldn't go back and forth to jump on days when it drops, etc. I would pick a target savings and a target loss and just suck it up.

That's a great article, but it can be misleading since it assumes a lump sum going in, then a lump sum coming back out.

The lump sum in might for some people be a realistic scenario (inheritance) but the bulk withdrawal is something basically nobody would do.

If you're putting money in starting in any of those years, and continue putting it in for 20 years, you'll have done just fine. OP has very little money right now, so he's in a great spot to just plug it in every month.

-W

Very valid point. I'll quibble with "misleading" as I think the article is clear that its focus is a single investment.

I'll actually second that it's misleading.  Perhaps not intentionally, but by saying "It's when you start and when you finish" implies that's the only way to invest, as in you need to be able to buy and sell at exactly the right time for your investment to work out, otherwise don't bother.  Thats just not the case with a typical saver/investor and it's a misleading way to look at it for the vast majority of people that work for 20-40 year and then draw down slowly in retirement.

Well, I don't mind some dispassionate, quibbling over articles. So, chart that Easterling created "shows annualized returns based on thousands of possible combinations of market entry and exit." The chart itself depicts annualized returns; the NY Times used a point in time reference for emphasis.

How often do you read, $100 invested on X date would be worth $80K today. The Times simply used that common phrase to show how Easterling's chart reveals how such statements are close to worthless. The date you pick matters. But, the chart isn't meant to discourage dollar cost averaging or any particular investment strategy.

So, again, I don't think it's misleading. I think what you're saying is that it doesn't provide the entire view, and for a one page article with a chart, I would say, "You're right; that wasn't its goal."

Yes, that's actually an excellent way of putting it. 

theolympians

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Re: Welp, I'm going to take a stab at timing the market
« Reply #285 on: June 02, 2019, 12:36:45 PM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....I'm in the UK and with Brexit in Oct....I'm unsure as to whether to wait to buy some investments in the next year or so, or just invest now accepting that it'll go down, but over 10 years come back up.

Hmm, tricky.....

There is a chinese proverb about the best time for investing was 20 years ago, the second best time is now.....I just think markets all might go down in next year or so.....

I have been only been casually following the brexit stuff. Am I reading this right: you are assuming markets in Britannia will tank if brexit happens? Why would this be the case? It might be bumpy, but over the long term the UK will likely benefit. Look at the U.S. When we broke away from an over-bearing, uncaring gov't our economy took off. The same could be for you. In this case it would be bloodless.

On another note, buy now!

bacchi

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Re: Welp, I'm going to take a stab at timing the market
« Reply #286 on: June 02, 2019, 01:02:09 PM »
I have been only been casually following the brexit stuff. Am I reading this right: you are assuming markets in Britannia will tank if brexit happens? Why would this be the case?

Company relocations.

GuitarStv

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Re: Welp, I'm going to take a stab at timing the market
« Reply #287 on: June 03, 2019, 07:54:55 AM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....I'm in the UK and with Brexit in Oct....I'm unsure as to whether to wait to buy some investments in the next year or so, or just invest now accepting that it'll go down, but over 10 years come back up.

Hmm, tricky.....

There is a chinese proverb about the best time for investing was 20 years ago, the second best time is now.....I just think markets all might go down in next year or so.....

I have been only been casually following the brexit stuff. Am I reading this right: you are assuming markets in Britannia will tank if brexit happens? Why would this be the case? It might be bumpy, but over the long term the UK will likely benefit. Look at the U.S. When we broke away from an over-bearing, uncaring gov't our economy took off. The same could be for you. In this case it would be bloodless.

On another note, buy now!

I'm not sure that comparing the United States colonial uprising 200 plus years ago against the British to the UK leaving the EU today makes any sort of sense.  The situations are not comparable just about any way you look at them.

There's an awful lot of information saying that Brexit is a bad idea long term for the UK.  Don't take my word for it, check out the UK government's own reports (https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be).  Or check out what economists are overwhelmingly saying (https://www.theguardian.com/politics/2016/may/28/economists-reject-brexit-boost-cameron, https://piie.com/publications/working-papers/brexit-everyone-loses-britain-loses-most, etc).  The economic evidence appears to be heavily against Brexit.

Can you provide the sources you're using that say otherwise?
« Last Edit: June 03, 2019, 08:43:00 AM by GuitarStv »

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #288 on: June 03, 2019, 08:17:38 AM »
I'm agnostic about the implications of Brexit, but comparing it to the Revolutionary war is hilarious. There are literally no useful parallels between those situations other than a disagreement about sovereignty.

If Britain were suddenly connected (Atlantis!) to an entire relatively unpopulated continent filled with tons of natural resources, then maybe we could start making the comparison. Then again they'd need/want a ton of immigration in that scenario...

-W

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Re: Welp, I'm going to take a stab at timing the market
« Reply #289 on: June 03, 2019, 10:34:11 AM »
Yep as someone from the UK the whole Brexit shenanigans is very concerning. Ludicrous as it sounds I wish there was some website that existed that provided a solution to escaping the world of work early. That would be really handy right now.

theolympians

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Re: Welp, I'm going to take a stab at timing the market
« Reply #290 on: June 03, 2019, 12:06:22 PM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....I'm in the UK and with Brexit in Oct....I'm unsure as to whether to wait to buy some investments in the next year or so, or just invest now accepting that it'll go down, but over 10 years come back up.

Hmm, tricky.....

There is a chinese proverb about the best time for investing was 20 years ago, the second best time is now.....I just think markets all might go down in next year or so.....

I have been only been casually following the brexit stuff. Am I reading this right: you are assuming markets in Britannia will tank if brexit happens? Why would this be the case? It might be bumpy, but over the long term the UK will likely benefit. Look at the U.S. When we broke away from an over-bearing, uncaring gov't our economy took off. The same could be for you. In this case it would be bloodless.

On another note, buy now!

I'm not sure that comparing the United States colonial uprising 200 plus years ago against the British to the UK leaving the EU today makes any sort of sense.  The situations are not comparable just about any way you look at them.

There's an awful lot of information saying that Brexit is a bad idea long term for the UK.  Don't take my word for it, check out the UK government's own reports (https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be).  Or check out what economists are overwhelmingly saying (https://www.theguardian.com/politics/2016/may/28/economists-reject-brexit-boost-cameron, https://piie.com/publications/working-papers/brexit-everyone-loses-britain-loses-most, etc).  The economic evidence appears to be heavily against Brexit.

Can you provide the sources you're using that say otherwise?

I was being tongue and cheek reference the American Revolution. That said, I find it odd that the British would consent to a continental governing body. I get the borderless argument, free trade etc. However, the Brits existed long before the EU and were able to negotiate their own trade deals. There was a time when the sun never set on the British Empire, when they were able to decide their own destiny. They are are long way from that. Now they are bound by edicts from Brussels.

Sure, it might be economically rough for a period. Then again, do you want your own country? Why should "you" allow an outside governing body dictate national and internal policy? Why should Croatia, Sweden, and the other 25 countries have control over your country?

Tongue in cheek again: Sure I can live with my parents for the rest of my life. They ensure the lights stay on, the fridge is stocked, and my clothes are washed. I just have to deal with curfews, them telling me how to dress, who can come over, and what to do with my money. Or I can leave home, be poor for a bit, but find a life and build.

Anyhoo, that is my two cents. I realize we are way off topic, and will refrain from drifting further!

Buy now, don't worry about Brexit. If Brexit happens and the economy tanks, buy more. Don't time the market. It will take years for the political stuff to iron itself out.

solon

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Re: Welp, I'm going to take a stab at timing the market
« Reply #291 on: June 03, 2019, 12:48:49 PM »
The Wall Street Journal literally just ran an article comparing Theresa May to John Adams, and what May's exit could have learned from Adams' exit.

https://www.wsj.com/articles/theresa-may-should-have-listened-to-john-adams-11559361665

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #292 on: June 03, 2019, 12:53:50 PM »
The Wall Street Journal literally just ran an article comparing Theresa May to John Adams, and what May's exit could have learned from Adams' exit.

https://www.wsj.com/articles/theresa-may-should-have-listened-to-john-adams-11559361665

That's an article about internal political wrangling/vote-whipping, not about the economic consequences, though, right? I can only read the first few paragraphs, rest is paywalled. But that's what it sounds like.

-W

GuitarStv

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Re: Welp, I'm going to take a stab at timing the market
« Reply #293 on: June 03, 2019, 06:21:42 PM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....I'm in the UK and with Brexit in Oct....I'm unsure as to whether to wait to buy some investments in the next year or so, or just invest now accepting that it'll go down, but over 10 years come back up.

Hmm, tricky.....

There is a chinese proverb about the best time for investing was 20 years ago, the second best time is now.....I just think markets all might go down in next year or so.....

I have been only been casually following the brexit stuff. Am I reading this right: you are assuming markets in Britannia will tank if brexit happens? Why would this be the case? It might be bumpy, but over the long term the UK will likely benefit. Look at the U.S. When we broke away from an over-bearing, uncaring gov't our economy took off. The same could be for you. In this case it would be bloodless.

On another note, buy now!

I'm not sure that comparing the United States colonial uprising 200 plus years ago against the British to the UK leaving the EU today makes any sort of sense.  The situations are not comparable just about any way you look at them.

There's an awful lot of information saying that Brexit is a bad idea long term for the UK.  Don't take my word for it, check out the UK government's own reports (https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be).  Or check out what economists are overwhelmingly saying (https://www.theguardian.com/politics/2016/may/28/economists-reject-brexit-boost-cameron, https://piie.com/publications/working-papers/brexit-everyone-loses-britain-loses-most, etc).  The economic evidence appears to be heavily against Brexit.

Can you provide the sources you're using that say otherwise?

I was being tongue and cheek reference the American Revolution. That said, I find it odd that the British would consent to a continental governing body. I get the borderless argument, free trade etc. However, the Brits existed long before the EU and were able to negotiate their own trade deals. There was a time when the sun never set on the British Empire, when they were able to decide their own destiny. They are are long way from that. Now they are bound by edicts from Brussels.

'Bound by edicts from Brussels' sounds scary . . . what 'edicts' exactly were causing you concern?


Sure, it might be economically rough for a period. Then again, do you want your own country? Why should "you" allow an outside governing body dictate national and internal policy? Why should Croatia, Sweden, and the other 25 countries have control over your country?

Well, it's just that the majority of economists believe that it will be rough immediately . . . and then that will continue to be rough for a very long time to come.  That's why I was asking where your information was coming from.  It conflicts with most of what I've read about the matter from economists.  Including those hired by the British government to study the matter.


Tongue in cheek again: Sure I can live with my parents for the rest of my life. They ensure the lights stay on, the fridge is stocked, and my clothes are washed. I just have to deal with curfews, them telling me how to dress, who can come over, and what to do with my money. Or I can leave home, be poor for a bit, but find a life and build.

This isn't a good analogy.  In their awkward teen years the Brits left home, conquered bits of the world, started a bunch of wars (including conflicts in Afghanistan, Iraq, and all over Africa that still rage to this day), eventually lost those bits of the world when the native populations largely threw off their control.  Then older and maybe a little bit wiser they decided to rent an apartment with some friends (the EU).  Now they seem to be throwing a hissy fit over being occasionally asked to do the dishes  . . . and despite not being able to afford an apartment of their own are telling their roomies to fuck off.

From where I'm sitting this seems like a regression more than progression - unless waving a flag around is more important to you than being successful and paying the bills.

ChpBstrd

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Re: Welp, I'm going to take a stab at timing the market
« Reply #294 on: June 03, 2019, 09:28:22 PM »
I've been wondering about the markets.....the S&P has been going up for 10 years or so and apparently things never tend to go up for that long....there tends to be a depression of some sort every ten years or so....I'm in the UK and with Brexit in Oct....I'm unsure as to whether to wait to buy some investments in the next year or so, or just invest now accepting that it'll go down, but over 10 years come back up.

Hmm, tricky.....

There is a chinese proverb about the best time for investing was 20 years ago, the second best time is now.....I just think markets all might go down in next year or so.....

I have been only been casually following the brexit stuff. Am I reading this right: you are assuming markets in Britannia will tank if brexit happens? Why would this be the case? It might be bumpy, but over the long term the UK will likely benefit. Look at the U.S. When we broke away from an over-bearing, uncaring gov't our economy took off. The same could be for you. In this case it would be bloodless.

On another note, buy now!

I'm not sure that comparing the United States colonial uprising 200 plus years ago against the British to the UK leaving the EU today makes any sort of sense.  The situations are not comparable just about any way you look at them.

There's an awful lot of information saying that Brexit is a bad idea long term for the UK.  Don't take my word for it, check out the UK government's own reports (https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be).  Or check out what economists are overwhelmingly saying (https://www.theguardian.com/politics/2016/may/28/economists-reject-brexit-boost-cameron, https://piie.com/publications/working-papers/brexit-everyone-loses-britain-loses-most, etc).  The economic evidence appears to be heavily against Brexit.

Can you provide the sources you're using that say otherwise?

I was being tongue and cheek reference the American Revolution. That said, I find it odd that the British would consent to a continental governing body. I get the borderless argument, free trade etc. However, the Brits existed long before the EU and were able to negotiate their own trade deals. There was a time when the sun never set on the British Empire, when they were able to decide their own destiny. They are are long way from that. Now they are bound by edicts from Brussels.

Sure, it might be economically rough for a period. Then again, do you want your own country? Why should "you" allow an outside governing body dictate national and internal policy? Why should Croatia, Sweden, and the other 25 countries have control over your country?

Tongue in cheek again: Sure I can live with my parents for the rest of my life. They ensure the lights stay on, the fridge is stocked, and my clothes are washed. I just have to deal with curfews, them telling me how to dress, who can come over, and what to do with my money. Or I can leave home, be poor for a bit, but find a life and build.

Anyhoo, that is my two cents. I realize we are way off topic, and will refrain from drifting further!

Buy now, don't worry about Brexit. If Brexit happens and the economy tanks, buy more. Don't time the market. It will take years for the political stuff to iron itself out.

Would you also suggest Texas or Alaska leave the U.S. for the same reasons?

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Re: Welp, I'm going to take a stab at timing the market
« Reply #295 on: June 03, 2019, 10:02:37 PM »
Brexit could use its own thread.

The EU doesn't govern the internal affairs of its member states.

An overwhelming majority of economists predict, nay, are reasonably certain that Britain's exit from the EU will have serious economic consequences and create enormous problems re travel/migration, esp. since Ireland is remaining in the EU.

Surprised the people of the UK voted for it? You have a better view of humanity than I.

(Edited to correct Ireland vs. N. Ireland - shouldn't write too late at night . . .)
« Last Edit: June 06, 2019, 12:05:06 AM by Full_Beard »

vand

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Re: Welp, I'm going to take a stab at timing the market
« Reply #296 on: June 04, 2019, 02:25:06 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



So actually would been just fine sitting out for some very long periods when the market went nowhere... 1965-1983, 1999-2013



robartsd

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Re: Welp, I'm going to take a stab at timing the market
« Reply #297 on: June 04, 2019, 08:40:34 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



So actually would been just fine sitting out for some very long periods when the market went nowhere... 1965-1983, 1999-2013
The chart is price of an index, not total returns - you'd miss the dividends paid over those periods.

Davnasty

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Re: Welp, I'm going to take a stab at timing the market
« Reply #298 on: June 04, 2019, 08:51:30 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:


So actually would been just fine sitting out for some very long periods when the market went nowhere... 1965-1983, 1999-2013

The purpose of the graph is to show how little relation there is between stock prices and major events, not to prove that the stock market always goes up. In fact many of these events likely did effect stock prices somewhere or somehow but even with the benefit of hindsight it's difficult to say why with any certainty.

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #299 on: June 04, 2019, 08:53:30 AM »
Any time I think I'm smart enough to time the market, I find the graph below very helpful.  If following my own logic/insight, I would have sold during a LOT of world events that seemed like they would tank the market, but in fact had no effect at all:



So actually would been just fine sitting out for some very long periods when the market went nowhere... 1965-1983, 1999-2013

Wrong.  Times when the market when nowhere and also times when it dipped are actually the best times to invest because you're buying cheap.  Putting money in when it's going up or has already gone up is actually worse. 

Don't get me wrong, it'd be great if the market went up at a steady, predictable rate, but it doesn't.  So the best time to invest is NOW, whatever the conditions might be.  And keep investing all the way to FIRE, through all the ups, downs and flat periods. 

I mean, if you're point is that you'll do better if you can predict the future, then I'd agree with that.  What the chart illustrates is that it's impossible to do that.