Author Topic: Welp, I'm going to take a stab at timing the market  (Read 98058 times)

dividendman

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Re: Welp, I'm going to take a stab at timing the market
« Reply #500 on: February 13, 2020, 09:59:38 PM »
Even if a crazed lunatic like Bernie Sanders becomes president, congress still has to approve his crazed budget. I think there would be a stock market correction if a democrat got elected, especially a socialist. Wall Street is not stupid. When it comes to people and their money, political propaganda (ex- OrangeManBad) takes a back seat. The smart money knows that Trump is great for business.
Just look at what he's done: Rolling back regulations, getting the corporate tax down from 35% to 21%, and just plain improving company willingness to invest, expand, etc because Trump is business-friendly. Stocks will go up after Trump wins, much like stocks went up after the 2016 election.

Are you really arguing stock market performance can be tied to the "goodness" of the economic policy of the president who presides over them?

If we look at the last 100 years or so I guess my ol' pal Coolidge is the winner with a run up of over 230% in his tenure. Clinton was over 220% too. Obama had a 150% run. Reagan's market was up about 148%. FDR had over 200% run up (and probably implemented the most government programs and control over the US economy than any other president, though he was in office 12 years instead of 4 or 8).

Eisenhower, Johnson, Kennedy, George H.W. Bush and Truman all had decent showings. With Ike leading this pack at an over 100% gain.

Under Trump the market is up about 50%.

Under Nixon, George W. Bush, and Carter the market declined, but Nixon and Bush's declines were over 20% while Carter's was almost flat at a decline of 0.7%. Poor Hoover had the worst performance with an 80% decline on his watch.

Seems that there is no real pattern with the how far left or right on the free market a President was to stock performance during their tenure.

(Numbers are the increase/decrease in the DJIA over the term(s) of the president).

Context matters.  Coming out of a recession, coming out of a bull market, extending an expansion beyond what should happen, etc.  The market has traditionally reacted favorably to pro business policies in relation to the current situation of the time.

I agree it matters, but which way? Did Trump "extend an expansion beyond what should happen"? Or was it his policies and tax cuts that did it? Is he just riding the benefits of the policies of his predecessor?

Did tax increases and government spending under FDR help the economy in the long run that allowed all future presidents to ride those coattails? Or did he just luck out after the great depression and a massive economy expanding war and his policies actually hamstrung future presidents?

Did social security help or hurt the country economically?

I think making any causal relationship between stock market performance and the current presidential policies isn't possible because context matters, but also because we don't know the lasting implications of many policies on the economy and stock market until a president or two or ten later.

talltexan

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Re: Welp, I'm going to take a stab at timing the market
« Reply #501 on: February 17, 2020, 08:44:16 AM »
I think that the expectation of something like TCJA drove the market higher from Nov. 2016 to Dec. 2017.

Then TCJA was passed and we got further increases. that was a policy that was pretty transparently about increasing the profitability of corporations, including ones that are publicly traded.

ChpBstrd

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Re: Welp, I'm going to take a stab at timing the market
« Reply #502 on: February 17, 2020, 02:13:56 PM »
I think that the expectation of something like TCJA drove the market higher from Nov. 2016 to Dec. 2017.

Then TCJA was passed and we got further increases. that was a policy that was pretty transparently about increasing the profitability of corporations, including ones that are publicly traded.

Then there's the expansion of PE ratios. The S&P 500's PE ratio expanded from 23.35 in 11/2016 to about 25.43 today, a gain of 8.9% before we even factor in earnings growth from tax cuts, etc.

https://www.multpl.com/s-p-500-pe-ratio/table/by-month

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #503 on: February 27, 2020, 06:57:34 PM »
With regard to presidents, I would note that looking at their tenure doesn't give the whole picture since they inherit policies and pass them on. That is, any analysis that looks only at what the stock market did from the day they took office until the day they left does not, I think in anyone's view, provide a fair picture. Where to cut that off (6 months, 9 months, 1 year) is also interminably debatable. Further, Congress has a strong role in the matter, so it's hard to pin it on the president only. I think if you teased out situations when the President's party aligned with the House and Senate and then factor in predecessor policy overlap, maybe you could find some trend on political party and success of stocks. But, whatever one produced would be vulnerable because it's going to be imperfect.

Back to the point of timing the market, I think if one were to say that they were concerned because our country was cutting taxes and, with a rising economy, not cutting the national debt and therefore he was going to go more conservative on his investments, despite otherwise strong indicators, I would nonetheless say that's a legitimate point. But, I recognize that someone could also make a legitimate counter point -- trying to time the market for most is folly.

The OP may, in hindsight come 2021, have made a wise play. Or not.

v8rx7guy

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Re: Welp, I'm going to take a stab at timing the market
« Reply #504 on: February 27, 2020, 07:12:09 PM »
wtf happened to this thread

Make this thread great again!

We hit the one year mark.  So now it is a yearly revisit from me to update unless someone else takes over.

Joe Schmo

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Re: Welp, I'm going to take a stab at timing the market
« Reply #505 on: February 27, 2020, 07:59:54 PM »
Two more days and heís breaking even??!!??!!

HBFIRE

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Re: Welp, I'm going to take a stab at timing the market
« Reply #506 on: February 27, 2020, 08:37:25 PM »
Two more days and heís breaking even??!!??!!

Very well could, if it drops another 11% or so into bear market.

Mr Mark

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Re: Welp, I'm going to take a stab at timing the market
« Reply #507 on: February 27, 2020, 09:11:32 PM »
this reminds me of why I have 30% bonds...



HBFIRE

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Re: Welp, I'm going to take a stab at timing the market
« Reply #508 on: February 27, 2020, 09:38:51 PM »
this reminds me of why I have 30% bonds...

I carry about 10% in bonds.  But then I also have about 200 K in my business (liquid) and then a years worth of expenses in a 3.3% account, so that's enough of a ballast for me.  What's the Buffet saying again?  When the tide goes out we'll see who's swimming naked.
« Last Edit: February 27, 2020, 09:42:05 PM by HBFIRE »

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #509 on: February 27, 2020, 11:41:02 PM »
892.9490 shares sold at $67.59 each for a total of $60,354.42.

Very well could, if it drops another 11% or so into bear market.

VTSAX closed today at $73.76. So, he's now 8.36% shy of his original sale price. What he did with the cash from the sale for the last 12 months is relevant too. But, he may be close to the true break even point, if not the mathematical break even point that assumes he just sat on his cash since the sale.

HamsterStache

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Re: Welp, I'm going to take a stab at timing the market
« Reply #510 on: February 28, 2020, 07:29:32 AM »
But, he may be close to the true break even point

But not really for reasons related to his original reasoning unless he thinks Russia and/or Trump created the virus...

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #511 on: February 28, 2020, 08:48:38 AM »
But, he may be close to the true break even point

But not really for reasons related to his original reasoning unless he thinks Russia and/or Trump created the virus...

Haha and true, though not that important for purposes of tracking whether it was a good financial move.

And, I personally don't think the continued correction is entirely about coronavirus. The stock market is overinflated (and has been). The coronavirus' risk to global markets precipitated the correction. If that's the only factor, it should stop, settle, and readjust. If other factors are in play, it may not.

American GenX

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Re: Welp, I'm going to take a stab at timing the market
« Reply #512 on: February 28, 2020, 09:02:24 AM »
But, he may be close to the true break even point

But not really for reasons related to his original reasoning unless he thinks Russia and/or Trump created the virus...

Haha and true, though not that important for purposes of tracking whether it was a good financial move.

And, I personally don't think the continued correction is entirely about coronavirus. The stock market is overinflated (and has been). The coronavirus' risk to global markets precipitated the correction. If that's the only factor, it should stop, settle, and readjust. If other factors are in play, it may not.

OTOH, something like this global COVID-19 outbreak could be enough to kick us into a recession, despite what stock market valuations are.  In that case, it could be a long recovery after the market finally finds its bottom.

moof

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Re: Welp, I'm going to take a stab at timing the market
« Reply #513 on: February 28, 2020, 10:54:41 AM »
this reminds me of why I have 30% bonds...
In the vein of timing the market I am around 20% in bonds (going up percentage wise every day).  Basically with valuations in nose-bleed range and my Fire date now less than 5 years away I moved from ~90/10 to 80/20 over the summer.  Now I'm siting here wondering when to move to 100% stocks.  Probably going to wait another week or two in hopes things drop more before I pull the trigger.  Knowing my own luck I will be kicking myself at some future date no matter what I do, oh well.

dragoncar

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Re: Welp, I'm going to take a stab at timing the market
« Reply #514 on: February 28, 2020, 01:52:48 PM »
this reminds me of why I have 30% bonds...
In the vein of timing the market I am around 20% in bonds (going up percentage wise every day).  Basically with valuations in nose-bleed range and my Fire date now less than 5 years away I moved from ~90/10 to 80/20 over the summer.  Now I'm siting here wondering when to move to 100% stocks.  Probably going to wait another week or two in hopes things drop more before I pull the trigger.  Knowing my own luck I will be kicking myself at some future date no matter what I do, oh well.

Probably better to move into 100% stonks after retirement.  You accidentally did a bond tent so just enjoy the shade

YoungGranny

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Re: Welp, I'm going to take a stab at timing the market
« Reply #515 on: March 02, 2020, 06:59:28 AM »
junioroldtimer sold 892.949 shares on February 7th at $67.59 each, converting $60,354.43 into cash.

On Feb 14 the closing price was $68.85, meaning that he had cost himself $1,125.11 after one week of trying to time the market.
On Feb 22 the closing price was $69.98, meaning that he had cost himself $1,866.26 after two weeks of trying to time the market.
On Mar 01 the closing price was $70.28, meaning that he had cost himself $2,402.03 after three weeks of trying to time the market.
On Mar 08 the closing price was $68.62, meaning that he had cost himself $919.73 after four weeks of trying to time the market.
On Mar 15 the closing price was $70.56, meaning that he had cost himself $2,652.05 after five weeks of trying to time the market.
On Mar 22 the closing price was $69.49, meaning that he had cost himself $1,696.60 after six weeks, plus $333.61 in dividends not paid is $2,030.21.
On Mar 29 the closing price was $70.43, meaning that he had cost himself $2,535.97 after seven weeks, plus $333.61 in dividends not paid is $2,869.58.
On Apr 05 the closing price was $71.94, meaning that he had cost himself $3,884.32 after eight weeks, plus $333.61 in dividends not paid is $4,217.94.
On Apr 12 the closing price was $72.35, meaning that he had cost himself $4,250.43 after nine weeks, plus $333.61 in dividends not paid is $4,584.04.
On Apr 19 the closing price was $72.16, meaning that he had cost himself $4,080.77 after ten weeks, plus $333.61 in dividends not paid is $4412.38.
On Apr 26 the closing price was $73.09, meaning that he had cost himself $4,911.21 after eleven weeks, plus $333.61 in dividends not paid is $5,244.82.
On Jul 24 the closing price was $74.55, meaning that he had cost himself $6,214.93 after twenty three weeks, plus $569.97 in dividends not paid is $6,784.90
On Aug 15 the closing price was $70.64, meaning that he had cost himself $2,723.49 after twenty six weeks, plus $569.97 in dividends not paid is $3,293.46
On Sep 3 the closing price was $72.04, meaning that he had cost himself $3,973.62 after thirty weeks, plus $569.97 in dividends not paid is $4,543.59
On Oct 25 the closing price was $74.71, meaning that he had cost himself $6,357.80 after thirty seven weeks, plus $899.59 in dividends not paid is $7,257.39
On Nov 15 the closing price was $76.60, meaning that he had cost himself $8,045.47 after forty weeks, plus $899.59 in dividends not paid is $8,945.06
On Dec 3 the closing price was $77.31, meaning that he had cost himself $8,679.46 after forty weeks, plus $899.59 in dividends not paid is $9,579.05
On Dec 27 the closing price was $79.88, meaning that he had cost himself $10,974.34 after forty six weeks, plus $1,282.58 in dividends not paid is $12,256.92
On Jan 11 the closing price was $81.95, meaning that he had cost himself $12,822.75 after forty nine weeks, plus $1,282.58 in dividends not paid is $14,105.33
On Feb 28, 2020 the closing price was $73.13, meaning that he had cost himself $4,946.94 after fifty six weeks, plus $1,282.58 in dividends not paid is $6,229.52.

This means OP would have had annualized earnings of 7.58% if he stayed in the market.

After the market losses last week I was curious to see if the OP decision (made for different reasons) paid off or not but it doesn't look like we've hit that point just yet.

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #516 on: March 02, 2020, 10:22:15 AM »
It is going to be really interesting to see if OP can manage to break even on this... I'm still personally predicting no, but who knows?

-W

BicycleB

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Re: Welp, I'm going to take a stab at timing the market
« Reply #517 on: March 03, 2020, 09:42:56 AM »
If the market drops enough that OP could break even, the question becomes: Will OP choose to get back in the market, or not?

v8rx7guy

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Re: Welp, I'm going to take a stab at timing the market
« Reply #518 on: March 03, 2020, 09:54:25 AM »
It is going to be really interesting to see if OP can manage to break even on this... I'm still personally predicting no, but who knows?

-W

Most of the time there will be a drop to the point you can get back in at a break even.  It's that one time where it never drop back down that spoils the plan of a market timer...

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #519 on: March 03, 2020, 12:36:13 PM »
It is going to be really interesting to see if OP can manage to break even on this... I'm still personally predicting no, but who knows?

-W
You mean break even on purely on price/dividends of VTSAX on the assumption that he kept his money in 0% returning cash? If he converted it to Vanguard's total bond market fund (VVTLX), his $60K would be up over 11% at the end of February 2020. My point is we'll never know exactly what his break even point is unless he tells us what he did with his $60K. But, if the exercise is merely about whether/when VTSAX will return to its price at the close of markets on 2/7/19, then carry on.

v8rx7guy

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Re: Welp, I'm going to take a stab at timing the market
« Reply #520 on: March 03, 2020, 12:43:55 PM »
^ Here is a quote from page 1.  "Going to cash"

So what are you doing to time the market?  Just going to cash?  All or just some % of your portfolio?

If you really believe in a big sell off put some $ into the ProShares Short S&P 500 Inverse ETF ticker SH.

Yes, going back to cash for now.

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #521 on: March 03, 2020, 01:20:28 PM »
You mean break even on purely on price/dividends of VTSAX on the assumption that he kept his money in 0% returning cash? If he converted it to Vanguard's total bond market fund (VVTLX), his $60K would be up over 11% at the end of February 2020. My point is we'll never know exactly what his break even point is unless he tells us what he did with his $60K. But, if the exercise is merely about whether/when VTSAX will return to its price at the close of markets on 2/7/19, then carry on.

There are tons of strategies (lever up on Tesla!) that would have beaten buy/hold. So what?

OP said "cash". You could maybe be generous and assume t-bonds or a CD or something, but you can't assume s/he bought bonds, because they specifically said "cash".

Regardless, OP isn't reading this anymore probably. So it's just for entertainment at this stage.

-W

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #522 on: March 03, 2020, 01:55:49 PM »
I'm certainly not making any assumptions about what he did. And all he said was:  I'm going to cash for now. Maybe he stayed in cash, maybe he bought a bond fund. I could care less, but I can't imagine someone interested in investing, let alone timing markets, would just sit on cash for 12 months. I wouldn't.

Right now, it looks like he was prescient. Tomorrow, maybe not. It's a rapidly changing question.

Davnasty

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Re: Welp, I'm going to take a stab at timing the market
« Reply #523 on: March 03, 2020, 02:32:30 PM »
I'm certainly not making any assumptions about what he did. And all he said was:  I'm going to cash for now. Maybe he stayed in cash, maybe he bought a bond fund. I could care less, but I can't imagine someone interested in investing, let alone timing markets, would just sit on cash for 12 months. I wouldn't.

Right now, it looks like he was prescient. Tomorrow, maybe not. It's a rapidly changing question.

Strange conclusion

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.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #524 on: March 03, 2020, 02:52:20 PM »
Ha, I was referring to his market timing. Did anyone take his political predictions seriously?

But, the president was indeed impeached and Congress' sh't show was a knock-down, drag-out fight (maybe perspectives differ on that latter part).

v8rx7guy

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Re: Welp, I'm going to take a stab at timing the market
« Reply #525 on: March 03, 2020, 02:55:53 PM »
Ha, I was referring to his market timing. Did anyone take his political predictions seriously?

But, the president was indeed impeached and Congress' sh't show was a knock-down, drag-out fight (maybe perspectives differ on that latter part).

I personally think the OP was one of the high percentage of Americans that believed that impeachment always meant removal from office.  "Knock down, Drag out fight" was referring to Trump refusing to leave office.

Davnasty

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Re: Welp, I'm going to take a stab at timing the market
« Reply #526 on: March 03, 2020, 02:56:13 PM »
Ha, I was referring to his market timing. Did anyone take his political predictions seriously?

But, the president was indeed impeached and Congress' sh't show was a knock-down, drag-out fight (maybe perspectives differ on that latter part).

True, but the key part of their prediction was that these events would cause markets to temporarily plummet.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #527 on: March 03, 2020, 03:19:43 PM »
Not disputing any of that. Whatever logic or lack thereof lay underneath the OP's reasons for selling, this thread has mostly tracked that purely from a single market transaction - sell on 2/7 and watch the daily price of VTSAX mostly go up until last week.

Anyone else here get 100% out of equities in 2019 and, if so, what were your reasons?

dragoncar

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Re: Welp, I'm going to take a stab at timing the market
« Reply #528 on: March 03, 2020, 04:07:10 PM »
Not disputing any of that. Whatever logic or lack thereof lay underneath the OP's reasons for selling, this thread has mostly tracked that purely from a single market transaction - sell on 2/7 and watch the daily price of VTSAX mostly go up until last week.

Anyone else here get 100% out of equities in 2019 and, if so, what were your reasons?

I sold everything on a hot tip that the Illuminati would be dropping COVID-19

Stamag

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Re: Welp, I'm going to take a stab at timing the market
« Reply #529 on: March 04, 2020, 07:43:59 AM »
I love this thread.  I've been following for about a year now.  I feel like it's a real life example of why not timing the market is good advice.  The OP did successfully predict that there would be a market drop relatively soon.  Even with that, after a year of market prominence OP has missed out on gains.  Of course there could be deeper recessions to come, only time will tell.

Thanks to the OP for posting his numbers and people like @YoungGranny for giving updates

frugalnacho

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Re: Welp, I'm going to take a stab at timing the market
« Reply #530 on: March 04, 2020, 11:58:54 AM »
It is going to be really interesting to see if OP can manage to break even on this... I'm still personally predicting no, but who knows?

-W

Most of the time there will be a drop to the point you can get back in at a break even.  It's that one time where it never drop back down that spoils the plan of a market timer...

I don't think that is true.  I don't have any data to back up this claim, but a quick look at a graph of stock market prices shows a pretty steady upward march in prices.  Even with a crystal ball where you know all future stock prices there are an abundance of all-time-highs (at the time) that are quickly surpassed never to be seen again.  Even the graph of stock prices is slightly misleading since it's not including reinvested dividends, which skews the data even more in favor of never being able to break even. 

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #531 on: March 04, 2020, 12:59:12 PM »
I don't think that is true.  I don't have any data to back up this claim, but a quick look at a graph of stock market prices shows a pretty steady upward march in prices.  Even with a crystal ball where you know all future stock prices there are an abundance of all-time-highs (at the time) that are quickly surpassed never to be seen again.  Even the graph of stock prices is slightly misleading since it's not including reinvested dividends, which skews the data even more in favor of never being able to break even.
Well, this thread will give us one data point. I think, in the world of market timing propositions, the OP sold at a reasonable time (in terms of calculated guesses). So, it will be interesting to see whether VTSAX ever dips to a point where he could buy back in and break even or better.

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #532 on: March 04, 2020, 01:06:06 PM »
I don't think that is true.  I don't have any data to back up this claim, but a quick look at a graph of stock market prices shows a pretty steady upward march in prices.  Even with a crystal ball where you know all future stock prices there are an abundance of all-time-highs (at the time) that are quickly surpassed never to be seen again.  Even the graph of stock prices is slightly misleading since it's not including reinvested dividends, which skews the data even more in favor of never being able to break even.
Well, this thread will give us one data point. I think, in the world of market timing propositions, the OP sold at a reasonable time (in terms of calculated guesses). So, it will be interesting to see whether VTSAX ever dips to a point where he could buy back in and break even or better.

The point of market timing is to do BETTER than just leaving it in.  So far the OP hasn't even accomplished that.  And it's doubtful he ever will. At this point, more drops are required for him to just break even. 

In other words, the OP took on extra risk by taking that money out and didn't even manage to beat the index.  Plus, cashing out was certainly not a tax neutral action, so even "breaking even" isn't enough.  The market has to drop below the original sell price in order for the OP to even hope to recoup the original capital plus the costs of cashing out. 

It's a crappy situation to be in, and a strong reason to never time the market.  All this stress and worry has been added to the OP's world and for what?  For less than zero, it turns out.  Jeez.

dragoncar

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Re: Welp, I'm going to take a stab at timing the market
« Reply #533 on: March 04, 2020, 01:19:17 PM »
I don't think that is true.  I don't have any data to back up this claim, but a quick look at a graph of stock market prices shows a pretty steady upward march in prices.  Even with a crystal ball where you know all future stock prices there are an abundance of all-time-highs (at the time) that are quickly surpassed never to be seen again.  Even the graph of stock prices is slightly misleading since it's not including reinvested dividends, which skews the data even more in favor of never being able to break even.
Well, this thread will give us one data point. I think, in the world of market timing propositions, the OP sold at a reasonable time (in terms of calculated guesses). So, it will be interesting to see whether VTSAX ever dips to a point where he could buy back in and break even or better.

The point of market timing is to do BETTER than just leaving it in.  So far the OP hasn't even accomplished that.  And it's doubtful he ever will. At this point, more drops are required for him to just break even. 

In other words, the OP took on extra risk by taking that money out and didn't even manage to beat the index.  Plus, cashing out was certainly not a tax neutral action, so even "breaking even" isn't enough.  The market has to drop below the original sell price in order for the OP to even hope to recoup the original capital plus the costs of cashing out. 

It's a crappy situation to be in, and a strong reason to never time the market.  All this stress and worry has been added to the OP's world and for what?  For less than zero, it turns out.  Jeez.

I wouldnít call it MORE risk, itís a different kind of risk.  He reduced his volatility risk to zero, which is the most common definition of risk.  He did increase underperformance risk, or FOMO risk.. not sure what itís called

Iím not a market timer but there are good reasons to reduce risk in a strategic way

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #534 on: March 04, 2020, 03:50:05 PM »
I agree. He didn't take on extra risk, he sought to minimize his risk at a time when lots thought (and still think) stocks are inflated. And I personally agree with that assessment (and, superficially, it's supported by the Schiller PE ratio). It's a different question, however, as to whether one should do anything about it (most say no) or whether one should partially diversity (personal, fact-specific question that one might take irrespective of price of stocks).

And again, we don't know what he did with the $60K in cash. Let it ride on Tesla (doubtful), put it in a bond fund (what I would have done), nada, or something else (maybe he even bought back in at 70 and cut his lost opportunity costs). We may never know.

And, I personally am not convinced the VTSAX won't dip below 67 before 2022. Volatility these past 2 weeks looks like a crayon drawing by a 4-year old. Am I going to bet that it will dip to those levels? No, I've got years to ride out the waves. But I see plenty of reasons to justify a market timing experiment, even after acknowledging that they're generally ill-advised and unsuccessful. I watch this thread with academic interest.

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #535 on: March 04, 2020, 04:03:47 PM »
I agree. He didn't take on extra risk, he sought to minimize his risk at a time when lots thought (and still think) stocks are inflated. And I personally agree with that assessment (and, superficially, it's supported by the Schiller PE ratio). It's a different question, however, as to whether one should do anything about it (most say no) or whether one should partially diversity (personal, fact-specific question that one might take irrespective of price of stocks).

And again, we don't know what he did with the $60K in cash. Let it ride on Tesla (doubtful), put it in a bond fund (what I would have done), nada, or something else (maybe he even bought back in at 70 and cut his lost opportunity costs). We may never know.

And, I personally am not convinced the VTSAX won't dip below 67 before 2022. Volatility these past 2 weeks looks like a crayon drawing by a 4-year old. Am I going to bet that it will dip to those levels? No, I've got years to ride out the waves. But I see plenty of reasons to justify a market timing experiment, even after acknowledging that they're generally ill-advised and unsuccessful. I watch this thread with academic interest.

It seems to me that diversification is a good thing and should already be done as part of your overall investing strategy.  Making changes "on the fly" is a really bad idea, if your basic investing approach is already sound. 

For example, I'm 80% stocks and 20% bonds, and within the stocks I'm 70% US and 30% World.  So I agree with you, diversification is important.  BUT, it's not something to monkey with based on what the freaking market is doing.  That's almost a guarantee to allow emotion to sway your decision making (usually fear). 

And if a person is still in the accumulation phase, then stock volatility doesn't even matter.  The ONLY scenario where it would is if it quickly drops and then stays low for a long time or has a very slow recovery. 

But EVEN THEN, lets say you only get 5% return from stocks vs. the usual 9%.  5% is still better than your other investing options.  So again, I just don't understand people wanting to dance in and out of the market.  It's madness.

Radagast

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Re: Welp, I'm going to take a stab at timing the market
« Reply #536 on: March 04, 2020, 09:21:10 PM »
I agree. He didn't take on extra risk, he sought to minimize his risk at a time when lots thought (and still think) stocks are inflated. And I personally agree with that assessment (and, superficially, it's supported by the Schiller PE ratio). It's a different question, however, as to whether one should do anything about it (most say no) or whether one should partially diversity (personal, fact-specific question that one might take irrespective of price of stocks).

And again, we don't know what he did with the $60K in cash. Let it ride on Tesla (doubtful), put it in a bond fund (what I would have done), nada, or something else (maybe he even bought back in at 70 and cut his lost opportunity costs). We may never know.

And, I personally am not convinced the VTSAX won't dip below 67 before 2022. Volatility these past 2 weeks looks like a crayon drawing by a 4-year old. Am I going to bet that it will dip to those levels? No, I've got years to ride out the waves. But I see plenty of reasons to justify a market timing experiment, even after acknowledging that they're generally ill-advised and unsuccessful. I watch this thread with academic interest.

It seems to me that diversification is a good thing and should already be done as part of your overall investing strategy.  Making changes "on the fly" is a really bad idea, if your basic investing approach is already sound. 

For example, I'm 80% stocks and 20% bonds, and within the stocks I'm 70% US and 30% World.  So I agree with you, diversification is important.  BUT, it's not something to monkey with based on what the freaking market is doing.  That's almost a guarantee to allow emotion to sway your decision making (usually fear). 

And if a person is still in the accumulation phase, then stock volatility doesn't even matter.  The ONLY scenario where it would is if it quickly drops and then stays low for a long time or has a very slow recovery. 

But EVEN THEN, lets say you only get 5% return from stocks vs. the usual 9%.  5% is still better than your other investing options.  So again, I just don't understand people wanting to dance in and out of the market.  It's madness.
+1 to every sentence. So, +11 or something.

mastrr

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Re: Welp, I'm going to take a stab at timing the market
« Reply #537 on: March 04, 2020, 09:56:10 PM »
I just don't understand people wanting to dance in and out of the market.  It's madness.

i just dance in more. madness is fun

MrThatsDifferent

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Re: Welp, I'm going to take a stab at timing the market
« Reply #538 on: March 09, 2020, 02:26:11 AM »
Umm, so whatís the analysis of OPís decision now?

dragoncar

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Re: Welp, I'm going to take a stab at timing the market
« Reply #539 on: March 09, 2020, 03:14:34 AM »
Umm, so whatís the analysis of OPís decision now?

Still negative for now.  Still sold for the wrong reasons.

waltworks

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Re: Welp, I'm going to take a stab at timing the market
« Reply #540 on: March 09, 2020, 08:10:48 AM »
Umm, so whatís the analysis of OPís decision now?

Still negative for now.  Still sold for the wrong reasons.

But could still end up ahead through dumb luck! It's getting close!

-W

ChpBstrd

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Re: Welp, I'm going to take a stab at timing the market
« Reply #541 on: March 09, 2020, 08:46:52 AM »
When @junioroldtimer returns and bitch-slaps us all, Iím going all-in!

Tyson

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Re: Welp, I'm going to take a stab at timing the market
« Reply #542 on: March 09, 2020, 10:22:54 AM »
When @junioroldtimer returns and bitch-slaps us all, Iím going all-in!

I'm hoping the market drops and stays down for a while.  Then maybe the 'smart guys' will STFU about CAPE. 

DadJokes

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Re: Welp, I'm going to take a stab at timing the market
« Reply #543 on: March 09, 2020, 10:43:41 AM »
When @junioroldtimer returns and bitch-slaps us all, Iím going all-in!

I'm hoping the market drops and stays down for a while.  Then maybe the 'smart guys' will STFU about CAPE.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #544 on: March 09, 2020, 12:09:48 PM »
When @junioroldtimer returns and bitch-slaps us all, Iím going all-in!
haha. I agree.

the_fixer

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Re: Welp, I'm going to take a stab at timing the market
« Reply #545 on: March 09, 2020, 05:23:29 PM »
Closed at $67.58 today might be close to break even.


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Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #546 on: March 09, 2020, 06:24:32 PM »
On February 7th or 8th, Jr. OT sold 892.949 shares at $67.59 each for a total of $60,354.42. Here's the progress report:

On Feb 14 the closing price was $68.85, meaning that he had cost himself $1,125.11 after one week of trying to time the market.
On Feb 22 the closing price was $69.98, meaning that he had cost himself $1,866.26 after two weeks of trying to time the market.
On Mar 01 the closing price was $70.28, meaning that he had cost himself $2,402.03 after three weeks of trying to time the market.
On Mar 08 the closing price was $68.62, meaning that he had cost himself $919.73 after four weeks of trying to time the market.
On Mar 15 the closing price was $70.56, meaning that he had cost himself $2,652.05 after five weeks of trying to time the market.
On Mar 22 the closing price was $69.49, meaning that he had cost himself $1,696.60 after six weeks, plus $333.61 in dividends not paid is $2,030.21.
On Mar 29 the closing price was $70.43, meaning that he had cost himself $2,535.97 after seven weeks, plus $333.61 in dividends not paid is $2,869.58.
On Apr 05 the closing price was $71.94, meaning that he had cost himself $3,884.32 after eight weeks, plus $333.61 in dividends not paid is $4,217.94.
On Apr 12 the closing price was $72.35, meaning that he had cost himself $4,250.43 after nine weeks, plus $333.61 in dividends not paid is $4,584.04.
On Apr 19 the closing price was $72.16, meaning that he had cost himself $4,080.77 after ten weeks, plus $333.61 in dividends not paid is $4412.38.
On Apr 26 the closing price was $73.09, meaning that he had cost himself $4,911.21 after eleven weeks, plus $333.61 in dividends not paid is $5,244.82.
On Jul 24 the closing price was $74.55, meaning that he had cost himself $6,214.93 after twenty three weeks, plus $569.97 in dividends not paid is $6,784.90
On Aug 15 the closing price was $70.64, meaning that he had cost himself $2,723.49 after twenty six weeks, plus $569.97 in dividends not paid is $3,293.46
On Sep 3 the closing price was $72.04, meaning that he had cost himself $3,973.62 after thirty weeks, plus $569.97 in dividends not paid is $4,543.59
On Oct 25 the closing price was $74.71, meaning that he had cost himself $6,357.80 after thirty seven weeks, plus $899.59 in dividends not paid is $7,257.39
On Nov 15 the closing price was $76.60, meaning that he had cost himself $8,045.47 after forty weeks, plus $899.59 in dividends not paid is $8,945.06
On Dec 3 the closing price was $77.31, meaning that he had cost himself $8,679.46 after forty weeks, plus $899.59 in dividends not paid is $9,579.05
On Dec 27 the closing price was $79.88, meaning that he had cost himself $10,974.34 after forty six weeks, plus $1,282.58 in dividends not paid is $12,256.92
On Jan 11 the closing price was $81.95, meaning that he had cost himself $12,822.75 after forty nine weeks, plus $1,282.58 in dividends not paid is $14,105.33
On Feb 28, 2020 the closing price was $73.13, meaning that he had cost himself $4,946.94 after fifty six weeks, plus $1,282.58 in dividends not paid is $6,229.52.
On March 9, 2020, the closing price was $67.58, meaning he saved himself $8.93 after 56 weeks and 5 days, but he's still in the hole $1,247.45 in missed dividends ($1256.38 - $8.93).

Let's look at the predictions:

I remain long-term optimistic on the US stock market but I'm short-term pessimistic. 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.

I'll let you guys know how I do. I intend to sell 893 shares of VTSAX. I will buy back in when the price is significantly cheaper.


The House impeached President Trump on December 18, 2019.
"All this Russia stuff" is ridiculously vague, but Russia's stance vis-a-vis OPEC has seemingly begun a knock-down, drag-out fight in which the markets are plummeting.

When will the OP buy back in? What does "significantly cheaper" mean?
The two-year low is $59.77. The five-year low is $45.94.

What was the OP's rate of return for the last 397 days? If it was more than ~2.0%, he would be in the black. Not bad for a seemingly random guess.

HBFIRE

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Re: Welp, I'm going to take a stab at timing the market
« Reply #547 on: March 09, 2020, 07:02:01 PM »
A true market timer would have waited until about 2 weeks ago :)

Radagast

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Re: Welp, I'm going to take a stab at timing the market
« Reply #548 on: March 09, 2020, 07:33:49 PM »
The problem with market timing is that the market takes six small steps forward for every single double size step back. Even if you correctly predict a crash and would have come out 20% ahead - with great timing on the bottom buy - , you will still spend twice as long watching the market creep up as you will in the duration of the eventual crash. Watching, waiting, wondering, as every month, for a year, the market crawls higher, questioning, second guessing, surely it was a bad call and it is time to capitulate, it has been two years, two and a half, you give up and buy back. Finally 3 years later a small crash gives you a lower entry point. It is the protracted waiting wrongness that will psyche people out even if they would have been right, coupled with the knowledge that they would be lucky to have as high as a 50% chance of ever being right.
See, classic illustration of my point.

Full_Beard

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Re: Welp, I'm going to take a stab at timing the market
« Reply #549 on: March 09, 2020, 07:39:26 PM »
The problem with market timing is that the market takes six small steps forward for every single double size step back. Even if you correctly predict a crash and would have come out 20% ahead - with great timing on the bottom buy - , you will still spend twice as long watching the market creep up as you will in the duration of the eventual crash. Watching, waiting, wondering, as every month, for a year, the market crawls higher, questioning, second guessing, surely it was a bad call and it is time to capitulate, it has been two years, two and a half, you give up and buy back. Finally 3 years later a small crash gives you a lower entry point. It is the protracted waiting wrongness that will psyche people out even if they would have been right, coupled with the knowledge that they would be lucky to have as high as a 50% chance of ever being right.
See, classic illustration of my point.
Well, if I could come out 20% better off with each crash, I'd happily spend all that time second guessing. It's knowing that I can't achieve those results that keeps me at bay. For this particular one, I did inoculate myself though.