Author Topic: Welp, I'm going to take a stab at timing the market  (Read 97733 times)

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #650 on: June 04, 2020, 07:29:16 AM »
There's many articles like this one reporting increased cruise line bookings:
https://globalnews.ca/news/6937576/cruise-bookings-rise-coronavirus/
"Cruise ship bookings jump 600% as Carnival reveals plans to resume trips in August"

I'd agree that sounds too soon, which leads me to the bear case for vaccines.  Historically, a vaccine is not found within a few years of the first outbreak.  There's no vaccine for SARS or MERS, both corona viruses.  The good news and market rally is based on stage I trials, which are the easy part: there is only a 33% failure rate at that stage.

But a counter argument, and the bull case, is that normally most health care research isn't being directed at one disease.  Before 2020, costly approaches to vaccine development were not used - they wouldn't be profitable.  But with almost 8 billion people needing a vaccine, the market suddenly makes new techniques cost effective.  This article claims that vaccine research and production infrastructure will make a permanent step forward as a result of all the recent investment to combat COVID-19:
https://www.genengnews.com/topics/bioprocessing/covid-19-will-have-long-lasting-impact-on-biopharma-manufacturing/

I know I've said this before, but we don't have vaccines for SARS or MERS because almost no one gives a fuck.  SARS had 774 deaths in total and we haven't seen a case since 2004.  MERS is still ongoing, but only had a total of 866 deaths.  In contrast coronavirus has 6.6M+ cases and 389k deaths, and is still accelerating in many parts of the world.   In terms of total infections, total deaths, economic disruption, and daily disruption to people's everyday lives coronavirus is many, many, many orders of magnitude larger.  And likewise the amount of interest and resources being focussed at the coronavirus is many orders of magnitude larger.  The research and resources being poured into coronavirus aren't even comparable to SARS or MERS.

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #651 on: June 04, 2020, 08:29:25 AM »
  At this point do we really expect the market to just continue hitting all time highs despite all these issues?             

The market is *often* hitting all-time highs. Not an unusual situation at all. It's within 5% of the all time high about 1/3 of the time.

That's what you'd expect from something that noisily trends upward (so far).

For reference, too, average return the year following an all-time high? 8.9% (nominal).

Congratulations on making 10% (assuming you didn't increase your cash position when you sold, that wasn't totally clear). The risk you took to get that was a pretty big one, though, and I'd strongly suggest taking your winnings and "walking away" - which in this case would mean, of course, leaving them in play, since you're the casino.

Again, I think stocks are crazy overvalued in the US too. But I've thought that lots of times in the last 20 years and been wrong enough to be glad I never acted on those feelings.

-W

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Welp, I'm going to take a stab at timing the market
« Reply #652 on: June 04, 2020, 08:33:16 AM »
There's many articles like this one reporting increased cruise line bookings:
https://globalnews.ca/news/6937576/cruise-bookings-rise-coronavirus/
"Cruise ship bookings jump 600% as Carnival reveals plans to resume trips in August"

I'd agree that sounds too soon, which leads me to the bear case for vaccines.  Historically, a vaccine is not found within a few years of the first outbreak.  There's no vaccine for SARS or MERS, both corona viruses.  The good news and market rally is based on stage I trials, which are the easy part: there is only a 33% failure rate at that stage.

But a counter argument, and the bull case, is that normally most health care research isn't being directed at one disease.  Before 2020, costly approaches to vaccine development were not used - they wouldn't be profitable.  But with almost 8 billion people needing a vaccine, the market suddenly makes new techniques cost effective.  This article claims that vaccine research and production infrastructure will make a permanent step forward as a result of all the recent investment to combat COVID-19:
https://www.genengnews.com/topics/bioprocessing/covid-19-will-have-long-lasting-impact-on-biopharma-manufacturing/
I know I've said this before, but we don't have vaccines for SARS or MERS because almost no one gives a fuck.  SARS had 774 deaths in total and we haven't seen a case since 2004.  MERS is still ongoing, but only had a total of 866 deaths.  In contrast coronavirus has 6.6M+ cases and 389k deaths, and is still accelerating in many parts of the world.   In terms of total infections, total deaths, economic disruption, and daily disruption to people's everyday lives coronavirus is many, many, many orders of magnitude larger.  And likewise the amount of interest and resources being focussed at the coronavirus is many orders of magnitude larger.  The research and resources being poured into coronavirus aren't even comparable to SARS or MERS.
I count 50 vaccine candidates for MERS-Cov, which argues against your claim that "almost no one gives a fuck".  It doesn't matter if "many orders of magnitude" of people are interested, what counts is the medical research.  Do you think there's 50,000 vaccine candidates for SARS-Cov-2?
https://www.who.int/who-documents-detail/overview-of-the-types-classes-of-candidate-vaccines-against-mers-cov

A MERS vaccine was being worked on when COVID-19 broke out.  The MERS vaccine trials reached stage 2 clinical testing in Saudi Arabia earlier this year.  One of the front runners for a SARS-Cov-2 vaccine was the same Oxford researchers developing a MERS vaccine - they used the same technique, and would not have been a front runner if they weren't already working on a MERS vaccine.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #653 on: June 04, 2020, 08:43:49 AM »
There's many articles like this one reporting increased cruise line bookings:
https://globalnews.ca/news/6937576/cruise-bookings-rise-coronavirus/
"Cruise ship bookings jump 600% as Carnival reveals plans to resume trips in August"

I'd agree that sounds too soon, which leads me to the bear case for vaccines.  Historically, a vaccine is not found within a few years of the first outbreak.  There's no vaccine for SARS or MERS, both corona viruses.  The good news and market rally is based on stage I trials, which are the easy part: there is only a 33% failure rate at that stage.

But a counter argument, and the bull case, is that normally most health care research isn't being directed at one disease.  Before 2020, costly approaches to vaccine development were not used - they wouldn't be profitable.  But with almost 8 billion people needing a vaccine, the market suddenly makes new techniques cost effective.  This article claims that vaccine research and production infrastructure will make a permanent step forward as a result of all the recent investment to combat COVID-19:
https://www.genengnews.com/topics/bioprocessing/covid-19-will-have-long-lasting-impact-on-biopharma-manufacturing/
I know I've said this before, but we don't have vaccines for SARS or MERS because almost no one gives a fuck.  SARS had 774 deaths in total and we haven't seen a case since 2004.  MERS is still ongoing, but only had a total of 866 deaths.  In contrast coronavirus has 6.6M+ cases and 389k deaths, and is still accelerating in many parts of the world.   In terms of total infections, total deaths, economic disruption, and daily disruption to people's everyday lives coronavirus is many, many, many orders of magnitude larger.  And likewise the amount of interest and resources being focussed at the coronavirus is many orders of magnitude larger.  The research and resources being poured into coronavirus aren't even comparable to SARS or MERS.
I count 50 vaccine candidates for MERS-Cov, which argues against your claim that "almost no one gives a fuck".  It doesn't matter if "many orders of magnitude" of people are interested, what counts is the medical research.  Do you think there's 50,000 vaccine candidates for SARS-Cov-2?
https://www.who.int/who-documents-detail/overview-of-the-types-classes-of-candidate-vaccines-against-mers-cov

A MERS vaccine was being worked on when COVID-19 broke out.  The MERS vaccine trials reached stage 2 clinical testing in Saudi Arabia earlier this year.  One of the front runners for a SARS-Cov-2 vaccine was the same Oxford researchers developing a MERS vaccine - they used the same technique, and would not have been a front runner if they weren't already working on a MERS vaccine.

I meant by comparison to coronavirus.  Yes some people have been working on vaccines for SARS and MERS, and they are now building on that research for the coronavirus.  I don't expect the number of vaccine candidates to be orders of magnitude greater, but the money and time being spent on the available candidates has increased.  I would be very interested in seeing the total amount of resources that have been dedicated to each, and I would be shocked if MERS or SARS had received more than a small fraction that's been dedicated to the coronavirus. 

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Welp, I'm going to take a stab at timing the market
« Reply #654 on: June 04, 2020, 09:12:53 AM »
There's many articles like this one reporting increased cruise line bookings:
https://globalnews.ca/news/6937576/cruise-bookings-rise-coronavirus/
"Cruise ship bookings jump 600% as Carnival reveals plans to resume trips in August"

I'd agree that sounds too soon, which leads me to the bear case for vaccines.  Historically, a vaccine is not found within a few years of the first outbreak.  There's no vaccine for SARS or MERS, both corona viruses.  The good news and market rally is based on stage I trials, which are the easy part: there is only a 33% failure rate at that stage.

But a counter argument, and the bull case, is that normally most health care research isn't being directed at one disease.  Before 2020, costly approaches to vaccine development were not used - they wouldn't be profitable.  But with almost 8 billion people needing a vaccine, the market suddenly makes new techniques cost effective.  This article claims that vaccine research and production infrastructure will make a permanent step forward as a result of all the recent investment to combat COVID-19:
https://www.genengnews.com/topics/bioprocessing/covid-19-will-have-long-lasting-impact-on-biopharma-manufacturing/
I know I've said this before, but we don't have vaccines for SARS or MERS because almost no one gives a fuck.  SARS had 774 deaths in total and we haven't seen a case since 2004.  MERS is still ongoing, but only had a total of 866 deaths.  In contrast coronavirus has 6.6M+ cases and 389k deaths, and is still accelerating in many parts of the world.   In terms of total infections, total deaths, economic disruption, and daily disruption to people's everyday lives coronavirus is many, many, many orders of magnitude larger.  And likewise the amount of interest and resources being focussed at the coronavirus is many orders of magnitude larger.  The research and resources being poured into coronavirus aren't even comparable to SARS or MERS.
I count 50 vaccine candidates for MERS-Cov, which argues against your claim that "almost no one gives a fuck".  It doesn't matter if "many orders of magnitude" of people are interested, what counts is the medical research.  Do you think there's 50,000 vaccine candidates for SARS-Cov-2?
https://www.who.int/who-documents-detail/overview-of-the-types-classes-of-candidate-vaccines-against-mers-cov

A MERS vaccine was being worked on when COVID-19 broke out.  The MERS vaccine trials reached stage 2 clinical testing in Saudi Arabia earlier this year.  One of the front runners for a SARS-Cov-2 vaccine was the same Oxford researchers developing a MERS vaccine - they used the same technique, and would not have been a front runner if they weren't already working on a MERS vaccine.
I meant by comparison to coronavirus.  Yes some people have been working on vaccines for SARS and MERS, and they are now building on that research for the coronavirus.  I don't expect the number of vaccine candidates to be orders of magnitude greater, but the money and time being spent on the available candidates has increased.  I would be very interested in seeing the total amount of resources that have been dedicated to each, and I would be shocked if MERS or SARS had received more than a small fraction that's been dedicated to the coronavirus.
Additional funding has encouraged more advanced - but more costly - vaccine research.  But those resources are only meaningful to the extent they translate into treatment, right?  That's why I'm using the yardstick of vaccine candidates - if those succeed, COVID-19 can be over.  If they fail, the greater resources were not enough.  Last I checked there were about 170 SARS-Cov-2 vaccine attempts, and MERS had about 50.  The greater resources have translated to more vaccine attempts now - and maybe more in future months - but it's not as great an influx as you believe.  Or if I'm missing something, how can resources cure COVID-19 without a vaccine?

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #655 on: June 04, 2020, 09:57:15 AM »
I really don't know what goes into medical or vaccine research.  My gut instinct is telling me it's not nearly as simplistic as 50 MERS candidates vs 170 SARS-Cov-2 candidates translating to 3.4X the resources being spent, or 3.4X the chance of success.  I suspect the money and time being devoted to the research is orders of magnitudes greater, since the impact and consequences are orders of magnitudes greater. 

Psychstache

  • Handlebar Stache
  • *****
  • Posts: 1029
Re: Welp, I'm going to take a stab at timing the market
« Reply #656 on: June 04, 2020, 10:32:36 AM »

Dude, you gotta own it. What you are doing is the *definition* of market timing.


Fair enough. I had said that I'm not trying to time it because I'll happily jump back in with the SP500 at 3500 when the situation normalizes a little.

https://en.wikipedia.org/wiki/Market_timing#:~:text=Market%20timing%20is%20the%20strategy,from%20technical%20or%20fundamental%20analysis.

Market timing is the strategy of making buying or selling decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis.

https://www.investopedia.com/terms/m/markettiming.asp

Market timing is a type of investment or trading strategy. It is the act of moving in and out of a financial market or switching between asset classes based on predictive methods. These predictive tools include following technical indicators or economic data, to gauge how the market is going to move.

https://www.merrilledge.com/article/focus-on-time-in-market-not-market-timing

Market timing is an investing strategy in which the investor tries to identify the best times to be in the market and when to get out.


I'm with walt on this. It's your money so you can do what you want, but it seems silly to say what you are currently doing is not market timing.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 9315
  • Registered member
Re: Welp, I'm going to take a stab at timing the market
« Reply #657 on: June 04, 2020, 12:05:35 PM »

Dude, you gotta own it. What you are doing is the *definition* of market timing.


Fair enough. I had said that I'm not trying to time it because I'll happily jump back in with the SP500 at 3500 when the situation normalizes a little.

https://en.wikipedia.org/wiki/Market_timing#:~:text=Market%20timing%20is%20the%20strategy,from%20technical%20or%20fundamental%20analysis.

Market timing is the strategy of making buying or selling decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis.

https://www.investopedia.com/terms/m/markettiming.asp

Market timing is a type of investment or trading strategy. It is the act of moving in and out of a financial market or switching between asset classes based on predictive methods. These predictive tools include following technical indicators or economic data, to gauge how the market is going to move.

https://www.merrilledge.com/article/focus-on-time-in-market-not-market-timing

Market timing is an investing strategy in which the investor tries to identify the best times to be in the market and when to get out.


I'm with walt on this. It's your money so you can do what you want, but it seems silly to say what you are currently doing is not market timing.

You guys arenít wrong, but I think heís going for more of a ďrisk offĒ approach than ďI think the market will go downĒ.  He will see lower volatility at the price of missing gains.  It could be seen as a different version of a conservative portfolio where instead of always investing 60/40 and giving up total return for stability, you invest 100/0 but only 60% of the time and again give up total return for stability.

Yes itís still market timing but itís a different flavor than that we usually see around here

Full_Beard

  • Stubble
  • **
  • Posts: 110
  • Location: 49th
Re: Welp, I'm going to take a stab at timing the market
« Reply #658 on: June 04, 2020, 12:16:17 PM »
I'm with walt on this. It's your money so you can do what you want, but it seems silly to say what you are currently doing is not market timing.
Fine, call it market timing. The label is irrelevant and the quotes from wiki-whatever are pedantic. I pulled out of the market once in my life and haven't gotten back in yet. If that's market timing, I'm timing the market. I see no shame in that label or strategy. Stupidity? Maybe. History will be my judge, but as I said before, I'll happily jump back when even if SP 500 is at 3500 provided that there's some modicum of normalcy (pandemic, fundamentals, earnings, debt, etc) -- and normalcy, in my view, is a low standard. I stayed in the market through 1998-2019 (I didn't change a thing, i.e., monthly investments in SP500 index, including 2007-10).

RE vaccines: The time, energy, and money going into vaccine development is impressive. Realistically, if one is available in December, that would exceptional. From what I've read, it seems Feb. - June is probably a more realistic time frame in the optimistic world. In the pessimistic world, it could be over 2 years. I agree that the past coronaviruses aren't good benchmarks because there was far less interest in developing a vaccine.

And then, of course, once it's developed, distributing it to achieve herd immunity will be challenging, both in terms of numbers and both in terms of the (growing?) number anti-vaxxers who see it as Bill Gates conspiracy to take over the world. But, I see that as a speed bump in the larger view of the road ahead.

Re markets: I think we all agree that the prices are way overvalued today and that that has been the case for several years now (and periodically throughout time). In the past, those over-values were based on outlooks of growth. And I see the argument that as soon as this pandemic is behind us, the economy will enter super charge mode. I think there are a lot of predictions/bets that that will occur in the 4th quarter of this year, maybe even the third. I personally think that that is too optimistic. And if I'm wrong, that would be excellent news. There's a ton of suffering happening these days and it's disheartening, bordering on depressing, to read the news each day.

As for cruise ships, yes, of course they're reporting that bookings are doing fine. Anyone who didn't think they'd actually get a refund or didn't care for one, told the cruise companies to rebook for later in the year or 2021. Some are seeing the super cheap offerings and the opportunity to cancel later and saying, why not, count me in. My friend didn't officially cancel her May 25th trip to Italy until May 15th because Air Italia offered her that. My point is that I would read very little at this point in time into late 2020 bookings given the realities of group social gatherings and group travel. Anyway, I just used cruise stocks to as the poster child for today's market insanity. Maybe there are better examples.

Good luck, everyone.
« Last Edit: June 04, 2020, 12:21:22 PM by Full_Beard »

jsloan

  • 5 O'Clock Shadow
  • *
  • Posts: 84
Re: Welp, I'm going to take a stab at timing the market
« Reply #659 on: June 04, 2020, 12:31:03 PM »
Quote
Congratulations on making 10% (assuming you didn't increase your cash position when you sold, that wasn't totally clear). The risk you took to get that was a pretty big one, though, and I'd strongly suggest taking your winnings and "walking away" - which in this case would mean, of course, leaving them in play, since you're the casino.

Again, I think stocks are crazy overvalued in the US too. But I've thought that lots of times in the last 20 years and been wrong enough to be glad I never acted on those feelings.

You are 100% correct, I was expecting the market to continue to tank but instead it went up and I got lucky.  It was luck, but at the same time my decision to get back in the market was based on real data such as simple PE for companies that were hit by the downturn for no reason other than the entire market went down (ie tech companies). 

Now I feel that a lot of the market is overvalued based on those same metrics.  There are some deals to be had in areas we expect to bounce back but have not yet (hospitality, airlines, oil), but these are more risky.  Because of this I have been pulling money out of the market and am now sitting on 40% cash position.  I started the pullback about a month ago and worked my way up to where I'm at now. 

I know we don't have a crystal ball, but we do have eyes and ears.  I'm not a bear by any means, but the current market feels like how things felt in 2008, but different.  Lots of volatility, unemployment, and bankruptcies but with added unknown of unlimited QE (not a good long term solution).  Just putting everything back into VSTAX just doesn't seem sensible at the moment, but then again I could be 100% wrong and everything ends up fine.  Probably being right so far has given me the confidence (wrongly) to know what is coming next.             

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #660 on: June 04, 2020, 02:05:49 PM »
The problem is that P/E doesn't predict shit. Even CAPE is only like .4 R2 for future returns predicting purposes.

Nobody knows. Period.

-W
« Last Edit: June 04, 2020, 02:31:13 PM by waltworks »

plog

  • Stubble
  • **
  • Posts: 231
Re: Welp, I'm going to take a stab at timing the market
« Reply #661 on: June 04, 2020, 11:49:00 PM »
Quote
I was expecting... It was luck, but at the same time my decision to get back in the market was based on real data...Now I feel...I know we don't have a crystal ball...the current market feels like how things felt in 2008, but different... doesn't seem sensible at the moment, but then again I could be 100% wrong and everything ends up fine.  Probably being right so far has given me the confidence (wrongly) to know what is coming next.

Falsifiability. That's the foundation of science.  Scientists make hypothesis then they immediately tell the world how they could be wrong and the manner in which someone can prove them wrong.  They welcome being proven wrong as much as having their hypothesis affirmed because whichever of those happen it means knowledge has been advanced.

The aim of this forum is finding the most efficient investing method and teaching others.  No one can deny your 'feelings' or counter your gut. Worse since you have no real method it can't be tested and can't be used to help anyone.  All your doing is using this forum to justify\validate your own investment method.  That's fine I guess, but your not really advancing the aim of this board.

There may be a way to efficiently market time.  But that method must be falsifiable, and not just based on gut feeling.  Use all the common market metric terms you want, but if your just looking at those numbers and 'feeling' things, it's not a real method.

jsloan

  • 5 O'Clock Shadow
  • *
  • Posts: 84
Re: Welp, I'm going to take a stab at timing the market
« Reply #662 on: June 05, 2020, 06:06:15 AM »
Quote
Falsifiability. That's the foundation of science.  Scientists make hypothesis then they immediately tell the world how they could be wrong and the manner in which someone can prove them wrong.  They welcome being proven wrong as much as having their hypothesis affirmed because whichever of those happen it means knowledge has been advanced.

The aim of this forum is finding the most efficient investing method and teaching others.  No one can deny your 'feelings' or counter your gut. Worse since you have no real method it can't be tested and can't be used to help anyone.  All your doing is using this forum to justify\validate your own investment method.  That's fine I guess, but your not really advancing the aim of this board.

There may be a way to efficiently market time.  But that method must be falsifiable, and not just based on gut feeling.  Use all the common market metric terms you want, but if your just looking at those numbers and 'feeling' things, it's not a real method.

I have been an index investor since 2000 and I believe that in the long term it is the way to go.  I would disagree with you about applying the scientific method to economics (soft science).  The economy is not a machine or process that can be tested via the scientific method like the movement of planets.  We cannot prove economic outcomes based on hypothesis like we can with other hard sciences.  We can back test and make predictions, but those predictions can be very wrong in the short term and long term.  I agree that indexing is the best long term strategy in the US today, but I also don't believe 100% in the "efficient market" to say that indexing will work forever or in all situations.  The market is sometimes very irrational and can reflect incorrect information.         
 

         

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Welp, I'm going to take a stab at timing the market
« Reply #663 on: June 05, 2020, 06:26:37 AM »
The new techniques for vaccine development are safer than prior approaches.  You'll often hear vaccine trials establish if a drug is "safe and effective", which gives the newer technologies an advantage.  Markets won't wait for people to get injected with a vaccine - early news of a success story will send markets sharply higher.  So for the optimists who are timing the market, it's better to be "all in" earlier, when any news of a vaccine might get announced.

Maybe that's months, maybe it's years.  That uncertainty opens up room for pessimists to stay out of the market, waiting for a fresh wave of infections to close down the economy.  Only... I'm not sure people will go along with it.  Polls show Republicans are less afraid of catching COVID-19, suggesting a preference to keep the economy open.  The current mass protests are more allied with Democrats, and unlikely to stop owing to a second wave.  But it's possible the situation gets serious enough to change everyone's minds, and prove pessimists right.

I plan on checking the growth rates in COVID-19 cases before the markets open an hour from now.

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #664 on: June 05, 2020, 07:46:27 AM »
I have been an index investor since 2000 and I believe that in the long term it is the way to go.  I would disagree with you about applying the scientific method to economics (soft science).  The economy is not a machine or process that can be tested via the scientific method like the movement of planets.  We cannot prove economic outcomes based on hypothesis like we can with other hard sciences.  We can back test and make predictions, but those predictions can be very wrong in the short term and long term.  I agree that indexing is the best long term strategy in the US today, but I also don't believe 100% in the "efficient market" to say that indexing will work forever or in all situations.  The market is sometimes very irrational and can reflect incorrect information.         

That's some serious word salad to just say "I'm going with my gut".

The economy doesn't have to be perfectly predictable for you to at least have a set of metrics or numbers that would justify getting in or out of the market. What you're doing is just letting your emotions make the decisions - and there are a huge number of built in cognitive biases (I'd argue valuing losses more than gains is the worst one when it comes to investing) which mean that your emotions are not going to serve you well.

Really, I always wonder what happens to the market timers. We hear from folks anytime the market is down, with the same basic story ("I just feel like values are crazy", "This time is different", "Trump/Obama/Iran/Covid19/whatever is going to crash everything") then they disappear. Hundreds of them over the years. @FinancialVelociraptor has stuck around  but he's a trader, not a market timer.

I'm assuming they're all still in their cubicles letting their lives slip away and sitting in cash. But who knows, maybe the pina coladas on the beach are too tasty to bother coming back to tell everyone how successful they've been.

-W

plog

  • Stubble
  • **
  • Posts: 231
Re: Welp, I'm going to take a stab at timing the market
« Reply #665 on: June 05, 2020, 08:05:49 AM »
Quote
I would disagree with you about applying the scientific method to economics (soft science).

You can apply the scientific method to determine the most efficient investing method if the investing method is well defined.  Your and my hypothesis is that index investing is more effective than randomly choosing actively managed funds or even choosing funds that recently beat indexes.  Those are well defined methods that we ( and everyone else)  can use data to test and falsify.  Thus far our hypothesis has withstood testing.

His hypothesis is that his gut is the most efficient method.  Thats not well defined because  only people with access to his gut are able to implement.

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 38
  • Location: Brisbane
Re: Welp, I'm going to take a stab at timing the market
« Reply #666 on: June 05, 2020, 08:09:48 AM »
Quote
I would disagree with you about applying the scientific method to economics (soft science).

You can apply the scientific method to determine the most efficient investing method if the investing method is well defined.  Your and my hypothesis is that index investing is more effective than randomly choosing actively managed funds or even choosing funds that recently beat indexes.  Those are well defined methods that we ( and everyone else)  can use data to test and falsify.  Thus far our hypothesis has withstood testing.

His hypothesis is that his gut is the most efficient method.  Thats not well defined because  only people with access to his gut are able to implement.

Scalpel? Check.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2257
Re: Welp, I'm going to take a stab at timing the market
« Reply #667 on: June 05, 2020, 10:06:56 AM »
The problem is that P/E doesn't predict shit. Even CAPE is only like .4 R2 for future returns predicting purposes.

Nobody knows. Period.

-W

What is your method to avoid buying the equivalent of pets.com in 1999? Is all valuation bunk, or just PE/CAPE? Should one also buy bonds regardless of expected yield?

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #668 on: June 05, 2020, 10:15:02 AM »
The problem is that P/E doesn't predict shit. Even CAPE is only like .4 R2 for future returns predicting purposes.

Nobody knows. Period.

-W

What is your method to avoid buying the equivalent of pets.com in 1999? Is all valuation bunk, or just PE/CAPE? Should one also buy bonds regardless of expected yield?

I think that the pets.com question is a little different, since you'd need to be trying to pick stocks (which I don't try to but at least think is theoretically doable). I'm referring purely to index investing. And yes, you might as well just buy regardless of valuation.

I mean, CAPE has been saying values are way above average and returns will suffer (if you subscribe to the CAPE-as-predictor notion) for the last decade. If you set aside a couple of months in 2009, it's been a "bad deal" for 30 years!

If you'd refused to invest because you didn't like the numbers that whole time, you would have royally screwed yourself.

You and I and everyone else, deep down, wants to believe that there's an underlying pattern here and that if we can just figure it out, it'll all make sense. But the evidence so far suggests that's not true - it's just chaos with an upward trend.

-W

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2257
Re: Welp, I'm going to take a stab at timing the market
« Reply #669 on: June 05, 2020, 10:29:20 AM »
Quote
I would disagree with you about applying the scientific method to economics (soft science).

You can apply the scientific method to determine the most efficient investing method if the investing method is well defined.  Your and my hypothesis is that index investing is more effective than randomly choosing actively managed funds or even choosing funds that recently beat indexes.  Those are well defined methods that we ( and everyone else)  can use data to test and falsify.  Thus far our hypothesis has withstood testing.

His hypothesis is that his gut is the most efficient method.  Thats not well defined because  only people with access to his gut are able to implement.

As best I can tell, the stock market is a system of randomly switching the most successful strategies. During one timeframe, momentum works and during another the dogs of the Dow method. One decade itís all about growth stocks and during another itís all about value. Sometimes small caps do better and other times large caps. Sometimes itís energy stocks and other times itís tech stocks. Sometimes being hyper-aggressive works and other times itís best to sit in cash. And while winning strategies are popping up randomly, the duration of each winning strategy also seems to be random, so that it is not possible to know that because strategy X worked during the last timeframe, it cannot also work this year/quarter/month/day because itís time to switch to a new strategy.

The thing driving this random strategy and random timeframe generator seems to be the behavior of investors who tend to chase the performance of the currently successful strategy until the trade becomes too crowded and must necessarily collapse. E.g. when everyone bids up the prices of a particular sector, prices rise so high that the possible ROI becomes lower. As another example, when lots of people go to cash in a panic because stocks fell in the past, the only thing left that could possibly happen is for lots of people to get back into stocks because the world runs out of investors who want to go to cash.

There are some claims that the market goes through predictable cycles, but Iím suspicious that any such clear signal would rapidly be arbitraged away. Thus the only signal the system can produce is a false signal and the only pattern it can have is randomness.

This is confusing because we all know earnings come from discrete events with causes. The consumer buys the item, the oil well strikes oil, the number of dollars increases, a terrorist attack occurs, etc. Weíre also told that the only reason to buy stocks is the expectation of future earnings. Yet, PE ratios and PEG ratios float around like random numbers.

BicycleB

  • Handlebar Stache
  • *****
  • Posts: 2436
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: Welp, I'm going to take a stab at timing the market
« Reply #670 on: June 06, 2020, 01:07:39 PM »
Quote
I would disagree with you about applying the scientific method to economics (soft science).

You can apply the scientific method to determine the most efficient investing method if the investing method is well defined.  Your and my hypothesis is that index investing is more effective than randomly choosing actively managed funds or even choosing funds that recently beat indexes.  Those are well defined methods that we ( and everyone else)  can use data to test and falsify.  Thus far our hypothesis has withstood testing.

His hypothesis is that his gut is the most efficient method.  Thats not well defined because  only people with access to his gut are able to implement.

To me it looks like you two (plog, waltworks) are misinterpreting @jsloan's remark:


I have been an index investor since 2000 and I believe that in the long term it is the way to go.  I would disagree with you about applying the scientific method to economics (soft science).  The economy is not a machine or process that can be tested via the scientific method like the movement of planets.  We cannot prove economic outcomes based on hypothesis like we can with other hard sciences.  We can back test and make predictions, but those predictions can be very wrong in the short term and long term.  I agree that indexing is the best long term strategy in the US today, but I also don't believe 100% in the "efficient market" to say that indexing will work forever or in all situations.  The market is sometimes very irrational and can reflect incorrect information.         
 

         

I don't think he/she is saying "my gut is the most efficient method." I also don't see that he/she is urging market timing. Am I missing something, or is the market timing by jsloan something that you just assume he/she is after? (Maybe I missed something upthread. Will also accept correction by jsloan!)

I think jsloan's remark simply means what it says: that economic matters cannot be scientifically tested. I think there's some truth to that assertion, because the economy is an interrelated single entity. As such, it is not subject to repeated trials with a control group. There is no control group, only the one economy that we live in, and identical conditions needed for a falsifiable scientific test are not available for repeated testing.

Instead, the economy contains many conditions that can be quantified and viewed as variables, such as 10 year CAPE. But it also contains other variables, so any "test" you do inherently contains varied conditions that may or may not invalidate the test. You can't really test it scientifically.

I'm not urging market timing either. I continue pondering, with a lean toward "don't freakin' time." But from a strict methodological view, jsloan looks right to me. Whether we attempt to market time or urge each other to stay far from it, our guesses about market dynamics aren't completely scientific.
« Last Edit: June 06, 2020, 01:15:27 PM by BicycleB »

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #671 on: June 06, 2020, 01:27:27 PM »
He makes it clear that he is market timing upthread (sold in February, re-entered in April). Thus far successfully, which is why we're hearing about it here.

-W
« Last Edit: June 06, 2020, 01:31:36 PM by waltworks »

v8rx7guy

  • Handlebar Stache
  • *****
  • Posts: 1778
  • Location: Bellingham, WA
Re: Welp, I'm going to take a stab at timing the market
« Reply #672 on: June 06, 2020, 03:20:18 PM »
He makes it clear that he is market timing upthread (sold in February, re-entered in April). Thus far successfully, which is why we're hearing about it here.

-W

You must have missed that he re sold in march 26 and is down another 7k

BicycleB

  • Handlebar Stache
  • *****
  • Posts: 2436
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: Welp, I'm going to take a stab at timing the market
« Reply #673 on: June 06, 2020, 07:24:32 PM »
Ok, I misunderstood. I'll just state my own opinion. We have only one economy, so we can't really do scientific tests on it.

We can measure various data and theorize something about them, but we'll never be quite certain that we've extracted the key elements of the situation. (I mean, we can be certain all we want, but falsely so. We never really have proof.) I don't think this fact says we should market time or not, just that we are guessing as wisely as we can when we can make our decisions.

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #674 on: June 06, 2020, 07:37:12 PM »
So to summarize: in history, market timing basically never works for anyone. But the world is an uncertain place, so maybe market timing actually works or maybe it doesn't?

I don't understand what you're trying to say here, I guess.

I don't think you need to get too far down the philosophy of science rabbit hole. This is statistics, not science. In the world of stock trading/investing, market timing does not work any more than random chance would suggest it would, in the dataset we have. People who try to market time repeatedly tend to lose money. That's been shown pretty convincingly many times. If you want to make an argument that the market is somehow going to become predictable in the future (which would open a *real* philosophical can of worms) by all means do it...

-W


Tyson

  • Magnum Stache
  • ******
  • Posts: 2512
  • Age: 48
  • Location: Denver, Colorado
Re: Welp, I'm going to take a stab at timing the market
« Reply #675 on: June 06, 2020, 10:18:12 PM »
Quote
I would disagree with you about applying the scientific method to economics (soft science).

You can apply the scientific method to determine the most efficient investing method if the investing method is well defined.  Your and my hypothesis is that index investing is more effective than randomly choosing actively managed funds or even choosing funds that recently beat indexes.  Those are well defined methods that we ( and everyone else)  can use data to test and falsify.  Thus far our hypothesis has withstood testing.

His hypothesis is that his gut is the most efficient method.  Thats not well defined because  only people with access to his gut are able to implement.

As best I can tell, the stock market is a system of randomly switching the most successful strategies. During one timeframe, momentum works and during another the dogs of the Dow method. One decade itís all about growth stocks and during another itís all about value. Sometimes small caps do better and other times large caps. Sometimes itís energy stocks and other times itís tech stocks. Sometimes being hyper-aggressive works and other times itís best to sit in cash. And while winning strategies are popping up randomly, the duration of each winning strategy also seems to be random, so that it is not possible to know that because strategy X worked during the last timeframe, it cannot also work this year/quarter/month/day because itís time to switch to a new strategy.

The thing driving this random strategy and random timeframe generator seems to be the behavior of investors who tend to chase the performance of the currently successful strategy until the trade becomes too crowded and must necessarily collapse. E.g. when everyone bids up the prices of a particular sector, prices rise so high that the possible ROI becomes lower. As another example, when lots of people go to cash in a panic because stocks fell in the past, the only thing left that could possibly happen is for lots of people to get back into stocks because the world runs out of investors who want to go to cash.

There are some claims that the market goes through predictable cycles, but Iím suspicious that any such clear signal would rapidly be arbitraged away. Thus the only signal the system can produce is a false signal and the only pattern it can have is randomness.

This is confusing because we all know earnings come from discrete events with causes. The consumer buys the item, the oil well strikes oil, the number of dollars increases, a terrorist attack occurs, etc. Weíre also told that the only reason to buy stocks is the expectation of future earnings. Yet, PE ratios and PEG ratios float around like random numbers.

That's really smart and insightful.  Thanks.

jsloan

  • 5 O'Clock Shadow
  • *
  • Posts: 84
Re: Welp, I'm going to take a stab at timing the market
« Reply #676 on: June 07, 2020, 07:12:32 AM »
Quote
I don't think he/she is saying "my gut is the most efficient method." I also don't see that he/she is urging market timing. Am I missing something, or is the market timing by jsloan something that you just assume he/she is after? (Maybe I missed something upthread. Will also accept correction by jsloan!)

Yes!  I am not a market timer (at least not until recently), I feel like Walt is trying to portray my decision to get out of the market earlier this year like I'm some kind of YOLO options trader :-).  The point of my post is that the market cannot be predicted, but there are moments when the US markets get out of whack and it can be very profitable to take a different course of action.  These events may only happen once every 7-10 years and in those situations it can be very profitable to hedge your positions.  I currently think we are in one of those corrections based on "gut + data".

In the same way we (bogleheads/mustashcians) rely on "rules" for indexing like 10% returns, your money will double every 7 years etc there are also very persuasive arguments to be had that this correction is not sustainable.  I don't have a crystal ball, but neither does anyone else.  When I see something like this: https://www.gurufocus.com/stock-market-valuations.php it does give me pause.  Do I think that everything Buffet has done is 100% correct?  No.  Do I think he has been right enough for me to listen and at consider that there may be other opinions/options in the current market?  Yes.

Sometimes moments like this are a good opportunity for any investor to reevaluate your beliefs, become more well rounded and learn something new.  I may be back to indexing in 6 months, lose my 10% winnings by withholding my remaining cash from the market, but ultimately I'll try to make the best decision based on the information I have at the time.  I value the opinion of this community because of dedication to help others even when it isn't what they want to hear.
 

des999

  • Stubble
  • **
  • Posts: 249
Re: Welp, I'm going to take a stab at timing the market
« Reply #677 on: June 07, 2020, 07:48:52 AM »
Quote
I don't think he/she is saying "my gut is the most efficient method." I also don't see that he/she is urging market timing. Am I missing something, or is the market timing by jsloan something that you just assume he/she is after? (Maybe I missed something upthread. Will also accept correction by jsloan!)

Yes!  I am not a market timer (at least not until recently), I feel like Walt is trying to portray my decision to get out of the market earlier this year like I'm some kind of YOLO options trader :-).  The point of my post is that the market cannot be predicted, but there are moments when the US markets get out of whack and it can be very profitable to take a different course of action.  These events may only happen once every 7-10 years and in those situations it can be very profitable to hedge your positions.  I currently think we are in one of those corrections based on "gut + data".

In the same way we (bogleheads/mustashcians) rely on "rules" for indexing like 10% returns, your money will double every 7 years etc there are also very persuasive arguments to be had that this correction is not sustainable.  I don't have a crystal ball, but neither does anyone else.  When I see something like this: https://www.gurufocus.com/stock-market-valuations.php it does give me pause.  Do I think that everything Buffet has done is 100% correct?  No.  Do I think he has been right enough for me to listen and at consider that there may be other opinions/options in the current market?  Yes.

Sometimes moments like this are a good opportunity for any investor to reevaluate your beliefs, become more well rounded and learn something new.  I may be back to indexing in 6 months, lose my 10% winnings by withholding my remaining cash from the market, but ultimately I'll try to make the best decision based on the information I have at the time.  I value the opinion of this community because of dedication to help others even when it isn't what they want to hear.
 

hate to say it, but Walt is right.  What you just typed is market timing, even though you are trying to convince yourself it's not.

reevaluate AA, sure, take money out of the market, convince yourself you have data that shows now is not the time to be in the market, market timing.

the way you said take your 10% 'winnings' makes it sound like gambling....oh wait.

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #678 on: June 07, 2020, 01:33:36 PM »
Ok, so I actually read that terrible gurufocus thing. They say:
"It has been unfortunate for investors who entered the market after the late 1990s. Since that time, the market has nearly always been overvalued, only dropping to fairly valued since the declines that began in 2008. "

But, um, that's not true. Because their metric didn't (like most) predict jack shit.

Let's say I had an only sort of ok job during that time (starting in January of 2000). I could only save $1500 a month to invest (most people on the forum/white collar professionals could invest a lot more than that, of course). My employer contributed nothing, nor did anyone else. And I started with zero.

Well, gosh, I made an annualized 8% return (admittedly a bit under the 10% historical average) and ended up (as of the end of May, I'm doing a little better as of today) with about $881k. In the FIRE ballpark for a single person without expensive tastes, on an investment rate that could reasonably be accomplished with an entry-level (ie, $40-50k/year) salary over a career half the length of normal.

How "unfortunate"! I hope you stayed in cash that whole time!

You can input your own numbers here if you're curious: https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/

What kind of idiots wrote that stuff?

-W
« Last Edit: June 07, 2020, 02:06:48 PM by waltworks »

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #679 on: June 08, 2020, 07:35:49 AM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...

You try to distance yourself from market timing by claiming you aren't some YOLO options trader, but then go on to describe text book market timing. 

So what makes you so much more insightful and clever than literally the entire market?  Everything indicates it's over valued and you shouldn't buy it...yet here we are.  Historically the best move has been to put money in as soon as you have it, and leave it in indefinitely. 

I know you think something is different this time and it makes sense to wait it out, but that's ALWAYS the case.  In retrospect it's always easy to look back and say "wow, that was a great time to get in the market!" or "wow, that was a bad time to get in the market! I should have waited in cash for 6 months", but it's never that easy in real time, and statistically the answer is to put your money in the market and leave it, and that turns out to be true time and time again despite all the apprehension you feel in real time. 

This forum is littered with nearly identical arguments, but for various time frames.  Many people in 2013 put forth the same argument.  Stocks are overvalued and this is unsustainable, so I'm taking my ball and going home and I'll get back in when it inevitably crashes, see you suckers at the next crash.  Then the same in 2014.  And 2015. Etc.  You could find dozens and dozens of threads like that on these boards, and across the internet as well.  Everyone one of those people was presented with the argument that you can't successfully market time, and study after study shows this, yet for them it was so obvious things were different this time, despite the fact that they didn't have any information that the entire world didn't already have access to. 

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 38
  • Location: Brisbane
Re: Welp, I'm going to take a stab at timing the market
« Reply #680 on: June 08, 2020, 08:52:42 AM »
A broken clock is a meaningless jumble of atoms to the Amondawa people of the Amazon, who experience sequences of events without needing an abstract concept of time. Likewise, market timing is meaningless to the buy & hold people of the internet hinterland. There is understanding that stock prices go up and down, but no ability to ignore either the statistical likelihood of market timing failure or the haruspices intent on outsmarting the market. A buy and holder can be carefully coaxed out of the safe jungle into modern speculation, but they will still go outside to shit on any dreams of retiring earlier.

v8rx7guy

  • Handlebar Stache
  • *****
  • Posts: 1778
  • Location: Bellingham, WA
Re: Welp, I'm going to take a stab at timing the market
« Reply #681 on: June 08, 2020, 09:08:59 AM »
Ok, I believe this to be an accurate summary of the market timing endeavors:

junioroldtimer sold 892.949 shares on Feb 7, 2019 at $67.59 each converting $60,354.43 into cash

junioroldtimer purchased 907.167 shares on Mar 13, 2020 at $66.14 each for gain in position of $1,294.78

However, he missed out on dividends totaling $1,282.58 during this time, for a market timing loss of $12.19 . BUT, he had the initial $60,354.43 invested in an Ally savings account for 1 year at a rate of 2.3% compounded monthly for a gain of $1,402.88 .

This brings the total position gain of "Market timing attempt #1" to be a gain of$1,390.69

Next, junioroldtimer sold 469.41 shares on Mar 27, 2020 at $63.91 each converting $30,000 into cash.

On Jun 5, 2020 the closing price was $78.85, meaning he had cost himself $7,012.99 after 10 weeks.


This is a potential total endeavor loss of $5,622.30
« Last Edit: June 08, 2020, 09:13:39 AM by v8rx7guy »

Tyson

  • Magnum Stache
  • ******
  • Posts: 2512
  • Age: 48
  • Location: Denver, Colorado
Re: Welp, I'm going to take a stab at timing the market
« Reply #682 on: June 08, 2020, 09:17:51 AM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...

You try to distance yourself from market timing by claiming you aren't some YOLO options trader, but then go on to describe text book market timing. 

So what makes you so much more insightful and clever than literally the entire market?  Everything indicates it's over valued and you shouldn't buy it...yet here we are.  Historically the best move has been to put money in as soon as you have it, and leave it in indefinitely. 

I know you think something is different this time and it makes sense to wait it out, but that's ALWAYS the case.  In retrospect it's always easy to look back and say "wow, that was a great time to get in the market!" or "wow, that was a bad time to get in the market! I should have waited in cash for 6 months", but it's never that easy in real time, and statistically the answer is to put your money in the market and leave it, and that turns out to be true time and time again despite all the apprehension you feel in real time. 

This forum is littered with nearly identical arguments, but for various time frames.  Many people in 2013 put forth the same argument.  Stocks are overvalued and this is unsustainable, so I'm taking my ball and going home and I'll get back in when it inevitably crashes, see you suckers at the next crash.  Then the same in 2014.  And 2015. Etc.  You could find dozens and dozens of threads like that on these boards, and across the internet as well.  Everyone one of those people was presented with the argument that you can't successfully market time, and study after study shows this, yet for them it was so obvious things were different this time, despite the fact that they didn't have any information that the entire world didn't already have access to.

I think the underlying issue with almost all of these people is they simply don't feel comfortable with their money in the market.  So that underlying discomfort causes them to make irrational decisions in order to feel a greater sense of control. 

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #683 on: June 08, 2020, 09:24:24 AM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...

You try to distance yourself from market timing by claiming you aren't some YOLO options trader, but then go on to describe text book market timing. 

So what makes you so much more insightful and clever than literally the entire market?  Everything indicates it's over valued and you shouldn't buy it...yet here we are.  Historically the best move has been to put money in as soon as you have it, and leave it in indefinitely. 

I know you think something is different this time and it makes sense to wait it out, but that's ALWAYS the case.  In retrospect it's always easy to look back and say "wow, that was a great time to get in the market!" or "wow, that was a bad time to get in the market! I should have waited in cash for 6 months", but it's never that easy in real time, and statistically the answer is to put your money in the market and leave it, and that turns out to be true time and time again despite all the apprehension you feel in real time. 

This forum is littered with nearly identical arguments, but for various time frames.  Many people in 2013 put forth the same argument.  Stocks are overvalued and this is unsustainable, so I'm taking my ball and going home and I'll get back in when it inevitably crashes, see you suckers at the next crash.  Then the same in 2014.  And 2015. Etc.  You could find dozens and dozens of threads like that on these boards, and across the internet as well.  Everyone one of those people was presented with the argument that you can't successfully market time, and study after study shows this, yet for them it was so obvious things were different this time, despite the fact that they didn't have any information that the entire world didn't already have access to.

I think the underlying issue with almost all of these people is they simply don't feel comfortable with their money in the market.  So that underlying discomfort causes them to make irrational decisions in order to feel a greater sense of control.

I get that, but what I don't get is why they insist they aren't market timers.  If you don't feel comfortable having your money in the market because you think it's over valued, so you sell and sit in cash, you are literally the textbook definition of market timing.

secondcor521

  • Magnum Stache
  • ******
  • Posts: 3055
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: Welp, I'm going to take a stab at timing the market
« Reply #684 on: June 08, 2020, 09:27:01 AM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...

You try to distance yourself from market timing by claiming you aren't some YOLO options trader, but then go on to describe text book market timing. 

So what makes you so much more insightful and clever than literally the entire market?  Everything indicates it's over valued and you shouldn't buy it...yet here we are.  Historically the best move has been to put money in as soon as you have it, and leave it in indefinitely. 

I know you think something is different this time and it makes sense to wait it out, but that's ALWAYS the case.  In retrospect it's always easy to look back and say "wow, that was a great time to get in the market!" or "wow, that was a bad time to get in the market! I should have waited in cash for 6 months", but it's never that easy in real time, and statistically the answer is to put your money in the market and leave it, and that turns out to be true time and time again despite all the apprehension you feel in real time. 

This forum is littered with nearly identical arguments, but for various time frames.  Many people in 2013 put forth the same argument.  Stocks are overvalued and this is unsustainable, so I'm taking my ball and going home and I'll get back in when it inevitably crashes, see you suckers at the next crash.  Then the same in 2014.  And 2015. Etc.  You could find dozens and dozens of threads like that on these boards, and across the internet as well.  Everyone one of those people was presented with the argument that you can't successfully market time, and study after study shows this, yet for them it was so obvious things were different this time, despite the fact that they didn't have any information that the entire world didn't already have access to.

I think the underlying issue with almost all of these people is they simply don't feel comfortable with their money in the market.  So that underlying discomfort causes them to make irrational decisions in order to feel a greater sense of control.

I get that, but what I don't get is why they insist they aren't market timers.  If you don't feel comfortable having your money in the market because you think it's over valued, so you sell and sit in cash, you are literally the textbook definition of market timing.

What amuses me is those who say that they are not market timers because they have an AA.  Which they regularly change and adjust strategically due to changes in the market.  Not here, but on another FIRE forum.  Um, OK, sure.  Not my monkeys.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #685 on: June 08, 2020, 09:38:52 AM »
Are you implying that rebalancing to maintain an AA is market timing? Or are you talking about the folks that alter their AA, like they maintain 50/50 stocks/bonds until a stock crash in which they decide to now be 70/30?

secondcor521

  • Magnum Stache
  • ******
  • Posts: 3055
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: Welp, I'm going to take a stab at timing the market
« Reply #686 on: June 08, 2020, 10:09:51 AM »
Are you implying that rebalancing to maintain an AA is market timing? Or are you talking about the folks that alter their AA, like they maintain 50/50 stocks/bonds until a stock crash in which they decide to now be 70/30?

The latter.  Especially when they change their AA multiple times per year.

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #687 on: June 08, 2020, 10:38:27 AM »
A broken clock is a meaningless jumble of atoms to the Amondawa people of the Amazon, who experience sequences of events without needing an abstract concept of time. Likewise, market timing is meaningless to the buy & hold people of the internet hinterland. There is understanding that stock prices go up and down, but no ability to ignore either the statistical likelihood of market timing failure or the haruspices intent on outsmarting the market. A buy and holder can be carefully coaxed out of the safe jungle into modern speculation, but they will still go outside to shit on any dreams of retiring earlier.

I love you, Moony.

-W

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Welp, I'm going to take a stab at timing the market
« Reply #688 on: June 08, 2020, 11:48:20 AM »
In one of the "bottom is in" threads, I predicted the market bottom on Mar 19-20.  I pushed to 100% equities, and then switched 1/4th of my portfolio to deeply discounted individual stocks.  I saw COVID-19 spreading 5x a week... but testing ramping up 10x a week.  I have a very clear goal for when I stop market timing: COVID-19 recovery.  I don't know if that's months or years away, I just figured if I buy stocks at -65% discounts, and they recover, they could triple.  Now I wait to see if they go bankrupt, or recover.  It's an odd combination of market timing (switching 1/4th of my portfolio one time) and passive investing (waiting months or years for the value of my initial purchase to be realized, or be wrong).

I've been tracking 3 equal weighted stock picks since March 26 in "An experiment".  With the economy closed, it was common for them to trail their benchmark by -10% to -20%.  Now that the economy is reopening, my experiment is beating it's benchmark by +30%.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 9315
  • Registered member
Re: Welp, I'm going to take a stab at timing the market
« Reply #689 on: June 08, 2020, 11:41:37 PM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...


I did rockclimbing once or twice.  Does that make me a rockclimber?  I was at the time I did the activity, but in general?

jsloan

  • 5 O'Clock Shadow
  • *
  • Posts: 84
Re: Welp, I'm going to take a stab at timing the market
« Reply #690 on: June 09, 2020, 05:32:56 AM »
What does everyone think of my new tattoo?  :-)






MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Welp, I'm going to take a stab at timing the market
« Reply #691 on: June 09, 2020, 05:59:11 AM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...
I did rockclimbing once or twice.  Does that make me a rockclimber?  I was at the time I did the activity, but in general?
Those one or two times, you were rock climbing.
Placing trades based on a future prediction of the market is an act of market timing.

I had index funds for years.  In March I sold based on the future, then I bought based on the future.  That was market timing.  Doesn't matter what I am - it's important to know that action involved market timing, which entails a risk of under performing the market.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #692 on: June 09, 2020, 09:16:31 AM »
So translation:  I am NOT a market timer! I don't believe you can successfully time the market.  However I think this time is different and I can absolutely time the market just this once...


I did rockclimbing once or twice.  Does that make me a rockclimber?  I was at the time I did the activity, but in general?

Do a rock climbing wall once, and no one calls you a rock climber.  Build a fence on your property, and no one calls you a fence builder.  But you fuck one goat...

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4142
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Welp, I'm going to take a stab at timing the market
« Reply #693 on: June 09, 2020, 09:18:46 AM »
...but seriously, it would be pretty hard to take that claim seriously if you were making that claim from atop a rock wall, even if it was the first one you've climbed.

waltworks

  • Magnum Stache
  • ******
  • Posts: 4190
Re: Welp, I'm going to take a stab at timing the market
« Reply #694 on: June 09, 2020, 09:33:30 AM »
What does everyone think of my new tattoo?  :-)



You can get a matching "Cubicle Slave" tat for your other arm!

-W

UnleashHell

  • Walrus Stache
  • *******
  • Posts: 7681
  • Age: 53
  • Location: Florida
  • Chapter IV - A New ... er.. something
Re: Welp, I'm going to take a stab at timing the market
« Reply #695 on: June 09, 2020, 09:39:09 AM »
...but seriously, it would be pretty hard to take that claim seriously if you were making that claim from atop a rock wall, even if it was the first one you've climbed.

first goat or first rock wall?

BicycleB

  • Handlebar Stache
  • *****
  • Posts: 2436
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: Welp, I'm going to take a stab at timing the market
« Reply #696 on: June 09, 2020, 02:31:21 PM »
...but seriously, it would be pretty hard to take that claim seriously if you were making that claim from atop a rock wall, even if it was the first one you've climbed.

first goat or first rock wall?

If @frugalnacho were at the top of the rock wall holding a goat, he'd be screwed either way (so to speak).

BicycleB

  • Handlebar Stache
  • *****
  • Posts: 2436
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: Welp, I'm going to take a stab at timing the market
« Reply #697 on: June 09, 2020, 02:31:58 PM »
What does everyone think of my new tattoo?  :-)



It's amusingly...timed.  :)

UnleashHell

  • Walrus Stache
  • *******
  • Posts: 7681
  • Age: 53
  • Location: Florida
  • Chapter IV - A New ... er.. something
Re: Welp, I'm going to take a stab at timing the market
« Reply #698 on: June 09, 2020, 02:33:46 PM »
...but seriously, it would be pretty hard to take that claim seriously if you were making that claim from atop a rock wall, even if it was the first one you've climbed.

first goat or first rock wall?

If @frugalnacho were at the top of the rock wall holding a goat, he'd be screwed either way (so to speak).
Well someone would be.
The top is in?????

DadJokes

  • Handlebar Stache
  • *****
  • Posts: 1652
Re: Welp, I'm going to take a stab at timing the market
« Reply #699 on: June 09, 2020, 04:02:16 PM »
...but seriously, it would be pretty hard to take that claim seriously if you were making that claim from atop a rock wall, even if it was the first one you've climbed.

first goat or first rock wall?

If @frugalnacho were at the top of the rock wall holding a goat, he'd be screwed either way (so to speak).
Well someone would be.
The top is in?????

Every rancher knows that the best place to screw livestock (or a goat in this case) is at the edge of a cliff. That way the livestock will push back.