Author Topic: Why I am reducing mkt exposure+have been since 2015.  (Read 181460 times)

PathtoFIRE

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #350 on: March 01, 2016, 10:48:48 AM »
In the long run, diversified portfolios of stocks just aren't that risky.

Reido

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #351 on: March 01, 2016, 01:05:20 PM »
If you're going to take that kind of risk - you should have subsequent gains that are appropriate. I wouldn't personally consider 1% above inflation a favorable risk/reward ratio. Basically your last 25 years of gains could be wiped out in a couple months...  Just my opinion

I have a balanced portfolio as a result of this. Nothing WRONG with equities, but I'm looking to FIRE in about 10 years.  I'm a professional so once I leave, I can't go back to my profession easily...

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #352 on: March 01, 2016, 02:59:02 PM »
If you're going to take that kind of risk - you should have subsequent gains that are appropriate. I wouldn't personally consider 1% above inflation a favorable risk/reward ratio. Basically your last 25 years of gains could be wiped out in a couple months...  Just my opinion

I have a balanced portfolio as a result of this. Nothing WRONG with equities, but I'm looking to FIRE in about 10 years.  I'm a professional so once I leave, I can't go back to my profession easily...

Remember, volatility is a good thing during the accumulation phase. Using the same calculations from above:

Total US Bond in USD: $333,170

It's quite telling that even 100% Japanese stocks starting from 1989 beat 100% US bonds.

Reido

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #353 on: March 01, 2016, 07:54:53 PM »
I think there are two advantages to Volatility - One is that DCA'ing into a volatile asset will lower your average cost of purchase by weighting your lower cost purchases more heavily than the higher cost ones.  The other advantage is that if you utilize a portfolio with more than one asset class, as long as the correlations are not 1, then you are forced to buy low and sell high by the process of rebalancing.  IMHO, the process of rebalancing is more valuable than looking to DCA into a single volatile asset class.

Below is a chart of the TSM vs. a portfolio of 50% TSM, 25% Total bond, 25% REIT
Both portfolios are DCA'ed with $100 initial investment and $100 annually added 1972-2014



My point with this is that by engineering a balanced portfolio, you can perform as well as the total stock market, but with far less risk and less severe drawdowns. 

I'm sure many of you understand this, so what could be the advantages of going 100% TSM?  The only thing I can think of is tax efficiency.

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #354 on: March 01, 2016, 10:44:37 PM »
I think there are two advantages to Volatility - One is that DCA'ing into a volatile asset will lower your average cost of purchase by weighting your lower cost purchases more heavily than the higher cost ones.  The other advantage is that if you utilize a portfolio with more than one asset class, as long as the correlations are not 1, then you are forced to buy low and sell high by the process of rebalancing.  IMHO, the process of rebalancing is more valuable than looking to DCA into a single volatile asset class.

Below is a chart of the TSM vs. a portfolio of 50% TSM, 25% Total bond, 25% REIT
Both portfolios are DCA'ed with $100 initial investment and $100 annually added 1972-2014



My point with this is that by engineering a balanced portfolio, you can perform as well as the total stock market, but with far less risk and less severe drawdowns. 

I'm sure many of you understand this, so what could be the advantages of going 100% TSM?  The only thing I can think of is tax efficiency.

That's not the rebalancing effect. That's the "let's use hindsight to put 25% of our portfolio in a subset of the stocks in TSM which nearly doubled the world stock market over this time period effect". We don't know which subset of TSM will outperform in our time period, so we don't make bets like that.

mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #355 on: March 01, 2016, 11:01:06 PM »
@JACK
Just keep in mind if you dollar cost averaged into the Nikkei since 1990 you would still be in terrible shape.

Oh? How terrible? I'm having trouble finding charts going back more than 10 years, especially including dividends.

Im pretty sure that if one of you tech guys build a site that has charts that overlap monthly investing vs lump sum, and with and without dividends using transparent layers so you can see it all with one glance--- you could make some money. I would do it if if I had the skills. I don't.

Reido

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #356 on: March 02, 2016, 07:40:29 AM »
@mrpercentage
I agree. I think that'd be a very useful tool. I'd like to know on a monthly basis as well... My instincts tell me that the DCA would be more effective, but I don't have the data to support that idea

@ interest compound
I don't see REITs as JUST being a part of total TSM. Obviously, the market does include REITs, but they have a ton of characteristics that cause me to think of them as their own asset class - the way they are taxed, their use of leverage, their exclusive utilization of real estate, etc.  Many other posters weight their portfolios based on capitalization I.e. Heavy on small cap value and so on...  I don't see anything wrong with weighting REITs in the same way

If Overweighting REITs is taboo, the what do you consider an alternative asset class?

Aphalite

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #357 on: March 02, 2016, 08:01:33 AM »
If you want to compare DCA vs Lump Sum, just use this:

DCA: http://www.buyupside.com/calculators/dollarcostave.php
Lump: http://longrundata.com/

Not sure if they have data off Nikkei, but if Yahoo Finance has it, they should have it too, you just need to find the right ticker

Reido

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #358 on: March 02, 2016, 09:31:56 AM »
That's very helpful. I appreciate it!

BlankCheck

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #359 on: March 03, 2016, 05:54:59 PM »
But I bet there are a few people now thinking about putting some money back in the market based on the increase.

No.

This is why market timing is tough.  The instincts are so often wrong.  If you think you've got the timing nailed down, ask yourself how you missed (or gave up on) a 200% annual return. 

What?  Who got, and who gave up, a 200% annual return?  If you were in the market during the downturn, you haven't made any of that gain - it just offset your recent losses (and not even completely at this point). 

This is rather amusing.  A short term dip in the market is something to shrug off, but a short term spike is MISSION ACCOMPLISHED!!! Peoples' crowing in here betrays their alleged investment philosophy.
« Last Edit: March 03, 2016, 06:06:32 PM by BlankCheck »

BlankCheck

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #360 on: March 03, 2016, 05:57:04 PM »
What would it take for you to stop buying?

Extreme example: the next 5 years see a raging bull market with millions of new investors pouring in. It's February 2021 and the S&P500 has a P/E > 80. Are you still buying?

We'd all be FIRE'd drinking mai tais on a beach at the MMM Tahiti Meet Up. It would be time to sell and live off the proceeds. :)

You and everyone else would be selling.  And that's the problem.  To sell, there has to be a buyer.  If there aren't buyers...



I'll admit, there is some point where I'd say "screw the efficient market hypothesis; y'all have clearly all gone completely insane" and quit buying. I don't know exactly what P/E ratio that would be at, but it would be fairly obvious because everyone would be comparing the situation to 1989 Japan and yelling about tulips.

So, calling bottoms is impossible, but calling tops is "fairly obvious"...
« Last Edit: March 03, 2016, 05:58:59 PM by BlankCheck »

Cycling Stache

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #361 on: March 03, 2016, 08:10:44 PM »
But I bet there are a few people now thinking about putting some money back in the market based on the increase.

No.

This is why market timing is tough.  The instincts are so often wrong.  If you think you've got the timing nailed down, ask yourself how you missed (or gave up on) a 200% annual return. 

What?  Who got, and who gave up, a 200% annual return?  If you were in the market during the downturn, you haven't made any of that gain - it just offset your recent losses (and not even completely at this point). 

This is rather amusing.  A short term dip in the market is something to shrug off, but a short term spike is MISSION ACCOMPLISHED!!! Peoples' crowing in here betrays their alleged investment philosophy.

This response missed the point.

If a person can time the market, then time the market.  Catching a 7% gain in a 2-week period is a no-brainer.  When you predict that move has run its course, then short the market, or move into the next sector that's going to surge.  That's exactly what market timing is.  Maximize the return you can make with each successful market timing move, and make as many moves as you can that you can successfully predict.

The reason most people don't do that is because they can't.  So the softer version of market timing that is prevalent here is to say that the market seems expensive and look how smart I am not investing now.  But unless you can predict the bottom and buy in at the right time, predicting a downturn in the market at some time in the future is not successfully calling the market; it's avoiding investing so you can feel smart if the market later goes down.

The problem is that study after study shows people don't time the market correctly.  So the winners are the people who just keep investing.  Because over the long term, the market makes money.  And the people who invest in the market consistently--even when it seems pricey--do better over the long term than those trying to time it, or those not investing at all.

So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

deeshen13

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #362 on: March 03, 2016, 09:09:03 PM »
Time in the market >>> Timing the market.

mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #363 on: March 03, 2016, 10:23:10 PM »
So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

You are wrong. I did it right here.

http://forum.mrmoneymustache.com/investor-alley/a-serious-investment-decision/

That said, I would not recommend this approach (always using large lump sums) as a main investment plan. I used the coin to help choose between two investments. I picked one investment because I wanted it to be potent and didn't want to water it down between two.
I got over 30% in six months depending on what final reference point you want to use.
So I did it successfully and have several times but woud not recommend it in general because you can get burned and if you don't have the conviction you will take the loss.

I did it again right here--- thats 2 for 2

http://forum.mrmoneymustache.com/investor-alley/kinder-morgan/

I did both with big money for me. Keeping it potent Sir.

Safe is diversification. I wasn't playing safe. You can get burned doing this.

BlankCheck

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #364 on: March 03, 2016, 10:31:45 PM »
If a person can time the market, then time the market.  Catching a 7% gain in a 2-week period is a no-brainer.  When you predict that move has run its course, then short the market, or move into the next sector that's going to surge.  That's exactly what market timing is.  Maximize the return you can make with each successful market timing move, and make as many moves as you can that you can successfully predict.

I should clarify because I know there's 8 long pages here.  I'm not talking about market timing in the sense of week to week, although maybe others in the thread were.


So the softer version of market timing that is prevalent here is to say that the market seems expensive and look how smart I am not investing now.  But unless you can predict the bottom and buy in at the right time, predicting a downturn in the market at some time in the future is not successfully calling the market; it's avoiding investing so you can feel smart if the market later goes down.

Well that's close, but it has nothing to do with trying to look or feel smart.  I just don't feel like putting my life savings into an investment that has been artificially inflated for seven years running.  I don't have to predict the bottom.  If I call any bottom that's lower than when I got out (to a degree that makes up for lost dividends etc), it's a win.  If I call a bottom of S&P 1400, and it goes down further to 1200, it's still better than buying at 1900.

The problem is that study after study shows people don't time the market correctly.  So the winners are the people who just keep investing.  Because over the long term, the market makes money.  And the people who invest in the market consistently--even when it seems pricey--do better over the long term than those trying to time it, or those not investing at all.

Perhaps it's always been true.  But it's a different world.  What happened in the markets in 1910 or 1950 has no bearing on today. It's not so much that I'm not bullish on the market.  It's that I'm not bullish on the world.  Not by a long shot.




Time in the market >>> Timing the market.

It's political season, so I guess it's the time for slogans.  But to answer you, perhaps I don't have as much time as you have.

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #365 on: March 04, 2016, 03:12:07 AM »
So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

You are wrong. I did it right here.

http://forum.mrmoneymustache.com/investor-alley/a-serious-investment-decision/

That said, I would not recommend this approach (always using large lump sums) as a main investment plan. I used the coin to help choose between two investments. I picked one investment because I wanted it to be potent and didn't want to water it down between two.
I got over 30% in six months depending on what final reference point you want to use.
So I did it successfully and have several times but woud not recommend it in general because you can get burned and if you don't have the conviction you will take the loss.

I did it again right here--- thats 2 for 2

http://forum.mrmoneymustache.com/investor-alley/kinder-morgan/

I did both with big money for me. Keeping it potent Sir.

Safe is diversification. I wasn't playing safe. You can get burned doing this.

You're 2 for 2 with your last 2 calls. That's great! What about your last 10? 20? 100?

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #366 on: March 04, 2016, 03:15:42 AM »
If a person can time the market, then time the market.  Catching a 7% gain in a 2-week period is a no-brainer.  When you predict that move has run its course, then short the market, or move into the next sector that's going to surge.  That's exactly what market timing is.  Maximize the return you can make with each successful market timing move, and make as many moves as you can that you can successfully predict.

I should clarify because I know there's 8 long pages here.  I'm not talking about market timing in the sense of week to week, although maybe others in the thread were.


So the softer version of market timing that is prevalent here is to say that the market seems expensive and look how smart I am not investing now.  But unless you can predict the bottom and buy in at the right time, predicting a downturn in the market at some time in the future is not successfully calling the market; it's avoiding investing so you can feel smart if the market later goes down.

Well that's close, but it has nothing to do with trying to look or feel smart.  I just don't feel like putting my life savings into an investment that has been artificially inflated for seven years running.  I don't have to predict the bottom.  If I call any bottom that's lower than when I got out (to a degree that makes up for lost dividends etc), it's a win.  If I call a bottom of S&P 1400, and it goes down further to 1200, it's still better than buying at 1900.

The problem is that study after study shows people don't time the market correctly.  So the winners are the people who just keep investing.  Because over the long term, the market makes money.  And the people who invest in the market consistently--even when it seems pricey--do better over the long term than those trying to time it, or those not investing at all.

Perhaps it's always been true.  But it's a different world.  What happened in the markets in 1910 or 1950 has no bearing on today. It's not so much that I'm not bullish on the market.  It's that I'm not bullish on the world.  Not by a long shot.




Time in the market >>> Timing the market.

It's political season, so I guess it's the time for slogans.  But to answer you, perhaps I don't have as much time as you have.

What you don't seem to understand, is that the vast majority of the time you end up getting back in higher than you got out. The real problem here is your portfolio has more risk than you're willing to take. Nothing wrong with that, especially if you don't have a long time horizon.. You'd be much better off simply moving to something like 20/80 stocks/bonds and leaving it alone.

Jack

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #367 on: March 04, 2016, 09:38:22 AM »
I'll admit, there is some point where I'd say "screw the efficient market hypothesis; y'all have clearly all gone completely insane" and quit buying. I don't know exactly what P/E ratio that would be at, but it would be fairly obvious because everyone would be comparing the situation to 1989 Japan and yelling about tulips.

So, calling bottoms is impossible, but calling tops is "fairly obvious"...

Who said anything about calling the top? I am 99.9999999999% certain in that situation that I'd miss it by a wide margin, and the other 0.0000000001% would be due to pure dumb luck. That's why I'd only even consider attempting it in the most extreme of circumstances.

BBub

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #368 on: March 04, 2016, 09:53:02 AM »
A pretty good indicator of bottoms seems to be when threads like this start gaining popularity... say Feb 6th-12th.  I may start a side-fund which invests an extra $1k each time a new thread appears with a title such as:

"talk me off the ledge"
"I've been saving for one whole year & I'm LOSING MONEY"
"F@#$%^@#@#%$ the stock market"
"I've been in cash all along because I'm so smart"
"WE'RE ALL DOOMED!!!"

capitalninja

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #369 on: March 04, 2016, 09:56:11 AM »
For anyone that decided to *increase* their market exposure during the first 6 weeks of the year (when everyone else was running for the hills) you should be happy that you did so.

Metric Mouse

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #370 on: March 04, 2016, 11:19:44 AM »
For anyone that decided to *increase* their market exposure during the first 6 weeks of the year (when everyone else was running for the hills) you should be happy that you did so.

Why would you do that!? You can't time the market!  Don't even bother to buy in dips - just DCA into indexes, and you'll be free to retire in 30 years like everyone else.

Mr. Green

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #371 on: March 04, 2016, 11:20:35 AM »
This thread is still alive? lol.

GuitarStv

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #372 on: March 04, 2016, 11:23:43 AM »
For anyone that decided to *increase* their market exposure during the first 6 weeks of the year (when everyone else was running for the hills) you should be happy that you did so.

I rebalanced all my (and my wife's) funds the first week of January, and am happy that I did so.

Basenji

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #373 on: March 04, 2016, 01:40:30 PM »
A pretty good indicator of bottoms seems to be when threads like this start gaining popularity... say Feb 6th-12th.  I may start a side-fund which invests an extra $1k each time a new thread appears with a title such as:

"talk me off the ledge"
"I've been saving for one whole year & I'm LOSING MONEY"
"F@#$%^@#@#%$ the stock market"
"I've been in cash all along because I'm so smart"
"WE'RE ALL DOOMED!!!"

I do this. I see the threads and say to DH, "Wanna get some more Vanguard?"

deeshen13

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #374 on: March 04, 2016, 03:44:06 PM »
I'm firmly on the side of "time in the market > timing the market", but it is worth noting at this point that the "don't time the market" guys who are celebrating buying dips are doing exactly that, timing the market.

Sol is the most consistent on this front: adamantly buying all the time, all the way down, all the way up - with a big ole indifference.

opnfld

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #375 on: March 04, 2016, 04:01:20 PM »
I'm firmly on the side of "time in the market > timing the market", but it is worth noting at this point that the "don't time the market" guys who are celebrating buying dips are doing exactly that, timing the market.

Sol is the most consistent on this front: adamantly buying all the time, all the way down, all the way up - with a big ole indifference.
I buy all all the time - down and up.  But I also rebalance whenever my target allocation shifts by 4% in either direction.  Which had me move ~$30K from bonds to stocks in the last 6 weeks.  I don't consider it market timing, but it does allow me to buy the dips and celebrate all the same.

Cycling Stache

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #376 on: March 04, 2016, 06:23:21 PM »
So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

You are wrong. I did it right here.

http://forum.mrmoneymustache.com/investor-alley/a-serious-investment-decision/

That said, I would not recommend this approach (always using large lump sums) as a main investment plan. I used the coin to help choose between two investments. I picked one investment because I wanted it to be potent and didn't want to water it down between two.
I got over 30% in six months depending on what final reference point you want to use.
So I did it successfully and have several times but woud not recommend it in general because you can get burned and if you don't have the conviction you will take the loss.

I did it again right here--- thats 2 for 2

http://forum.mrmoneymustache.com/investor-alley/kinder-morgan/

I did both with big money for me. Keeping it potent Sir.

Safe is diversification. I wasn't playing safe. You can get burned doing this.

Here are some of your stock picks in this forum the last 6 months, when you mentioned them, and how they've done since:

Ford (Oct. 2015) -13%
Apple (Oct. 2015) -13%
Disney (Oct. 2015) -14%
Exxon (Sept. 2015) 0%
Conoco (Sept. 2015) -15%

2 for 2?  I'm not trying to pick on you.  But these kinds of examples of "successful stock picking" can be misleading.

iamlindoro

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #377 on: March 04, 2016, 06:40:33 PM »
So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

You are wrong. I did it right here.

http://forum.mrmoneymustache.com/investor-alley/a-serious-investment-decision/

That said, I would not recommend this approach (always using large lump sums) as a main investment plan. I used the coin to help choose between two investments. I picked one investment because I wanted it to be potent and didn't want to water it down between two.
I got over 30% in six months depending on what final reference point you want to use.
So I did it successfully and have several times but woud not recommend it in general because you can get burned and if you don't have the conviction you will take the loss.

I did it again right here--- thats 2 for 2

http://forum.mrmoneymustache.com/investor-alley/kinder-morgan/

I did both with big money for me. Keeping it potent Sir.

Safe is diversification. I wasn't playing safe. You can get burned doing this.

Here are some of your stock picks in this forum the last 6 months, when you mentioned them, and how they've done since:

Ford (Oct. 2015) -13%
Apple (Oct. 2015) -13%
Disney (Oct. 2015) -14%
Exxon (Sept. 2015) 0%
Conoco (Sept. 2015) -15%

2 for 2?  I'm not trying to pick on you.  But these kinds of examples of "successful stock picking" can be misleading.

And to put it in context, see attached.

mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #378 on: March 04, 2016, 07:02:56 PM »
So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

You are wrong. I did it right here.

http://forum.mrmoneymustache.com/investor-alley/a-serious-investment-decision/

That said, I would not recommend this approach (always using large lump sums) as a main investment plan. I used the coin to help choose between two investments. I picked one investment because I wanted it to be potent and didn't want to water it down between two.
I got over 30% in six months depending on what final reference point you want to use.
So I did it successfully and have several times but woud not recommend it in general because you can get burned and if you don't have the conviction you will take the loss.

I did it again right here--- thats 2 for 2

http://forum.mrmoneymustache.com/investor-alley/kinder-morgan/

I did both with big money for me. Keeping it potent Sir.

Safe is diversification. I wasn't playing safe. You can get burned doing this.

Here are some of your stock picks in this forum the last 6 months, when you mentioned them, and how they've done since:

Ford (Oct. 2015) -13%
Apple (Oct. 2015) -13%
Disney (Oct. 2015) -14%
Exxon (Sept. 2015) 0%
Conoco (Sept. 2015) -15%

2 for 2?  I'm not trying to pick on you.  But these kinds of examples of "successful stock picking" can be misleading.

And to put it in context, see attached.

Ford-- sold
Apple--sold
Disney-- purchased at 92
Exxon-- I am up and still buying with a 3.8% yield
Conoco-- still down a little but it just exploded to my average purchase price today

Throw it at me-- Im up 33% in NM today-- thats profit-- all of it. Want see the Robinhood pic?

mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #379 on: March 04, 2016, 07:18:32 PM »
This is a very small holding. All of my Robihoods is because it is my speculation account. That said BOOM!!!!

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #380 on: March 04, 2016, 07:53:36 PM »
So the point was not that a 7% growth in my portfolio was exciting or meaningful.  It's that the failure of the market timers to capture that growth highlights the fallacy of the (unfortunately) persistent that people can consistently time and beat the market.

You are wrong. I did it right here.

http://forum.mrmoneymustache.com/investor-alley/a-serious-investment-decision/

That said, I would not recommend this approach (always using large lump sums) as a main investment plan. I used the coin to help choose between two investments. I picked one investment because I wanted it to be potent and didn't want to water it down between two.
I got over 30% in six months depending on what final reference point you want to use.
So I did it successfully and have several times but woud not recommend it in general because you can get burned and if you don't have the conviction you will take the loss.

I did it again right here--- thats 2 for 2

http://forum.mrmoneymustache.com/investor-alley/kinder-morgan/

I did both with big money for me. Keeping it potent Sir.

Safe is diversification. I wasn't playing safe. You can get burned doing this.

Here are some of your stock picks in this forum the last 6 months, when you mentioned them, and how they've done since:

Ford (Oct. 2015) -13%
Apple (Oct. 2015) -13%
Disney (Oct. 2015) -14%
Exxon (Sept. 2015) 0%
Conoco (Sept. 2015) -15%

2 for 2?  I'm not trying to pick on you.  But these kinds of examples of "successful stock picking" can be misleading.

And to put it in context, see attached.

Ford-- sold
Apple--sold
Disney-- purchased at 92
Exxon-- I am up and still buying with a 3.8% yield
Conoco-- still down a little but it just exploded to my average purchase price today

Throw it at me-- Im up 33% in NM today-- thats profit-- all of it. Want see the Robinhood pic?

Nice! Have you considered starting your own thread so you can live-post your trades?

mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #381 on: March 04, 2016, 08:02:18 PM »
I'm actually leaning to the Buffett approach. I traded more last year. Will trade hundreds this year but the thousands will remain in long to life holds. I'm not an advocate for trading but a firm believer in timing

And just for the record-- I still believe in Ford and Apple. Wall Street is still trying to get used to Apples transition to stalwart from growth and too many managers got burned with autos in the financial crisis. With the geopolitics their love is delayed but it will come. Thats my final thought on the matter.
« Last Edit: March 05, 2016, 01:01:47 AM by mrpercentage »

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #382 on: March 05, 2016, 06:26:09 AM »
Ford-- sold
Apple--sold

Come on, man.  You can see why people feel like you're all over the place, right?  What do you mean you sold Apple and Ford?

Here are some of your comments in the last year on Apple and Ford:

Apple
Apple-- they are an unstoppable force. For the next 5 years at least. Apple watch is sold out-- proving the doubters wrong once again.

Im sticking with Apple and always will.

Ford
Ford because despite popular opinion they have watched everyone else die and they are still here.

Dividend purchasing well, Im buying Ford.. its got a 3.7% yield. It just did a recall. It's price isn't over inflated because Warren Buffet is sitting in it (GM). It has been around for over a hundred years. Im sure it will do just fine. Shit Im driving one. They must be doing something right.

Navios Maritime Holdings (NM)
This is the one you cite as the counterpoint?  Seriously?  You're posting about a $60 (unrealized) profit as proof of stock picking prowess?  And by the way, you've mentioned NM a number of times, including claiming that you owned it back in May 2015.  It's down 67% since then!

Analysis
The issue (for the rest of us) is not your jumping into and out of these stocks.  It's that it highlights the behavioral inconsistencies, and how hard it is to see them when you're the one doing it.  You post repeatedly about how some of these are buy and hold, never sell, long-term investments, mention them again in the last 4 months in threads recommending specific stocks, and then sell them? 

Then cite a $60 (unrealized) profit in a different stock that's down 67% since you first claimed to own it as evidence of stock picking prowess?

Your actions aren't unique.  You're like me and pretty much everyone else--the decisions you make based on gut and instinct are ones that--statistically--tend to lead to lower returns.  How can a buy and hold forever stock suddenly become an oh yeah I sold that after a couple months because of my next great buy and hold forever stock?  Because we don't make rational decisions when investing on gut feel.

mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #383 on: March 05, 2016, 07:05:43 AM »
Everyone knows when and why I sold Ford and I did it the same time I sold Apple.

As far as NM. Traders usually troll specific stocks. It's what they do. I am no exemption to this as you have to know what you are dealing with. Some do gold While I do stocks highly effected by commodities.

I have been open about everything I have done. It's not my fault you all think I am a total nut. I can point to posts that say I was throwing in half my emergency fund or 20% of everything I have and its stamped and right there.
What is that up 30% and 20%?

I suppose you would be more impressed if I threw $10,000 into NM. I could but then you would rant about how stupid that was. And you would be right because I do not want to own it for 20 years and 20 years is my safety net.
End of line

Seppia

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Why I am reducing mkt exposure+have been since 2015.
« Reply #384 on: March 05, 2016, 07:55:26 AM »
This thread keeps on giving LOLs at an astounding rate.

Retire-Canada

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #385 on: March 05, 2016, 10:24:19 AM »
Nice! Have you considered starting your own thread so you can live-post your trades?

^^ this is a great idea. :)

BlankCheck

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #386 on: March 05, 2016, 11:16:17 AM »
The real problem here is your portfolio has more risk than you're willing to take.

Right.

Nothing wrong with that, especially if you don't have a long time horizon..

Right. 

You'd be much better off simply moving to something like 20/80 stocks/bonds and leaving it alone.

Exactly. 

So, what's the problem?  Even though I "don't seem to understand", we agree on a lot!


A pretty good indicator of bottoms seems to be when threads like this start gaining popularity... say Feb 6th-12th.  I may start a side-fund which invests an extra $1k each time a new thread appears"

You mean, market timing?


For anyone that decided to *increase* their market exposure during the first 6 weeks of the year (when everyone else was running for the hills) you should be happy that you did so.

You mean, market timing?

I rebalanced all my (and my wife's) funds the first week of January, and am happy that I did so.

You mean, market timing?

I do this. I see the threads and say to DH, "Wanna get some more Vanguard?"

You mean, market timing?

I don't consider it market timing, but it does allow me to buy the dips and celebrate all the same.

You mean, market timing?

This thread is still alive? lol.

Partly thanks to you!

This thread keeps on giving LOLs at an astounding rate.

Isn't that the truth!

Seppia

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #387 on: March 05, 2016, 06:29:00 PM »

This thread keeps on giving LOLs at an astounding rate.

Isn't that the truth!

Absolutely.
The only thing that surpasses the  extremism of the most intransigent anti-timers is the craziness of some market timers.

I don't understand why there cannot be a middle ground where at the very extremes of valuation one can tilt slightly AA.

I'm getting boring with the same example all the time, but it would seem smart to me, In a scenario like today where

- Us market is objectively high (doesn't mean it cannot go higher)
- US dollar is at an all time high
 
To buy a little more international than usual.


Seppia

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #388 on: March 05, 2016, 06:36:02 PM »
Reality is we're splitting hairs here, assuming everybody here buys and never sells (which I assume most of us do) it's only going to be between good and great.
I mean we will still fare better than 90% of the rest of investors.

When I do my semi-timing (i.e. buying more euro now) if I never sell I might do slightly better or slightly worse than those who stick ALL. THE. TIME. to the same AA, but should still do ok at least.

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #389 on: March 05, 2016, 06:47:30 PM »
- US dollar is at an all time high

The US dollar is not at an all-time high. Not against the EUR anyway:



Or the Canadian Dollar:



Looking at the US Dollar Index, where it plots the US Dollar against all world currencies, it's nowhere close to being at an all-time high:



Maybe one reason why people shouldn't market-time, is because they never know what they're talking about. In this thread alone we've already seen many examples of this.
« Last Edit: March 05, 2016, 06:49:41 PM by Interest Compound »

Seppia

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #390 on: March 05, 2016, 07:00:06 PM »
My bad I meant against the euro. I live in Europe so I tend to be euro centric in my reasonings.
Where are you getting your numbers? The euro did not exist in the nineties.

"Highest in thirteen years" seems pretty high anyways, especially combined with the difference in valuation (eur/us).

Or are you negating this?

Interest Compound

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #391 on: March 05, 2016, 07:17:14 PM »
Your actions aren't unique.  You're like me and pretty much everyone else--the decisions you make based on gut and instinct are ones that--statistically--tend to lead to lower returns.  How can a buy and hold forever stock suddenly become an oh yeah I sold that after a couple months because of my next great buy and hold forever stock?  Because we don't make rational decisions when investing on gut feel.

I was about to make a post reiterating my prior post back on page 1, about the debates not being worth it:

http://forum.mrmoneymustache.com/investor-alley/why-i-am-reducing-mkt-exposurehave-been-since-2015/msg967924/#msg967924

But you know what? It IS worth it. I'm sure our debates here have helped many a newbie steer clear of mrpercentage, and maybe (just MAYBE) helped them avoid his massive mistakes. And if not? It sure helps reinforce our OWN convictions! When I'm old and beginning to lose my mental capacities, I'll think back and say to myself:


mrpercentage

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #392 on: March 05, 2016, 07:27:44 PM »
Im flattered.

What huge mistakes? ---- selling Apple and Ford to put $7,000 down on a new car?

Yeah you should keep more dry powder so you don't have to do that. I will throw Apple in your face when it hits $150. You better believe I will.

I will headline that shit---- Ka-BOOM!

steveo

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #393 on: March 05, 2016, 08:20:20 PM »
Im flattered.

What huge mistakes? ---- selling Apple and Ford to put $7,000 down on a new car?

Yeah you should keep more dry powder so you don't have to do that. I will throw Apple in your face when it hits $150. You better believe I will.

I will headline that shit---- Ka-BOOM!

I don't get these comments. Do you understand what indexing means. We get a little bit of the gains and the losses of individual stocks. Overall though we get average returns. Average returns will on the whole beat active investors.

So the odds over our entire portfolio vs active traders like yourself are in our favour. You can't throw anything in anyone's faces because over the long term we should come out ahead. If you get some big wins great. I hope you do. It shouldn't though impact my position at all.

It's like comparing asset allocations. Yes 100% stock positions will beat other positions at times but at other times they won't. It's not something that you need to compare.

Apart from all of that if I save more than you or you more than me it will probably have a much bigger impact of getting to our financial goals including FIRE. Even that isn't really comparable because you may choose for instance to have 10 kids and live in an 11 bedroom house. Actually I'll qualify this a little - I think you have a greater risk of losing money so maybe you need to save more or amend your investing approach.
« Last Edit: March 05, 2016, 08:26:14 PM by steveo »

BlankCheck

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #394 on: March 05, 2016, 08:22:45 PM »
Seppia, no worries.  I'm just having fun here.  We agree on this:

- Us market is objectively high (doesn't mean it cannot go higher)

My reaction to the over-valued market is more extreme than others, obviously.  But there are some contradictions in some of the anti-marketing-timing chiding in here, including in the Buffett thread, where Buffett was lauded for both saying market timers are silly, and for increasing his cash holdings at times while waiting for better investment opportunities.

Telecaster

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #395 on: March 05, 2016, 09:09:39 PM »
My reaction to the over-valued market is more extreme than others, obviously.  But there are some contradictions in some of the anti-marketing-timing chiding in here, including in the Buffett thread, where Buffett was lauded for both saying market timers are silly, and for increasing his cash holdings at times while waiting for better investment opportunities.

Hmm, not a great example.  Buffett looks at the value of individual companies.  Buying one company definitely isn't timing "the market"  because one company isn't the market.   And often the companies he buys or invests in aren't even publicly traded.  Not even being part of the market  pretty much by definition means he can't be timing the market.

In 2015,  when the market timers told us to stay away, Buffett bought a whole bunch of stuff.  PCP notably which was his largest acquisition to date, Duracell, a chain of car dealerships, just to name a few, and the BRK subsidiaries made 29 bolt-on acquisitions on top of that.   If he's timing the market, he's doing it exactly wrong.


Seppia

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Why I am reducing mkt exposure+have been since 2015.
« Reply #396 on: March 05, 2016, 09:37:27 PM »
I disagree
Buffett said over and over again "be greedy when others are fearful, and fearful when others are greedy", which is, uh, market timing.
He buys single companies, saying he tries to do so when they are cheap or at a fair price. He repeatedly stated he wouldn't buy an overvalued asset, no matter how great the underlying business is.

He is Warren Fucking Buffett though (I would suggest he makes "Fucking" an actual part of his name for added badassery), so even if some geniuses discount what he achieved as "lucky", I would not use him as a reference.

The USA economy is a fantastic asset, the most beautiful of all in my opinion.
It's just sold very expensive today, especially if you're buying in euros.
« Last Edit: March 05, 2016, 09:40:20 PM by Seppia »

BlankCheck

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #397 on: March 05, 2016, 09:53:32 PM »
Hmm, not a great example.  Buffett looks at the value of individual companies.  Buying one company definitely isn't timing "the market"  because one company isn't the market.   And often the companies he buys or invests in aren't even publicly traded.  Not even being part of the market  pretty much by definition means he can't be timing the market.

In 2015,  when the market timers told us to stay away, Buffett bought a whole bunch of stuff. PCP notably which was his largest acquisition to date, Duracell, a chain of car dealerships, just to name a few, and the BRK subsidiaries made 29 bolt-on acquisitions on top of that.   If he's timing the market, he's doing it exactly wrong.

Seppia beat me to it, but yeah, you're adding valid nuance here but the bold above goes with the "buy when others are fearful and sell".  Buffett certainly doesn't subscribe to "just buy buy buy with every dollar because everything always goes up".  Granted I believe he said he doesn't ever sell the market.  But to also be fair, you and I don't have access to (and influence with) Congress like he does.

But anyway, the argument doesn't really get us anywhere.  I was just having fun pointing out the silliness of "you dumb market timers! Every time you sell I buy even more!" 

BBub

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #398 on: March 06, 2016, 09:44:43 AM »
A pretty good indicator of bottoms seems to be when threads like this start gaining popularity... say Feb 6th-12th.  I may start a side-fund which invests an extra $1k each time a new thread appears"

You mean, market timing?

Yeah.  Pretty foolish, wouldn't you agree?

GuitarStv

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Re: Why I am reducing mkt exposure+have been since 2015.
« Reply #399 on: March 06, 2016, 12:05:59 PM »
I rebalanced all my (and my wife's) funds the first week of January, and am happy that I did so.

You mean, market timing?

Not really, no.

In addition to regular monthly contributions, I've rebalanced my portfolio every January and June for years now.  It doesn't mean that I can't be happy to be buying stocks when they're low.