Why I am reducing mkt exposure+have been since 2015.

[Lexaholik]

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.

Spot on. I read a lot of stuff on investing and once in a while I find a super insightful post--this is one of them.

[BlankCheck]

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.

Can I be happy that I sold when stocks are high?

Isn't that the whole point?

Isn't that what you do when you rebalance after stocks have gone up?

Yeah.  Pretty foolish, wouldn't you agree?

The wording of your comment, and this entire thread, reminds me of this classic movie exchange:

DUKE: "So you're aware of all your behavior, yet you continue to do things that aren't good for you.  Sounds sort of foolish, doesn't it, Jack?"

JACK: "No.  Stealing 15 million dollars from Jimmy Serrano sounds foolish."

DUKE: "I didn't think I'd get caught."

JACK: "Now that's living in denial."

DUKE: "I'm aware of that."

JACK: "Oh, so, you're aware of all your behavior, yet you continue to do things that aren't good for you.  Sounds foolish to me, doesn't it Jon?"

Ah, Midnight Run...

[BlankCheck]

Sorry, duplicate post...

[MrDelane]

BlankCheck - just one question for you.....




Why aren't you popular with the Chicago Police Department?

[BlankCheck]

Why don't we have emoticons on here???  Thank you MrDelane, that was very nicely played.  It's been quite a while since I literally LOL'd at the computer!



Regarding my investment strategy of sitting on the sidelines, I guess I can summarize it this way:



THESE THINGS GO DOWN!  THESE THINGS GO DOWN!!!!


IT'S.... IT'S TOO BIG!!!

[GuitarStv]

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.

Can I be happy that I sold when stocks are high?

Isn't that the whole point?

Isn't that what you do when you rebalance after stocks have gone up?

Absolutely.  Every time I rebalance I'm happy, because I'm either buying stocks on discount or I'm banking some profit into bonds.

[mrpercentage]

[mrpercentage]

Oh it's realized now. Booyah CNBC! Booyah turtles!

[protostache]

Oh it's realized now. Booyah CNBC! Booyah turtles!

Congratulations. You should post this in a Journal thread.

[Lexaholik]

I'll give you a personal example, not stock related.  My family has been in real estate for almost 40 years.  We have a small real estate brokerage.  Around 2005 and 2006, my father, with 30 years of real estate experience, told me that housing was going to crash.  He knew that prices were unsustainable and that mortgages were being given out like candy.  I was 22 or 23 back then and wanted to buy a house badly.  He told me over and over again to wait for the right time.  This was painful for me as I watched housing prices keep rising for the next several years.  Well, we obviously know what happened to the housing market.  In 2009 I bought a 3-unit for myself (for 122k) and 4 other single family houses that I flipped and sold for good profits shortly after.  That 3-unit is now worth 250k and I plan on holding it forever.  I also bought 2 condos to rent out in the past year that I plan on holding forever because while the housing market isn't cheap, its fair in my opinion.  I don't mind buying during fair or cheap periods.  So yeah, if I would have bought it for 300k in 2008, its rough value around then, I wouldn't have lost much money by now and I could have collected rent the entire time.  But, because I waited for the right buying period, my returns are much, much greater.  I hope this provides some perspective.

My whole point is don't buy or sell when it is obvious that the market is expensive.  Expensive markets can get even more expensive for very, very long periods of time so stay in with what you already have in the market.  Just don't add until it's fairly priced again.  And I'll say it once again, this current market is very, very obviously expensive.  When even John Bogle thinks the market is going to give poor returns for the near future, it's hard to argue with.  http://www.marketwatch.com/story/john-bogle-says-you-wont-make-much-money-from-stocks-2015-11-05

This makes a lot of sense but I wonder if it's applicable to stock investing. Real estate investment is more similar to starting your own niche business because it's so dependent on geographic dependent trends. So someone with expertise in that geographic location can evaluate whether something is overvalued or undervalued. The stock market is different--it's far more difficult to tell if the market is overvalued or undervalued. You can convince yourself that it's expensive based on ratios or statements from authoritative sources, but I don't think it's that clear cut.

Now that the market has recovered a bit, I'm curious if the overvalued crowd (e.g. Cougar, Keith123, and others) still feel the same way they did in early February. FYI-my point wasn't necessarily that it was a good idea to buy at that time--just that it's very hard to tell when the stock market is overvalued or undervalued.

[Seppia]

It's actually easy to tell if it's overvalued or undervalued, especially in extreme periods, there's broad data on this.
What's hard to tell is what it will do in the short term.

[Seppia]

Not that the answer is anything other than stay the course and never sell btw.

[Lexaholik]

Not that the answer is anything other than stay the course and never sell btw.

Even though I don't agree that it's easy to tell if the market's overvalued/undervalued, I definitely, absolutely agree with you on this.

[Seppia]

When ALL the main indicators (Shiller PE, Warren Buffett's "stock to GDP ratio", etc) scream "overvalued", probably it's fair to think the market is at least high.

It could go even higher but history suggest there's a fairly strong correlation between these indicators and future 10-20 years returns (hint: they should be on the low side).

Also, to be fair I am personally inclined to so some very minor tampering with the AA in extreme cases such as for example right now.
I am in Europe and make money in euros, plus the pretty strong disparity in valuation between European and US markets have led me to pause new purchases of USA indexes.
I'm not selling what I have, I'm just not adding more.
I increased euro and emerging contributions obviously, I'm still investing the same total amount as I do not believe in keeping cash over a certain quantity (I'm very conservative so 2 years expenses for me. Keep in mind I have zero bonds and spend very little money).

I do believe there's a difference  between trying to constantly time the market and just avoiding what clearly looks like a very subpar investment when you have much better alternatives.

[frugledoc]

I do believe there's a difference  between trying to constantly time the market and just avoiding what clearly looks like a very subpar investment when you have much better alternatives.

What's the difference?  All these indicators are unhelpful in predicting future returns, which could be good, bad or indifferent.    The world is a very different place now to it was in the past, at least from a financial point of view (e.g. global money printing and currency devaluation) so who knows what the best indicator would have been when we look back in 10 to 20 years time.

One indicator I like it public and media sentiment.  When it is bad, I feel more confident and when it is very good, then I worry.

[Seppia]

What's the difference?  All these indicators are unhelpful in predicting future returns, which could be good, bad or indifferent.   

Uh? No they are not. Shiller PE, for example , has a demonstrably strong correlation with future returns on a 10-20 year period

The world is a very different place now to it was in the past,

This is exactly what all market timers say all the time.
Point is: no.
Like bogle says: regression to the mean

[josstache]

This depends heavily on what time period the "mean" is based on.  If the mean is based largely on the 20th century, regression to the mean might involve something like another two world wars causing massive capital destruction in the developed world.  The two world wars were mostly unprecedented, so if one wants to argue that we should expect something similar, is that actually an argument for a "new normal" of massive capital destruction every so often?  Because of the technology and overall resources available to modern nations, we could either expect relative peace to continue for for the foreseeable future due to deterrence, or we could expect that major wars will inevitably break out and perhaps cause even more horrific destruction than World War 2.

In terms of a "new normal" that hasn't necessarily started yet, I suspect the rise of AI and automation will have extremely unpredictable effects on society and the markets, such that our 20th century indicators might become even less reliable.

All I'm doing is investing in a globally diversified portfolio and hoping for the best. 

[TheAnonOne]

The markets are valued high based on certain charts and key indicators that have, in the past, been semi-accurate.

Though, nothing stops the next 150 years of the market from averaging 15% returns, or likewise, averaging 0%

I find the discussion interesting but ultimately pointless.

[Seppia]

Though, nothing stops the next 150 years of the market from averaging 15% returns, or likewise, averaging 0%.

I think basic math does indeed prevent them from having that type of returns

[capitalninja]

All this theory crafting and yet I'm looking at a basket of 5 stocks that produced a return between 11 - 18% since August 2015 precisely because I did the opposite of reducing my market exposure. August - Sep and Jan - Feb were fabulous times if you had cash waiting around ready to deploy.

[dandypandys]

I have only read the first page, but found the convo very interesting. Reminds me of an ex who persuaded me to invest 38k in gold and silver between 2008-11 :/
I am actually trying to time the market to get it sold for close to what I bought it for, so I can either pay off my house at 5.9% or put it in the market. I am leaning towards mortgage free/
Not sure what to do?  I will carry on reading the thread and hope for enlightenment, 70 % VTSAX at my 403b after listening and reading a bunch of Bogle, and hanging out here for a couple of months, reading the Stock series, I am convinced it is the right way ahead to just let it be and ride out all the nonsense. However I do like to hear opposing views so I can make an informed decision, or rather it shores up my current thinking.

[Seppia]

I have only read the first page, but found the convo very interesting. Reminds me of an ex who persuaded me to invest 38k in gold and silver between 2008-11 :/
I am actually trying to time the market to get it sold for close to what I bought it for, so I can either pay off my house at 5.9% or put it in the market. I am leaning towards mortgage free/
Not sure what to do? 

Are you serious?
I mean I don't want to offend you but you have THIRTY EIGHT THOUSAND DOLLARS in gold and you are asking yourself if you should or should not sell it to cut down a mortgage at almost 6%?

[AdrianC]

http://goldprice.org/gold-price-history.html

Gold peaked in 2011. Could be that $38K investment (speculation) is now quite a bit less. But...the trend is up...?

[Paul der Krake]

That could take a while...

[dandypandys]

LOL
Wish i could add an embarrassed face here, where are the emoticons-
Just wondering whether to wait a week, or month, it has gone up a wee bit as I have been watching. Maybe sell it in stages?

I have only read the first page, but found the convo very interesting. Reminds me of an ex who persuaded me to invest 38k in gold and silver between 2008-11 :/
I am actually trying to time the market to get it sold for close to what I bought it for, so I can either pay off my house at 5.9% or put it in the market. I am leaning towards mortgage free/
Not sure what to do? 

Are you serious?


I mean I don't want to offend you but you have THIRTY EIGHT THOUSAND DOLLARS in gold and you are asking yourself if you should or should not sell it to cut down a mortgage at almost 6%?

[johnny847]

LOL
Wish i could add an embarrassed face here, where are the emoticons-
Just wondering whether to wait a week, or month, it has gone up a wee bit as I have been watching. Maybe sell it in stages?

I have only read the first page, but found the convo very interesting. Reminds me of an ex who persuaded me to invest 38k in gold and silver between 2008-11 :/
I am actually trying to time the market to get it sold for close to what I bought it for, so I can either pay off my house at 5.9% or put it in the market. I am leaning towards mortgage free/
Not sure what to do? 

Are you serious?


I mean I don't want to offend you but you have THIRTY EIGHT THOUSAND DOLLARS in gold and you are asking yourself if you should or should not sell it to cut down a mortgage at almost 6%?

You've got a pretty bad sunk cost fallacy here. You're focusing on how much unrealized losses you have. But how much you bought it at is irrelevant. That's in the past and can't change. What you can do now is either sell it or hold onto it.

Suppose your gold is worth 30k now.
You keep asking yourself should you lock in a 8k loss to pay down the mortgage. That's the wrong question. You should be asking yourself if you had 30k lying around, would you invest it in gold or pay down your mortgage? (You can always sell your gold and then just buy it right back, so this is an equivalent situation)

[dandypandys]

Thanks Johnny, I know you are right, it is just my feelings. Doesn't help that our condo did the same thing, bought it at 140k now zillow says 80k. I am so done with speculations. Live and learn.
I have calculated what I spent total including shipping etc, and seems the loss will only be 4k maybe.

[Seppia]

Just sell the gold (all of it ASAP) and pay down the 6% mortgage.
The best way to deal with bad decisions (we all have our fair share) is act now.

[Keith123]

I'll give you a personal example, not stock related.  My family has been in real estate for almost 40 years.  We have a small real estate brokerage.  Around 2005 and 2006, my father, with 30 years of real estate experience, told me that housing was going to crash.  He knew that prices were unsustainable and that mortgages were being given out like candy.  I was 22 or 23 back then and wanted to buy a house badly.  He told me over and over again to wait for the right time.  This was painful for me as I watched housing prices keep rising for the next several years.  Well, we obviously know what happened to the housing market.  In 2009 I bought a 3-unit for myself (for 122k) and 4 other single family houses that I flipped and sold for good profits shortly after.  That 3-unit is now worth 250k and I plan on holding it forever.  I also bought 2 condos to rent out in the past year that I plan on holding forever because while the housing market isn't cheap, its fair in my opinion.  I don't mind buying during fair or cheap periods.  So yeah, if I would have bought it for 300k in 2008, its rough value around then, I wouldn't have lost much money by now and I could have collected rent the entire time.  But, because I waited for the right buying period, my returns are much, much greater.  I hope this provides some perspective.

My whole point is don't buy or sell when it is obvious that the market is expensive.  Expensive markets can get even more expensive for very, very long periods of time so stay in with what you already have in the market.  Just don't add until it's fairly priced again.  And I'll say it once again, this current market is very, very obviously expensive.  When even John Bogle thinks the market is going to give poor returns for the near future, it's hard to argue with.  http://www.marketwatch.com/story/john-bogle-says-you-wont-make-much-money-from-stocks-2015-11-05

This makes a lot of sense but I wonder if it's applicable to stock investing. Real estate investment is more similar to starting your own niche business because it's so dependent on geographic dependent trends. So someone with expertise in that geographic location can evaluate whether something is overvalued or undervalued. The stock market is different--it's far more difficult to tell if the market is overvalued or undervalued. You can convince yourself that it's expensive based on ratios or statements from authoritative sources, but I don't think it's that clear cut.

Now that the market has recovered a bit, I'm curious if the overvalued crowd (e.g. Cougar, Keith123, and others) still feel the same way they did in early February. FYI-my point wasn't necessarily that it was a good idea to buy at that time--just that it's very hard to tell when the stock market is overvalued or undervalued.

Happy Easter.  I definitely still think the market is over-valued, at least based on current fundamentals and my expectations of the short to medium term future prospects for companies and the economy.  If you've been following the markets lately, it looks like corporate profit margins are finally starting to contract - http://finance.yahoo.com/news/corporate-profits-decline-recession-long-term-stock-market-warning-174833869.html.  This is a negative for the market.  Aggregate US debt is through the roof, another negative.  Interest rates being so low is the only thing keeping things afloat.  There simply is nowhere else to park the money.  I can really only see 3 paths out of this. 

1.  Interest rates stay low for a veeery long time and the QE just keeps going on endlessly.  Very much like how Japan dropped rates in the mid nineties and never got them back up to normal again.  I can see that happening here.  Shit, negative interest rates might even happen in the US if things don't start picking up.  They just did it in Japan.  Maybe "helicopter" money drops, rapid inflation to ease the debt burden.  All that will do is kick the can down the road for even longer though.  I would expect the stock market will stay stable or keep rising in this scenario.     
2.  The Fed grows some balls and raises interest rates until they are at a reasonable level. This should push the market down as rates rise.  As the risk-free rate rises, investors will expect higher returns for riskier asset classes like stocks, devaluing them. 
3.  Worldwide recession resulting in a massive crash of 30% to 50%.  I actually would love this.  It would allow for a repricing of assets and a reset of credit.  After that, we could get back credit expansion which should fuel growth again. 

I think #1 is the most likely.  If I may give my personal opinion on good investments, I think residential rental property looks pretty appealing at the moment.  Prices are certainly not very low in my area but it's a great inflation play with leverage.  You get to borrow at a very low fixed rate with usually 5 times leverage.  So in a scenario with rapid inflation, your debt burden gets even easier but the asset price and rents follow the rise in inflation.  Just gotta make sure the cash flows cover the total cost of ownership.

[mrpercentage]

Happy Easter.  I definitely still think the market is over-valued

+1

I laughed reading this. It was reading these two statements back to back. Struck me as funny.

I think the stock season will end a little early this year giving you a 5-10% drop.

Corporations have been stock piling cash. What they should be doing is giving their lower-to-mid middle class employees a raise. The one they havent been given the last 10-15 years. Then they should cover that raise by having the balls to raise their prices just enough to cover the raise. CA is talking about $15 minimum wage now with the odds high of getting it. You cant have all they employees making minimum wage, and minimum wage has been creeping up to the lower middle class from $5 back in the early 2000's to $15 now. Why hasn't the middle classes salary tripled? The Fed and QE and bailouts.

Its simple-- pay your employees more-- they will be happy and stay-- they will be more productive-- they will be more loyal-- you will attract more talent--they are the source to the entire nations earnings. Yes this will cause inflation, and then your rates can normalize. You have to pay the worker bees well if you want the biggest hive with the most honey.

Will it happen? Who knows. I am certain its what needs to happen.

[Metric Mouse]

Its simple-- pay your employees more-- they will be happy and stay-- they will be more productive-- they will be more loyal-- you will attract more talent--they are the source to the entire nations earnings. Yes this will cause inflation, and then your rates can normalize. You have to pay the worker bees well if you want the biggest hive with the most honey.

I think you over estimate how much pay affects happiness and productivity of employees. It's rarely even in the top five of happiness, and raises have not been shown to have long-term positive effects on productivity. I think whatever studies you are using to make this claim are outdated, or poorly constructed.

[sol]

I think you over estimate how much pay affects happiness and productivity of employees.

I think doesn't affect happiness very much, as long as it is adequate.  How happy would you be if your pay was cut 3% per year for the next five years, like clockwork, regardless of your performance?  Suddenly it might rise to a higher position on that top 5 list.

[mrpercentage]

Its simple-- pay your employees more-- they will be happy and stay-- they will be more productive-- they will be more loyal-- you will attract more talent--they are the source to the entire nations earnings. Yes this will cause inflation, and then your rates can normalize. You have to pay the worker bees well if you want the biggest hive with the most honey.

I think you over estimate how much pay affects happiness and productivity of employees. It's rarely even in the top five of happiness, and raises have not been shown to have long-term positive effects on productivity. I think whatever studies you are using to make this claim are outdated, or poorly constructed.

I think I remember the documentary "Happiness" on Netflix showing that pay will increase Happiness until you reach about $70,000. Then it no longer benefits you. So again pay the LOWER and MID middle class more. They have in fact been screwed by the last 15 years. You want to talk redistribution of wealth? How about all my gold, silver, guns, and diamonds gone due to unemployment in 2009. You know I was paid far less than its actual value because the sharks know we need money. You know who benefited from me (and countless others) giving away my wealth to survive in 2009? The top 1% that we bailed out-- thats who. If they do not give us a raise in the next couple of years this country will go 100% socialist. I want to vote them all out RIGHT NOW! Give me the Bern!!

At least we will get healthcare, better education, and subsidized internet because the queen hasn't given a single crap about her worker bees. She will be stung to death soon. I see it coming. Oh its coming

[Metric Mouse]

I was referring specifically to your claim that more pay automatically makes happier, more productive employees. This has been shown to not be the case.  This is irrespective of wage scale.  While regular pay increases are nice, they are not the primary driver of happiness for the vast majority of employees, according to research. Again, specifically in the context of "What at work makes you happy." 

General happiness/life satisfaction may indeed be tied to income, with diminishing returns above $70k-$75K, as you pointed out. Not really an employer's prerogative to ensure that every one of their employees is fully happy in all aspects of their life, though the Gravity Payments experiment did have some mixed results, last I'd heard...

Personally, I'm FIREd, so I do not worry about my pay dropping 3% per year. It would have zero impact upon my life. Yippie ki yeh...

Mr. Percentage; I don't know what you've been drinking tonight, but please pour me a glass? :D  No one else brought up wealth re-distribution. I also would doubt that a "1%er" purchased your guns and gold. More likely the middle-class owner of a pawnshop buying low to sell high. May we all be so lucky with our portfolios!

[mrpercentage]

I was referring specifically to your claim that more pay automatically makes happier, more productive employees. This has been shown to not be the case.  This is irrespective of wage scale.  While regular pay increases are nice, they are not the primary driver of happiness for the vast majority of employees, according to research. Again, specifically in the context of "What at work makes you happy." 

General happiness/life satisfaction may indeed be tied to income, with diminishing returns above $70k-$75K, as you pointed out. Not really an employer's prerogative to ensure that every one of their employees is fully happy in all aspects of their life, though the Gravity Payments experiment did have some mixed results, last I'd heard...

Personally, I'm FIREd, so I do not worry about my pay dropping 3% per year. It would have zero impact upon my life. Yippie ki yeh...

General happiness is tied to contentment is tied to production. Your lack of empathy with workers wages is what can lead to a 50% drop in the stock market when changes come out to address that lack of empathy. Im pretty sure that will effect your life.

What the middle class has gotten a lot of is too bad, so sad, try hard, you were just stupid get educated, in fact take on more debt you cant get out of to do it-- doesnt concern me Im good. That leads to every revolution in history. Doesn't turn out very well for those on top either. Their heads are usually rolling around on the floor.

Wealth distribution is mentioned in every news program you don't watch-- obviously. It is central to "why are the people voting for these outsiders?".

The truth is the wealth has been moved from the middle to the top-- not the other way around. We have been voting to change that and its gotten worse. Obama care specifically has led to the loss of millions of full time jobs to part time jobs. Honeywell just started hiring more full time employees because they were out of compliance-- Dillards and Macy's have almost all part time employees. Don't believe me go in one and ask a clerk how many hours they work. Universal healthcare will fix that but I guarantee the stock market will take a massive hit for it.

You see a companies earnings come from people. The majority are not being paid as much. That means earnings are going down. That means your stocks will go down. That will make even more people mad leading to all kinds of people getting voted out-- going to socialism and then there goes all the 400% gains of the healthcare sector because of Obama Care-- another forced redistribution of wealth from young people that dont need medical insurance to Valeant.

But we don't need to go there. You could just get rid of Obama Care and start paying us more and return our full time jobs that have health insurance.

Me Im voting all these corrupt people out. Every single one of them. From every legislator up. Thats me. I figure all I can do is vote.

[AdrianC]

But we don't need to go there. You could just get rid of Obama Care and start paying us more and return our full time jobs that have health insurance.

And those of us who are FIRE or aspire to be FIRE, where do we get our health insurance?

The "open market"? You have to be kidding.

[BlankCheck]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

[Tyson]

The truth is the wealth has been moved from the middle to the top-- not the other way around.

You mean it trickled UP, not DOWN?  Shocking I tell you, shocking!

[Metric Mouse]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

Good luck! I hope that works out well for you.

[bacchi]

But we don't need to go there. You could just get rid of Obama Care and start paying us more and return our full time jobs that have health insurance.

And those of us who are FIRE or aspire to be FIRE, where do we get our health insurance?

The "open market"? You have to be kidding.

And small businesses. The "open market" for small companies is a sham.

Why are you against entrepreneurial ventures?

[Terrestrial]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

Do you mind sharing the strike/premium for the option(s)? I'm curious on how you chose to do it and what the payout range is  (i.e. high strike, better chance of it hitting but had to pay a large premium, or low strike to protect against catostrophic drop only but lower premium).

Good luck, I hope it works out for you.  I normally don't short the market, but do sell puts during times when the market has dropped.

[BlankCheck]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

Do you mind sharing the strike/premium for the option(s)? I'm curious on how you chose to do it and what the payout range is  (i.e. high strike, better chance of it hitting but had to pay a large premium, or low strike to protect against catostrophic drop only but lower premium).

Good luck, I hope it works out for you.  I normally don't short the market, but do sell puts during times when the market has dropped.

The strike price is 2000 on the S&P, at a 6.39 premium (actually SPY is the underlying asset, at 209 right now; the strike is actually 200).  So, not at all cheap, but it lasts until September.  I don't need a catastrophe, but I definitely need a significant dip.

We'll see.  I've never shorted the market before.  But I don't want to diminish my holdings any more than I already have.  So I'm hedging instead.

[ecomic]

It is always very dangerous to tell which stock or fund it is going to give the best return. I am always very skeptical about it. I try to find myself some bargains in the market and put my own money. When I put all my saving into something i am very careful at all times what the news and the price is. Check it every day a couple of times... it is the only way to avoid high volatility, selling fast when you see weird moves

[Retire-Canada]

It is always very dangerous impossible to tell which stock or fund it is going to give the best return.

Fixed that. Unless you have a time machine or crystal ball there is no way to know.

[Aphalite]

It is always very dangerous impossible to tell which stock or fund it is going to give the best return.

Fixed that. Unless you have a time machine or crystal ball there is no way to know.

The best? Impossible

Adequate on a risk adjusted basis? More than possible

[James]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

I wouldn't see any reason to "let you have it" any more if you were wrong than if you were right. You are speculating on a market move. Whether you make money or lose money doesn't change the nature of what you are doing and shouldn't change opinion of the action, it would be a single example that proves nothing either way.


Good luck!

[Metric Mouse]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

I wouldn't see any reason to "let you have it" any more if you were wrong than if you were right. You are speculating on a market move. Whether you make money or lose money doesn't change the nature of what you are doing and shouldn't change opinion of the action, it would be a single example that proves nothing either way.


Good luck!

It would prove timing the market is possible, even doable by an 'average' person.  Or even outside of timing the market, it could show that beating the market returns is doable - this would have huge implications for a FIRE timeline.

[signhere]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

I wouldn't see any reason to "let you have it" any more if you were wrong than if you were right. You are speculating on a market move. Whether you make money or lose money doesn't change the nature of what you are doing and shouldn't change opinion of the action, it would be a single example that proves nothing either way.


Good luck!

It would prove timing the market is possible, even doable by an 'average' person.  Or even outside of timing the market, it could show that beating the market returns is doable - this would have huge implications for a FIRE timeline.

no, it wouldn't prove that timing the market is possible.

[Livewell]

Just wanted to go on record.  I am still bearish, and I now have a put option on the S&P 500 that expires in September.  If I'm wrong, you can all let me have it!

I wouldn't see any reason to "let you have it" any more if you were wrong than if you were right. You are speculating on a market move. Whether you make money or lose money doesn't change the nature of what you are doing and shouldn't change opinion of the action, it would be a single example that proves nothing either way.


Good luck!

It would prove timing the market is possible, even doable by an 'average' person.  Or even outside of timing the market, it could show that beating the market returns is doable - this would have huge implications for a FIRE timeline.

no, it wouldn't prove that timing the market is possible.

Timing the market is absolutely possible.  Problem is no one can do it consistently and even the pros have poor records over medium (3+ year) terms.  That was the point of the vanguard study.

If you want to be a more sophisticated investor, IMO one has to do the work to understand a specific value(s) in the market and place your bets accordingly.  Of course, you need time to research and can still be wrong.  For the vast majority of us it's better to do "big and dumb" index funds, take the average, and focus on the skills and interests that lead us to higher income and happiness.   

[Terrestrial]

It would prove timing the market is possible, even doable by an 'average' person.  Or even outside of timing the market, it could show that beating the market returns is doable - this would have huge implications for a FIRE timeline.

No - it would prove that one guy made a correct call one time (and good for him).  It proves nothing about the ability/probability of doing it successfully for multiple market cycles/conditions over a long time period, nor does a one time event have any significant impacts to a FIRE timeline.   

The misnomer that timing proponents seem to have is that nobody disputes that it's reasonably possible to make a correct call on market direction ONE time.  If one of us guessed the market will be higher in September and one guessed lower - someone would be right.  There's just vast empirical evidence to suggest that it's increasingly difficult/impossible to get the correct call on the second, third, fifth, tenth, twentieth time.    In short, if I guessed it was going to rain next Tuesday and it does - it doesn't mean I can now predict the weather.

I should also note that the specific way he is timing the market, his theory can be right but he can still be very 'wrong' in terms of reaping any benefit.  If the S&P does in fact go down as predicted but 'only' by 7% he would be right about the direction and still lose money.  It gets exponentially harder the more variables you are trying to predict, in this case it's up to 3:  the market direction, within a specific timeframe, to at least a specific magnitude.