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Old 07-28-2015, 06:42 AM   #41
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While I believe in equities and maintaining a consistent AA and rebalancing as needed, what I have observed is that those who try to time the market frequently make a pretty good call on when to get out, but have much difficulty deciding when to get back in and miss a good portion of rallys.
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Old 07-28-2015, 06:49 AM   #42
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Originally Posted by eta2020 View Post
Thanks to all my life being 100% in equities we currently get dividend yield which easily
covers all our expenses. Hence we could care less if market goes 30% down or up.

Good luck market timers!
+1. Pretty much the same here but with 70/30 or so
I always view it as owning 'income property' (without the hassles). The value of the property might go up or down, but the rent keeps coming in.

Still, it is hard sometimes to watch the value temporarily drop; as noted however the over-time trend has been upward for the past 100+ years.
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Old 07-28-2015, 11:19 AM   #43
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This might be my final post before I get mowed down in a fusillade of orthodoxy and asset allocation but I got out in late 2000 and back in, in April or 2003. Also, out in late 2007 and back in, in Summer 2008. Dare I say A) look at the charts and B) "read da papers." The 200 Day Rambling Average is a pretty good indicator of what's going on and, yes, what is likely to happen in the useful future.

I am not claiming Nyaa nyaa! Market Timing works, buy & hold is bad. Just saying buy and hold can kill you depending on your situation, just as some form of prudent, reasoned timing can slay buy and hold at points along the spectrum.
I don't know when you got out, let's call it October 2000 when the market was at 1311 from a peak of nearly 1500. Back in in April of 2003 means you were in around 975 (on 1 Apr) from a low of 815.

Out in late 2007, I'll give you the peak of ~1475, back in summer 2008 means you bought in at 1150 before the market dropped to 800 again.

Doing as well as you did, you missed 3 out of 4 peaks and valleys by 15-30%. I wonder how taxes impacted your gains? Did you sell and buy at any other times, or just those two you mentioned?

CAN is a weak work because a lot of things CAN happen. The problem is that in order to slay buy-and-hold, you gotta get it right when compensating for taxes and fees too.

Some folks can do it. Many more THINK they can do it, but never really look to see. I'm in the bigger group that doesn't care to try to predict the unpredictable (yet!). Being in accumulation allows me to let it ride without worrying too much.
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Old 07-28-2015, 12:21 PM   #44
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The buy and hold does not take any special skills and beats 90% of the market.
Cause you get High fund return instead of Low investor's return and it takes almost no skills.

Just How Dumb Are Investors? - MoneyBeat - WSJ
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Old 07-28-2015, 12:54 PM   #45
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Thanks to all my life being 100% in equities we currently get dividend yield which easily
covers all our expenses. Hence we could care less if market goes 30% down or up.

Good luck market timers!
Seems that when the markets go way down, I find myself reviewing my dividends (and cap gains to a lesser degree) which I view as a fairly reliable income stream.

Sort of comforting for the reasons you state. I say to myself, 'well...I'll still get paid every month while waiting for the upturn...'
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Old 07-28-2015, 01:11 PM   #46
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The dumbest thing a person can do is think they are smart. And dumb luck usually reinforces it. Consider yourself ahead and stop gambling.


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While I generally agree with the above, one thing comes to mind about buy an hold. While Buy and Hold has mostly worked for long periods in the U.S., that may be a form of luck in and of itself.

Had we decided to "hold" in response to the Japanese stock market's troubles in the 90s, we might not be feeling very smart right now.

Like it or not, there is some luck/faith/hope in the investing philosophy that holds that "things eventually get better" if you just sit tight. So far, it's worked in the U.S. It worked for a while up until 1990 in Japan too, though.

I also hope that buy and hold continues to work over long periods when invested in U.S. equities. But, we shouldn't deny that there is a wager embedded in that approach that assumes that the troubles that have afflicted foreign markets over long periods won't happen here.
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Old 07-28-2015, 01:52 PM   #47
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.

Like it or not, there is some luck/faith/hope in the investing philosophy that holds that "things eventually get better" if you just sit tight. So far, it's worked in the U.S. It worked for a while up until 1990 in Japan too, though.

I also hope that buy and hold continues to work over long periods when invested in U.S. equities. But, we shouldn't deny that there is a wager embedded in that approach that assumes that the troubles that have afflicted foreign markets over long periods won't happen here.
You are correct. I think worst stock market was Austrian where buy hold had 100 plus years of negative returns.

One should certainly diversify between US, Developed Markets, Emerging Markets, Dividend growth, Wide Moat etc etc and I am talking about being 100% in equities.....which may not be best AA for most of the people.

If you add to it REITs, CDs and bonds diversification gets even wider.

But cool head, plan a ignoring emotions ... sticking to plan is simple way to make great returns no matter what AA one selects.

It is way more about discipline then having skills IMO
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Old 07-28-2015, 02:33 PM   #48
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This may not be very smart, but I almost always refuse to realize a short term capital gain. (All my comments here relate only to my taxable account, which unfortunately is by far my largest.) I may feel that I really should grab this gain while I have it, but in the past I have sometimes acted on that impulse only to pay a tax and then see the stock's price continue to increase. OTOH while it annoys me to pay LTCG taxes, I will and often do so. This year it worked the other way. I had a 75% quick ST gain on an oil issue bought last fall.I elected to wait and then the gain dissipated.

It seems that opinion here is fairly equally divided about the future of oil prices. I admit that I have no special insight, but US and much other non-OPEC production will come down, and unless we are facing a very different future and likely one that cannot be borne, crude price will have to increase. Just avoid bankruptcies and things should work out well enough.

When a commodity price is low, there are always hundreds of learned reasons why this is so. But the price always manages to go back up anyway. Even coal may, but this one is too scary for me. Various kinds of government action while unlikely could permanently damage coal prospects. And in any case, natural gas will have to increase first.

Gold miners are even more bloodied than oil and gas, and will likely deliver even better returns when they reverse. A big difference though is that oil has an immediate and obvious offtake from stocks and production. Not so with gold, so it is inherently more speculative. But I bought miners before only because they were cheap, and did fine and now I am going to rinse and repeat. ( I hope anyway)

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Old 07-28-2015, 02:57 PM   #49
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Well, many of us have been wringing our hands about the market being frothy/overvalued/high pe10, etc.

We should be feeling good about now...
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Old 07-28-2015, 04:08 PM   #50
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Well, many of us have been wringing our hands about the market being frothy/overvalued/high pe10, etc.

We should be feeling good about now...
Why is that? Because the market's less than 2% off its all-time high? I'll bet it sets another before it goes down 5% to below 2000. Know how I know? I don't.
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Old 07-28-2015, 04:22 PM   #51
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I'm afraid I'm one of those people who has always come out ahead with market timing. I use my TSP funds......when the market takes a big jump up I move money from my C fund to the G fund. When the market takes a big drop I move money back to the C fund.....usually $25K-$50K these days. When the market was way up before the big drop in 2007-08 I moved all of my TSP to the G fund. As it dropped I moved money back into the C fund.....at 12,000.....and at 11,000.....then pretty well full in again towards the bottom.....I'm well ahead from where I would have been if I'd done nothing. I still occasionally move money from one to the other, although not recently since the market hasn't really had a big move for a long time. I am likely to stop doing this since I am retired and can't afford messing up. I guess you could call it rebalancing.....or dumb luck.....it works for me.....
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Old 07-28-2015, 04:27 PM   #52
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I'm afraid I'm one of those people who has always come out ahead with market timing. I use my TSP funds......when the market takes a big jump up I move money from my C fund to the G fund. When the market takes a big drop I move money back to the C fund.....usually $25K-$50K these days. When the market was way up before the big drop in 2007-08 I moved all of my TSP to the G fund. As it dropped I moved money back into the C fund.....at 12,000.....and at 11,000.....then pretty well full in again towards the bottom.....I'm well ahead from where I would have been if I'd done nothing. I still occasionally move money from one to the other, although not recently since the market hasn't really had a big move for a long time. I am likely to stop doing this since I am retired and can't afford messing up. I guess you could call it rebalancing.....or dumb luck.....it works for me.....
Do you have other examples of when you've done this? You listed one and said "always."
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Old 07-28-2015, 04:33 PM   #53
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I would have to go back through the TSP site to see if they have my old transactions.....but yes.....I meant "always". As in the moves I made in the "big drop"....it took a couple of years to be better off and wait for the market to come back up past 11,000+12,000... but I have "always" come out ahead on the moves. I used to do little quick market timings......but that really was stupid (you already think so....) and my nerves couldn't handle it and I didn't do it more than a few times. Likely not to do it anymore at this time although if the market were to go back up to recent highs I would likely move everything over to the G fund and call it quits since that should provide me with enough to meet our needs.

Oh...and back to main topic of this thread. No idea what's going to happen in the market, I'm hoping it gets back up to the highs so I can move more money over to the G fund. I have enough cash for a couple of years either way....but I would rather lock in some gains if possible.
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Old 07-28-2015, 07:42 PM   #54
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I'm afraid I'm one of those people who has always come out ahead with market timing. ...............
Me too. I've never lost $ in Vegas either (this is actually true since while I've been to Vegas, I've never gambled), but I have never won there either.
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Old 07-28-2015, 08:10 PM   #55
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Overall, there is considerable risk the market could have a very sharp drop, but I am not sure enough to sell half of my equities which would be my move if I believed with conviction we were vastly overpriced. Instead I see a fairly priced stock market with an overblown debt market that could implode if reflation cannot happen. This situation is very similar to the housing situation in 2007, with the exception that the Central Banks are far more aware of the risks of continued price drops in the area of concern and the next level of interaction from the price fall is actually at the producer level and not the consumer level, which probably means a more drawn out issue.
Interesting. Thanks for your thoughts, Running_Man, I appreciate it.
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Old 07-28-2015, 09:12 PM   #56
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but I have "always" come out ahead on the moves. I used to do little quick market timings......but that really was stupid (you already think so....)
It's not for me to judge whether it's stupid or not. I can only judge if it's a good thing for me to do or not. I choose not to act based on whims, feelings, or the thoughts of others. If such a time comes that I make a rational judgement that the market is going to crash on my own, I may act on it. I just seriously doubt I'll ever spend enough time or think myself intelligent enough to be able to accurately predict when to get out and subsequently when to get back in. I think I could've done it once or twice before now, but the potatoes aren't small anymore...

My questions to you and razztazz aren't intended to imply stupidity or really even disagreement with your actions. On one hand, I pointed out that razztazz did well with his timing, but was still off by 15-30% on 75% of his transactions he mentioned. Normally, I have found that people who claim success with market timing "always" or "most often" have forgotten a couple of times where they got it wrong, and I've never had anyone tell me what their gain was vs. buy-and-hold after taxes and trade commission/fees (probably negligible). I'm sure there are people out there who are up several % to tens of % over boring people like me. I just hope someday to find someone who can say "yep, since XXXX year I'm up 20% over a buy-and-hold indexer after taxes/fees, but when I account for YYYY year when I miscalled a market peak, I'm actually only up about 2%" or something like that level of detail.

Right now, I suspect that's what most market timers who are successful would be able to tell me - that their additional risk and attention paid is worth a marginal gain. If I could get 2% additional per year guaranteed, I'd do it in a skinny minute. But I feel like *I* am personally as likely to lose 10% timing as I am to gain 10% at any given time, that's all.
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Old 07-28-2015, 10:42 PM   #57
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This may not be very smart, but I almost always refuse to realize a short term capital gain. (All my comments here relate only to my taxable account, which unfortunately is by far my largest.) I may feel that I really should grab this gain while I have it, but in the past I have sometimes acted on that impulse only to pay a tax and then see the stock's price continue to increase. OTOH while it annoys me to pay LTCG taxes, I will and often do so. This year it worked the other way. I had a 75% quick ST gain on an oil issue bought last fall.I elected to wait and then the gain dissipated.

It seems that opinion here is fairly equally divided about the future of oil prices. I admit that I have no special insight, but US and much other non-OPEC production will come down, and unless we are facing a very different future and likely one that cannot be borne, crude price will have to increase. Just avoid bankruptcies and things should work out well enough.

When a commodity price is low, there are always hundreds of learned reasons why this is so. But the price always manages to go back up anyway. Even coal may, but this one is too scary for me. Various kinds of government action while unlikely could permanently damage coal prospects. And in any case, natural gas will have to increase first.

Gold miners are even more bloodied than oil and gas, and will likely deliver even better returns when they reverse. A big difference though is that oil has an immediate and obvious offtake from stocks and production. Not so with gold, so it is inherently more speculative. But I bought miners before only because they were cheap, and did fine and now I am going to rinse and repeat. ( I hope anyway)
Ha
Interesting perspective.

I agree on coal being a long and slow climb out of the deep pits. I am sooooooo Happy that I sold my JOY some time ago when it was approx $65 (right now is $26 ).
Back then I felt coal was not coming back up, I attribute it to a lucky guess.

Oil will come back, but it will take a few years, and probably not the insane levels it was at earlier.

I never thought of buying gold miners, any recommendations to look at ?

I also avoid STCG , and once I sold a call on about 150K worth of stock, and as the date approached it hit the strike price. I realized if it was called that I'd have lots of STCG and a large tax bill.
So I had to scramble to scratch up a spare $150K and buy enough of that stock so if it was called, the newly purchased stuff would go with hardly any Gain attached to it. Turned out the price dropped and I was safe.
I kept the purchase as it was a good company and it went up 26% roughly by the next year.

It taught me a lesson to look at when selling a call, what will happen tax wise if it gets traded, plus now I do most my option stuff in IRA as options are taxed heavily.
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Old 07-28-2015, 10:57 PM   #58
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Interesting perspective.

II never thought of buying gold miners, any recommendations to look at ?

I also avoid STCG , and once I sold a call on about 150K worth of stock, and as the date approached it hit the strike price. I realized if it was called that I'd have lots of STCG and a large tax bill.
So I had to scramble to scratch up a spare $150K and buy enough of that stock so if it was called, the newly purchased stuff would go with hardly any Gain attached to it. Turned out the price dropped and I was safe.
I kept the purchase as it was a good company and it went up 26% roughly by the next year.

It taught me a lesson to look at when selling a call, what will happen tax wise if it gets traded, plus now I do most my option stuff in IRA as options are taxed heavily.
Good info re: options and tax. About the miners, my technique with these as with any other bottom fishing speculative foray is to stick with ETFs. That way you can go ahead and buy when the commodity (and miners) are cheap without worrying this the one you chose is heading for oblivion. Also, while in the past I have bought several ETFs, to get the most fly for the least dough this time I am just going to go with the big Juniors ETF, GDXJ It is down ~90% or more from the highs maybe 5 years ago. It might be pure crap, but if gold gets kicked up it will likely fly. One doesn't want to put much money into these kinds of specs anyway.

Ha
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Old 07-29-2015, 08:00 AM   #59
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If I wanted to buy a gold miner, I would probably buy Royal Gold, which is actually a gold stream purchaser.

When the miners get in trouble, they sell a % of their future gold production to Royal at a discount rate. Essentially they take a loan that can never be paid off.

RGLD will be a good purchase when gold starts going up. Right now it rather looks like gold is going to continue down for awhile.
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Old 08-07-2015, 11:23 AM   #60
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The biggest risk is a continued collapse in commodity prices which will ultimately lead to a major debt default which causes a panic in markets and large unpredicted drops from which none will have the ability to react. This will also destroy the reputations of central bankers as being able to manage things and panic would be the rule of the day.

It is interesting to me that commodity prices have continued to decline (collapse?) since Running_Man made this comment on 7/29. I just read that the CRB Commodity Index is now lower than it was in 2008/2009.
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