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Old 08-24-2010, 05:42 PM   #121
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But I think for most, the primary reason for rebalancing is that they have chosen an AA that is aggressive enough to take advantage of expected long term returns of the stock market, and conservative enough to provide some cushion from that stock market volatility. To call them market timers because the market conditions change over time, and therefore trigger a rebalance is a very long stretch, IMO.
Obviously, I would go further and say that there is not any kind of logic stretch that could call this market timing.

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Old 08-24-2010, 05:43 PM   #122
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Yes, it is...
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No it is not.
OK guys, what I really need to know is how many angels will fit on the head of a pin?

Ha
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Old 08-24-2010, 05:44 PM   #123
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OK guys, what I really need to know is how many angels will fit on the head of a pin?

Ha
Have no idea. Do angels really exist?

Oh wait - I married one, so they must exist. And he is much bigger than a pin. So the answer must be 1! (or maybe it's 0 )

It all depends on what your definition of "fit" is!

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Old 08-24-2010, 06:10 PM   #124
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Maybe one of you needs to start a poll on whether AA is market timing. My vote is No, btw.

I will say that I like this thread (at least the original post) a lot better than when someone posts "I went all cash 6 months ago" because they rarely post that when it was a bad call. Dex is putting it out there up front.
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Old 08-24-2010, 06:12 PM   #125
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It seems like much disagreement on this thread is lack of a common definitions. If 'market timing' means trying to purchase low/sell high based on predictions of the movement of the market, then AA is not market timing because the point of AA is to remove the prediction factor from the equation. If 'market timing' means trying to achieve higher returns by purchasing low/selling high, then AA is market timing because this is the goal albeit without making predictions.

It also seems like there is disagreement about how to evaluate risk. Dex appears to value principal preservation (from the statement about sleeping better at night) so an all cash position faces an inflation erosion risk/opportunity cost as opposed to a potentially large drop of value overnight. As someone that isn't FIREd yet, I tend to discount that risk and inflate the risk of being out of the market for dividend yield/capital appreciation.

My question to Dex is: You appear to base your decision (at least in part) on a broad market technical analysis. Do you not apply this same type analysis to actual holdings because you only invest in funds (I think you mentioned this)? I am getting at whether you consider this a sky is falling scenario for all equities vs a general market decline that will pull down virtually all broad holdings although individual companies may prosper. I am also curious as to whether you apply this reasoning to foreign equities. Are ADRs included in your technical analysis? Would this not show the whole picture because they trade on other non-US exchanges as well?
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Old 08-24-2010, 06:16 PM   #126
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Audrey is a "last word" kinda gal.
Dex is a "last word" kinda guy.

In case you other readers couldn't tell .

PS: I think that rebalancing done regularly by some pre-determined, nonconditional algorithm or rules is not market timing since you do it regardless of prevailing market conditions or signals. Once you start skipping it sometimes and doubling up other times based on the market, you cross from rebalancing to AA.

But... I don't care what you call it.
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Old 08-24-2010, 06:21 PM   #127
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I will say that I like this thread (at least the original post) a lot better than when someone posts "I went all cash 6 months ago" because they rarely post that when it was a bad call. Dex is putting it out there up front.
I like this thread as well.

I hope Dex starts another one: "I'm going 100% into stocks!"
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Old 08-24-2010, 06:21 PM   #128
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Oh come on dex get in the last word.
Go ahead and say, "Yes Mam"

That's how I do it at home.
I always get the last word in that way.
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Old 08-24-2010, 07:09 PM   #129
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I like this thread as well.
I hope Dex starts another one: "I'm going 100% into stocks!"
I don't worry about people getting out of the market. Plenty of them everywhere.

I worry about when people declare that it's time to start getting back into the market.
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Old 08-24-2010, 07:12 PM   #130
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This might add some fuel to the bail to cash fire.

I might be a fool, but I am sticking to my 50/50 mix of bond to equity index funds, and I hope that in the long run things will become positive again.
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Old 08-24-2010, 07:30 PM   #131
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Have no idea. Do angels really exist?

Oh wait - I married one, so they must exist.

Audrey
Are you sure? There has been a lot of chatter that he times the market behind your back and he is using a wiji board!
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Old 08-24-2010, 07:51 PM   #132
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A quick google search shows that most "experts" are ofthe view that rebalancing is a form of market timing. Here is a short explanation: What Is Market Timing? | The Incidental Economist and a more detailed one: What Is Market Timing? | The Incidental Economist

Personally I think it is pretty clear that although rebalancing to a set formula is very different from changing allocations based on ad hoc expectations of future market movements, it is still a form of market timing. In brief, rebalancing is simply saying that when the relative values of two or more asset classes diverge by a sufficiently large margin, it is time to sell one and buy the other(s) - it's pretty hard to understand why this is not market timing. The fact that the rebalancing decision is made well in advance does not change anything.

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Old 08-24-2010, 07:53 PM   #133
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Well, I for one don't care if or what is called something.

But I am sure that when I do not make money with my recent market move, it just sucks!
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Old 08-24-2010, 08:03 PM   #134
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My question to Dex is: You appear to base your decision (at least in part) on a broad market technical analysis. Do you not apply this same type analysis to actual holdings because you only invest in funds (I think you mentioned this)? I am getting at whether you consider this a sky is falling scenario for all equities vs a general market decline that will pull down virtually all broad holdings although individual companies may prosper.
I don't understand the above. It sounds like a stock broker that would say we expect stocks to decline and are moving money into safe havens like food stores.

There have been times in the past where some parts of the economy & companies have done well while others have done poorly. If we were in a secular bull market it might be worth the time to research and take the risk. I think Investor Business Daily is a good place for that type of investing.

Since we are in a secular bear market I don't think it is worth the time or risk.

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I am also curious as to whether you apply this reasoning to foreign equities. Are ADRs included in your technical analysis? Would this not show the whole picture because they trade on other non-US exchanges as well?
I have invested in China stocks in the past - oil & China Life. You can use technical analysis with the US information but you need to read news reports about them since they can be very volatile.

I think emerging markets will be a good investment in the future - stocks & bonds.
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Old 08-24-2010, 08:20 PM   #135
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I lived on Shawn Kwong Road in Happy Valley 10 years ago.
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Old 08-24-2010, 08:27 PM   #136
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I can tell you don't read my posts by that comment. Those that do; know 'everybody does it' is not something that concerns me at all.
I understand that from your other posts, but people aren't always consistent in all walks of their life (probably a good thing!). I was just commenting on the content of this thread.

I'm not saying that 'everybody does it' factored into your decision to market time. But it appears to me (and appearances can be deceiving, esp in this medium) that you're using the 'everybody does it' refrain to deflect the calls of 'market timer'.

I'll be honest, I just don't have the conviction to market time in any significant way. If you've got the conviction, I guess you have to go with it - what else could you do?

As they say, differences are what makes markets.

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Old 08-24-2010, 08:37 PM   #137
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I'm not saying that 'everybody does it' factored into your decision to market time. But it appears to me (and appearances can be deceiving, esp in this medium) that you're using the 'everybody does it' refrain to deflect the calls of 'market timer'.
I misunderstood - I don't mind being called a market timer (there are a few here; some even use the AA method). I really don't make that many changes in positions. And my getting the timing right is often off a bit - I get greedy. As I said, I wish I was out with the other who got out in April/May (?).
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Old 08-24-2010, 08:48 PM   #138
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As I said, I wish I was out with the other who got out in April/May (?).
Me too! Two hundred grands down the tube since late April! But I don't lose until I sell, right?

Well, I have been bullish, and pay the price. Still holding, not planning to sell nor buy.
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Old 08-24-2010, 08:58 PM   #139
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I don't understand the above. It sounds like a stock broker that would say we expect stocks to decline and are moving money into safe havens like food stores.

There have been times in the past where some parts of the economy & companies have done well while others have done poorly. If we were in a secular bull market it might be worth the time to research and take the risk. I think Investor Business Daily is a good place for that type of investing.

Since we are in a secular bear market I don't think it is worth the time or risk.
Ouch. I take that as a dig, but I won't take it personally. My main point was whether you are making this move because you think something will trigger a huge decline in equities, or it is just part of your normal investing strategy when you seen an opportunity through macro technical analysis.

I think the IBD 10 success factors are mildly useful, but I don't put much credence in the rest of it.

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I have invested in China stocks in the past - oil & China Life. You can use technical analysis with the US information but you need to read news reports about them since they can be very volatile.

I think emerging markets will be a good investment in the future - stocks & bonds.
My point here was whether technical analysis still applies in the same way as the past given that the make up of the market is more international now so you are comparing apples to oranges in the analysis.

I am just curious and asking specific questions as to your thought process so I can hopefully learn something new or at least view another perspective. I am not trying to make a statement about whether it is right or wrong.
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Old 08-24-2010, 09:16 PM   #140
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Ouch. I take that as a dig, but I won't take it personally. My main point was whether you are making this move because you think something will trigger a huge decline in equities, or it is just part of your normal investing strategy when you seen an opportunity through macro technical analysis.
No dig intended.
No trigger.
More weight on the technical analysis.


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My point here was whether technical analysis still applies in the same way as the past given that the make up of the market is more international now so you are comparing apples to oranges in the analysis.

I am just curious and asking specific questions as to your thought process so I can hopefully learn something new or at least view another perspective. I am not trying to make a statement about whether it is right or wrong.
Technical analysis is valid for international stock but you have the currency aspect. Recently the trend has been US stock market down - US$ up. So if that repeats it would be a good time to buy unheadged foreign stocks and bonds MFs.
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