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Old 01-06-2008, 09:50 AM   #41
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With all the talk of a tough time for the DOW and the US economy in the next year is anyone tempted to try to time the market by selling stocks before the recession hits; or maybe you've already done it............
It has crossed my mind many times, but has decided that to stay put.
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Old 01-07-2008, 02:29 AM   #42
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Originally Posted by 2B View Post

Good luck to you. I hope you can escape befoe it causes you to lose too much money.
Fortunately I've made enough money with TA to ER and keep my pile growing with fun.
Good that Sir 2B knows all what works and doesn not. It is so comforting.
BTW, thanks for providing such a timely confirmation of what I started with, you can't help people...
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Old 01-07-2008, 06:29 AM   #43
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I'm sticking with my plan -- which is kind of cool for me, because I only paid attention to having an AA plan last year!

I figured out (the Unclemick version on an envelope) how much the funds in my taxable account throw off as dividends. I know that covers my basics. I take more when needed for maintenance and travel, which happen at irregular times. I decided not to worry about the market, on the theory there will be a time to travel and do maintenance some day. And if the urge or need comes sooner, I can always sell bonds.
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Old 01-07-2008, 07:45 PM   #44
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We are not trying to time the market, however the market situation has caused us to pay more attention and we have taken the following actions:

(1) Liquified the majority of our positions in individual stocks in the US. We will hold onto our solid performers like Berkshire Hathaway, but some of the smaller positions we are going to close out.

(2) Transfer the cash to Australia. We are not certain how much long the US$ is going to hold up and as the Aussie $ has been so high it seems time to take this action.

(3) We have moved our 401k holdings to cash. We are prepared to sit on the sidelines for the next 6 months and watch how things play out.

(4) We are investing what cash we do have in Australia in the Aust equivalent of CD's - Term Deposits. It is possible to get as high as 7.75%.

Of course our situation is probably different from 99.999% of the people on this board. We are looking at 2008 as being our last year in the workforce and we will be moving to Australia to live, so in a sense all we have done is accelerate what we may have done in 12 months time.
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Old 01-07-2008, 09:30 PM   #45
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We are not trying to time the market, however the market situation has caused us to pay more attention and we have taken the following actions:

(1) Liquified the majority of our positions in individual stocks in the US. We will hold onto our solid performers like Berkshire Hathaway, but some of the smaller positions we are going to close out.

(2) Transfer the cash to Australia. We are not certain how much long the US$ is going to hold up and as the Aussie $ has been so high it seems time to take this action.

(3) We have moved our 401k holdings to cash. We are prepared to sit on the sidelines for the next 6 months and watch how things play out.

(4) We are investing what cash we do have in Australia in the Aust equivalent of CD's - Term Deposits. It is possible to get as high as 7.75%.

Of course our situation is probably different from 99.999% of the people on this board. We are looking at 2008 as being our last year in the workforce and we will be moving to Australia to live, so in a sense all we have done is accelerate what we may have done in 12 months time.
? sounds like market timing to me. It is sacrilegious on this forum and I find I can't do it, but I thoroughly understand your logic. Even though I don't agree with it. But you do have to admit to yourself that you are attempting to time the market. not a criticism, just an observation.
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Old 01-08-2008, 12:01 AM   #46
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? sounds like market timing to me. It is sacrilegious on this forum and I find I can't do it, but I thoroughly understand your logic. Even though I don't agree with it. But you do have to admit to yourself that you are attempting to time the market. not a criticism, just an observation.
I don't think what we are doing is market timing because the cash we are now withdrawing we will not be looking to put back in at any time.

We have always operated differently to the majority on this board and that is because our situation is different from most. We don't have to worry about medical insurance because of the national health system in Australia. We will qualify for SS in the US if it is still around and if we fall on hard times we will also qualify for SS in Oz. We don't own a house anywhere in the world. Our investments are diversified in 3 currencies - US$, Aus$ and Pound Sterlings. We have always held about 44% of our portfolio in cash and it is likely to be around 50% after we liquify some of our holdings this week. We don't have any children so don't care about leaving behind pots of money and if we do we don't have to worry about estate taxes because there are none in Australia. If we end up broke and have to go into a nursing home well the good old government pay the $275k bond in Australia if you have nothing.
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Old 01-08-2008, 12:11 AM   #47
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I don't think what we are doing is market timing because the cash we are now withdrawing we will not be looking to put back in at any time.
You should not take this as an accusation and be defensive. I know that most (me included) on this forum don't think it is a good idea.

But I do think that market timing is a definition.
It is when you attempt to pick a high point to sell and a low point to buy. I believe that is what you are doing.
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(3) We have moved our 401k holdings to cash. We are prepared to sit on the sidelines for the next 6 months and watch how things play out.
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Old 01-08-2008, 12:31 AM   #48
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You should not take this as an accusation and be defensive. I know that most (me included) on this forum don't think it is a good idea.

But I do think that market timing is a definition.
It is when you attempt to pick a high point to sell and a low point to buy. I believe that is what you are doing.
What I can never get clear about is why anyone should feel that it is some sort of breach of faith to do this. Most really successful investors do it to some extent, although they may explain it somewhat differently. Whatever Warren Buffet says, watch the way he acts.

I feel that stocks should be bought like anything else. By a lot when what you want is cheap, buy much less or even sell some when it would take a miracle for cash flows to justify the price of the target company. No one ever said it should be easy. But not easy is not the same as impossible.

And what difference does it make what people on this board think? We all have different goals, different bankroll to spending ratios, different personalities, etc.

I think tax considerations are an important negative to market timing with taxable funds, but other than that, why not?

Don't you think it was easy to see in 2000 that many stocks could not possibly pay out as business investments at the prices they were selling? So all you have to do is take control of your greed, realize that your wife's sister's husband may beat your performance for a while, and you may hear about that from DW. But so what? A seller of grossly overpriced investments has to prevail eventually as long as there are any rational investors left. This appeared to be the case; and lo and behold it was the case. Going on 8 years now and the S&P has gone nowhere. And the dividend would not keep you up with even the low inflation we have had.

Ha
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Old 01-08-2008, 02:57 AM   #49
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heres my definition: market timing is anytime we try to beat the markets....when we say we will accept what the markets give us each year good or bad thats investing .when we attemp to be smarter than the markets and beat them thats speculating.

making a change in your portfolio due to age, lifestyle or other non market related reasons isnt market timing.
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Old 01-08-2008, 03:00 AM   #50
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as far as the s&p barley being up in 8 years , the s&p is only a segment of a balanced portfolio. if you were well balanced over the last 8 years you had to do great. im up over 100%
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Old 01-08-2008, 05:25 AM   #51
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What I can never get clear about is why anyone should feel that it is some sort of breach of faith to do this. Most really successful investors do it to some extent, although they may explain it somewhat differently. Whatever Warren Buffet says, watch the way he acts.

I feel that stocks should be bought like anything else. By a lot when what you want is cheap, buy much less or even sell some when it would take a miracle for cash flows to justify the price of the target company. No one ever said it should be easy. But not easy is not the same as impossible.

And what difference does it make what people on this board think? We all have different goals, different bankroll to spending ratios, different personalities, etc.

I think tax considerations are an important negative to market timing with taxable funds, but other than that, why not?

Don't you think it was easy to see in 2000 that many stocks could not possibly pay out as business investments at the prices they were selling? So all you have to do is take control of your greed, realize that your wife's sister's husband may beat your performance for a while, and you may hear about that from DW. But so what? A seller of grossly overpriced investments has to prevail eventually as long as there are any rational investors left. This appeared to be the case; and lo and behold it was the case. Going on 8 years now and the S&P has gone nowhere. And the dividend would not keep you up with even the low inflation we have had.

Ha
I really don't care if you do or don't ... it's just confuses me and causes mis-communicatons when you do (in this case) market time and say it's not. I try to learn from all who post here and am just observing and commenting.
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Old 01-08-2008, 06:44 AM   #52
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I'm afraid you'll keep buying more for less of these small value in a few months.

Thats the idea, I would think. Isn't that what buying low is all about?
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Old 01-08-2008, 09:55 AM   #53
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You should not take this as an accusation and be defensive. I know that most (me included) on this forum don't think it is a good idea.

But I do think that market timing is a definition.
It is when you attempt to pick a high point to sell and a low point to buy. I believe that is what you are doing.
I am not being defensive in the sense that I am trying to justify that what I am doing as being the right thing. Rather I am trying to explain why I am doing what I am. Personally I don't really care if everyone else on this forum thinks it's a bad thing, after all DH and I are the only ones that have to live with the results of our actions.

The reason why we are moving our 401k to cash is because we are most likely to leave the US at the end of 2008. At some time in the near future we are going to have to work out a way to withdraw our cash from the 401k and at the same time minimising the tax effect. Reason for that being we don't want to have to submit US tax years for the rest of our lives.

We know that our situation is so different from many on this board as most of our savings are in taxable accounts - we did this because we knew we would RE and didn't know what country we would be residing in. Also we play the lottery which is a big no-no amongst members of this board.
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Old 01-08-2008, 09:59 AM   #54
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As for me, I try not to do any market timing. I am pretty new to investing, but have been doing it long enough to find out that I am no good at predicting market increases and decreases, much less long term or even short term highs and lows.

So, with a lump sum possibly coming my way this spring, I am thinking I should invest a fraction of it each month for a couple of years in order to avoid bad market timing. Decisions, decisions.
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Old 01-08-2008, 10:38 AM   #55
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I thought their would be a significant market correction last year, so I held a higher cash position that I would normally. Now I think we've entered into a recession. Will we see that correction now? Probably so. The question is, how much? I've jumped out several times at the top into cash only to find that deciding when to get back in is very difficult. A friend works on a percentage plan. If a position goes up 20%, he sells. When it goes back down 10% he buys. ( Or was it the other way around??) Let's see, if the S&P drops by 50%, it has to go back up 100% to be back where you started. So I think it's 20% up and 10% down. At least his plan has a mathematical basis, even when the whole mess is random.

I'm still sitting on too much cash, but now interest rates are also going down. What to do, what to do. Market timing is indeed stressful.
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Old 01-08-2008, 10:43 AM   #56
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Going on 8 years now and the S&P has gone nowhere. And the dividend would not keep you up with even the low inflation we have had.
While I agree with you about the S&P 500, I challenge your statement about the dividends. In the first quarter of 2000 the trailing 4-quarter dividend of the Vanguard S&P 500 index fund (VFINX) was 1.44 (the highest trailing 4-quarters for that year). For all of 2007, the dividend was 2.49. This is a dividend growth rate of about 7% per year over the 8-year period. So someone living off the VFINX dividends would have seen his income grow at better than 2.5 times the average annual CPI increase.
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Old 01-08-2008, 11:17 AM   #57
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While I agree with you about the S&P 500, I challenge your statement about the dividends. In the first quarter of 2000 the trailing 4-quarter dividend of the Vanguard S&P 500 index fund (VFINX) was 1.44 (the highest trailing 4-quarters for that year). For all of 2007, the dividend was 2.49. This is a dividend growth rate of about 7% per year over the 8-year period. So someone living off the VFINX dividends would have seen his income grow at better than 2.5 times the average annual CPI increase.
FIRE'd@51, I wasn't clear. I did not mean that the dividend per se didn't keep up with inflation. As you have shown it did. What I meant to convey was that adding back the dividend to the principal value would not have kept the real principle whole over this time period.

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Old 01-08-2008, 01:52 PM   #58
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Not sure how fine a line exists between 'buying low' and 'market timing' in the OP view.
However, I am definately planning to buy low, likely very soon. Where as the OP is talking about moving out of equities into cash, my thinking is opposite. Use income to buy up stocks that are low.
Citigroup is an example, they are around $27.50 right now I believe. Dividend is around 7.5% and P/E is also about 7.6? While Citigroup may very well go down even more in the next few months and may cut it's dividend (3.5% is still pretty nice) I don't think they are going under. So I may take this opportunity to buy on clearance

As for total returns from what I have seen and read, dividend stocks (on average) give greater total returns than non-dividend stocks in recent history:

Quote:
A calculation of the standard deviation (a measure of an investment’s volatility) of dividend paying versus non-dividend paying stocks from 1985 through 2005 reveals that dividend paying stocks were approximately 37% less volatile over this time period. Additionally, during this same 20 year period dividend paying stocks achieved an average annual total return of 10.79% versus an average of 9.43% for non-dividend paying stocks.
source: Private Wealth Advisors
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Old 01-08-2008, 10:03 PM   #59
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I am not being defensive in the sense that I am trying to justify that what I am doing as being the right thing. Rather I am trying to explain why I am doing what I am. Personally I don't really care if everyone else on this forum thinks it's a bad thing, after all DH and I are the only ones that have to live with the results of our actions.

The reason why we are moving our 401k to cash is because we are most likely to leave the US at the end of 2008. At some time in the near future we are going to have to work out a way to withdraw our cash from the 401k and at the same time minimising the tax effect. Reason for that being we don't want to have to submit US tax years for the rest of our lives.

We know that our situation is so different from many on this board as most of our savings are in taxable accounts - we did this because we knew we would RE and didn't know what country we would be residing in. Also we play the lottery which is a big no-no amongst members of this board.
Peace DangerMouse. I agree with you on forum 'thoughts' and who has to live with consequences.

NO U.S. TAXES FOREVER? WOW. Wish I could do that. So you either not US citizens and will never come back to the US or are you renouncing your US citizenship?
In either case, best of luck to you on your retirement plans.
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Old 01-08-2008, 11:26 PM   #60
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Well let's see..The NASDAQ has fallen for 7 or 8 days straight. Sure seems to me the time is fast approaching where a gentleman, dirty rotten market timer could launch a timed trade with some success Shucks, could even be tomorrow
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