Market Timers Unite!

[guest]

As a person who practices “stepping aside” (yes….”stinking market timer”) during troubling years, I must now decide when to return to the fracas. It is approaching the time I think to start considering the move. I have heard speculation from the talking heads and some other sources that the recovery is going to take time but some of the effect should be felt by spring. I am agreeing spring/summer will begin the slow grind back up but I also believe things will take off initially by leaps and bounds.

I know this is a fact filled forum and the general level of knowledge here far surpasses my own. Obviously, I have no facts to back this up; facts are not a common attribute of the timer…er step aside style person. (I am sure that Cramer will surely jump on board at least for one week soon if that counts.)

My target for the turn is mid January as of today but subject to change depending on market reactions to the latest moves by our elected buddies.

Does anyone share my belief that the market will initially “jet up”? Is there anyone else that has “stepped aside” and is considering the same move?

Side Note: For those that might have read some of my previous posts, the money I am talking about returning to the market is my wife’s….not mine. I remain satisfied with my AA. This would only be a suggestion I would give her. She has “stayed the course” and paid the price. But she has only been “half” in. She might want to move all in soon. Pulling out now regardless of the day to day moves is not something I have recommended to her.

 

[Culture]

Guest,

Clearly market timing is not widely accepted here. However, I am more than happy to "shade" my portfolio between cash and equities, and between various equity classes depending on market conditions. For example, it was clear last year that REITs were at a ridiculous high. I sold 50% of my REITs and spread it among other equity classes. However, I still maintained signficant exposure, changing my positions in REITs from 5% to 2.5% of my potfolio. If I was wrong, and REIT has continued upward, I would still have seen signficant gains.

Late last year, it because equity valuations seemed poised for a fall (they appears too high too me), I changed my portfolio from 80/20 to 50/50. Starting a month ago, I have starting shifting back to 70/30, 5% at a time. In fact, I just shifted 5% yesterday.,

In short, to answer your questions, I do not know when the bottom will occur, and neither does anyone else, but equities are clearly on sale (long-term). Therefore, I am DCAing back into the market now, and I am definately getting it cheap. I am currently paying what people paid about 10 years ago! If it goes even lower, I do not need it for at least five years, maybe more.

However, I am a big believer in idexes and MPT. Curerntly, I have all my assets in Vanguard index funds. My equities are currently split about 30% large cap, 25% mid cap, 20% samll cap, 5% REIT, 15% developed overseas and 5% developing overseas. I am thus shaded toward small and mid-cap US equities, and against overseas equities.

 

[ziggy29]

One thing I will say is this: I'm not betting on the market turning around as long as almost every rally is immediately killed by sellers and when any decent day is wiped out in the last half hour of trading.

As long as those things keep happening regularly, there is no bottom. I'm no technician, but that is almost always true in bear market psychology. These are signs of a market that is determined to keep going down. At some point that may stop, maybe when all the institutions and hedge funds are done deleveraging. But until then, I don't see it. Whether that's at Dow 9000 or Dow 5000, I can't say.

 

[MichaelB]

As a person who practices “stepping aside” (yes….”stinking market timer”) during troubling years, I must now decide when to return to the fracas.

A 90% decline is the same as an 80% decline followed by a 50% decline. If timing were that easy they wouldn't have had to invent all the financial tricks that caused this mess.

 

[CaseInPoint]

Does anyone share my belief that the market will initially “jet up”? Is there anyone else that has “stepped aside” and is considering the same move?

I've been waiting on the sidelines for nearly a year. Finally, last week I bought into a conservative managed Vanguard fund and this morning I bought shares of a Vanguard index ETF. Overall, in the past week I invested about 30% of savings that I set aside for this type of investment.

Timing the market is perfectly fine for some, not ideal for others. I agree with Culture that stocks are at an attractive price now. Nobody really knows if we're at the absolute bottom of the market, but we're certainly at a relatively low price point.

If you have 5-10 years before you'll need the money, I'd recommend speaking to an advisor about investing now.

 

[al_bundy]

for over a year i've been learning to read charts, not perfect but i'm only down 11% or so for the year. i thought we were going to rally 2 weeks ago and was up 9% and then the crash.

so i went back to reading some more and found my mistake and waiting for a sucker rally to sell into in a few months. people have been studying the market since the 1800's and trying to predict it and a lot of good theories out there show that people like Siegel is wrong along with the efficient market hypothesis


if you try to time by following the news, it will never get you anywhere. most of the stock market moves are emotion driven. greed or fear of losing money.

 

[Animorph]

As far as I'm concerned you can wait until you know when the bottom WAS, or you can buy now when the prices are clearly much lower than last year. I've added 4 equal steps of cash after the market went past -20% and I have one left that goes in next week if things keep going as they have been lately. If the market goes down after that it is one hell of a dip and I'll borrow from the HELOC for another three steps. Then I'm just in it for the ride I guess. I've got about 2 year's worth of additional cash to get me through that if necessary.

 

[guest]

Thanks

Thanks for the gentle responses! I know market timing is not something that is advocated here..... I put it near asking about an annuity in terms of risking your potential posting life on this forum!!! But I also know not all people on this forum are charging ahead both barrels blasting away either. These are tough times and I see many are enduring but still hinting at the deepness of their alarm.

Caseinpoint: Agreed. Sitting and watching and ready to move. Just not moving just yet. There are no guarantees when anyone moves and losses will be whined about to all that will listen!

Animorph: The prices are my focus also. I know trying to hit the cheapest everything is not really even within reach besides for a person who just gets plain lucky. I will move to recommend the "full jump in" and let the the best half make her own choice....I'm a hubby that can't keep out! She is no dummy though and has probably made her own choice!!

 

[ERD50]

My only advice would be that, if you were skillful (or lucky) enough to avoid the last 40% drop (congrats!), I would just start getting back in now. You might not be so skillful (or lucky) next time, or at picking a re-entry point.

No matter how you look at it, you are 40% ahead of wherever you would have been. I would not look that gift horse in the mouth - take it!

JMO.

 

[harley]

for over a year i've been learning to read charts, not perfect but i'm only down 11% or so for the year. i thought we were going to rally 2 weeks ago and was up 9% and then the crash.

Me too, reading the charts.

My problem was with line 8. I thought the F was an E.

 

[cashflo2u2]

Bob Brinker, one of the alleged best market timers, completely missed this bear market, when into it and stayed in fully invested and called at least 4 bottoms on the way down. LOL