Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Market Timing???
Old 06-16-2007, 05:13 PM   #1
Dryer sheet aficionado
 
Join Date: Jun 2007
Posts: 41
Market Timing???

What does everyone think about people that put out news letters that claim to be able to time the market? can they do it are they just trying to make a buck? myself I have always done research and chose my funds that way. but since I just retired I am looking to reallocate and go more into index funds.
__________________

__________________
rpow53 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-16-2007, 05:26 PM   #2
Recycles dryer sheets
SamHouston's Avatar
 
Join Date: Jan 2006
Location: Houston
Posts: 218
Personally, I don't trust anyone who claims his system can predict market swings. Sure, he'll be correct some of the time just based on the law of averages. That's what people tend to remember and talk about. It's sort of like what happens in Vegas; no one wants to talk about their losing visits and only remembers the winning trips.

Market timing is doomed to fail over the long term, IMO, just like gambling in Vegas is doomed to fail over the same period of time.
__________________

__________________
"Be careful about reading health books. You may die of a misprint." - Mark Twain
SamHouston is offline   Reply With Quote
Old 06-16-2007, 05:49 PM   #3
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Yeah, nobody will be 100% right ... but, if you don't have an interest (me) or the time (not me) to do the research, it pays to subscribe. If been a Brinker subscriber for years ... pulled me out in Jan 2000 and put me back in March 2003. Doesn't really matter what happens from here on ... already justified about 500 years of subcription costs.
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Old 06-16-2007, 07:08 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Market timing is a fools errand...but I think there are a few times in an investors life when the markets are drunk and you can make a smart decision to commit more capital or get the hell out.

2000 and 2003 were good recent examples of those drunken moments.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 06-16-2007, 09:36 PM   #5
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by tryan View Post
Yeah, nobody will be 100% right ... but, if you don't have an interest (me) or the time (not me) to do the research, it pays to subscribe. If been a Brinker subscriber for years ... pulled me out in Jan 2000 and put me back in March 2003. Doesn't really matter what happens from here on ... already justified about 500 years of subcription costs.

Ditto!

However, he will be wrong someday (some say he already was with the QQQ call) I just hope it's on the buy side.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 06-17-2007, 12:41 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,292
I am not smart enough to be a timer and I don't trust anyone to make my decisions for me.

I have been fully invested for maybe 25 years and it has paid off well so far.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 06-17-2007, 04:26 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
I think timing the market is very difficult. I do not believe it is impossible. IF you have enough information and know how to interpret it properly, I believe it can be done. If one is correct a greater % than not correct, they will come out on top. That said, I believe very few people have the skill to do so. A few life long professionals.

All of the rest of us should stay away from it.


Some very legitimate people put out those letters. There are also some hucksters.
__________________
chinaco is offline   Reply With Quote
Old 06-17-2007, 08:15 AM   #8
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Quote:

(some say he already was with the QQQ call)
I missed that party - thankfully - because my 401k did not carry the Q's. Read many threads about sorry souls who lost boat loads and never forgave Brinker for not giving any future guidance for those who followed the call. It seems Brinker wants forget he made that call.
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Old 06-17-2007, 08:29 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by Ed_The_Gypsy View Post
I am not smart enough to be a timer and I don't trust anyone to make my decisions for me.

I have been fully invested for maybe 25 years and it has paid off well so far.
That is probably the best 25 year period ever. Let us hope it repeats.

Ha
__________________
haha is offline   Reply With Quote
Old 06-17-2007, 08:31 AM   #10
Recycles dryer sheets
fluffy's Avatar
 
Join Date: Jun 2006
Posts: 82
Here's a fairly thorough evaluation of the predictive powers of various market gurus: CXOAG Guru Grades

Looks to me an awful lot like a normal distribution around 50%
__________________
We come in the spirit of hostility and menace
fluffy is offline   Reply With Quote
Old 06-17-2007, 08:42 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Aug 2002
Posts: 1,322
I don't think you can time the market year in and year out, but you can sense huge downturns and bail out. I did so in 2001 when I figured the bubble was bursting and it was going to turn ugly. I was a little late on the bubble burst but not late enough to avoid the really down times. I bailed prior to 911 and it was sad to see a down market being hit by that evil tragedy as well.

I got back in around 2004, again a bit late, but still made more than if I had held through all of that. I tried timing again over the next couple of years but it was clear the good pickings were done. So now I'm staying in, but with the option of bailing out if I sense another huge downturn. I may have been lucky the first time, but you gotta do what you gotta do.
__________________
FinallyRetired is offline   Reply With Quote
Old 06-17-2007, 08:45 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Lets look at this from a different perspective...out of the thousands and thousands of newsletter writers, at least some decent percentage...just from mass of luck...should have called for a pullout around 2000 and a reentry to equities by 2003.

Oddly, it seems that 2000 pullout calls werent that common, and many advisors had people getting back into equities well before the bottom, as brinker did with the QQQ call already mentioned.

By the way, check this page: QQQQ Bob Brinker's QQQQ Advice and results

This guy kept pretty good tabs on Brinkers QQQ advice...pretty interesting to read the non-revisionist play by play.

Out of a few thousand guys flipping coins to decide what to do...someone should have had better performance. Instead, everyone gravitates to the guy who had the best coin flipping luck.

But the marketing literature looks great when they pick a winning period, start a year later or stop a year earlier, compare themselves to an inequivalent risk level index, etc.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 06-17-2007, 08:54 AM   #13
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Quote:
Originally Posted by tryan View Post
It seems Brinker wants forget he made that call.
... and continue to subscribe his newsletter for a couple hundred of dollars per year.
__________________
Spanky is offline   Reply With Quote
Old 06-17-2007, 12:19 PM   #14
Full time employment: Posting here.
bosco's Avatar
 
Join Date: Jul 2005
Posts: 987
Well, I've said it before and I'll say it again. I realize I'm swimming upstream against the approved forum doctrine.

I agree that it is very difficult to "beat the market" in absolute terms using market timing. But that is not always the goal. Sometimes the goal is to reduce risk.

If I can garner 80% of the additional gains above cash by being in the market 50% of the time, have I not come out ahead on a risk adjusted basis?

Timing is difficult due to the all or nothing approach. But many of those on this forum who speak negative about timing seem to engage in it themselves, but just call it something else. What do you call it when the market makes you nervous and you practice "asset allocation" at a time that is not on a predetermined schedule?

The bottom line, to me, is to find the system that allows you to sleep at night and that is a written-down plan. This helps keep emotion out of it. When I was practicing market timing (I no longer do), I stuck to systems that I had the algorithm for--don't like relying on gurus. I won't say it was wildly successful, but neither was it disastrous. I think I slightly underperformed the market, but was only in about 60% of the time or so.

Finally, there are reputable timers with long-term respectable results. One that I watch (but don't use) is

Mojena Market Timing

I am certainly NOT advocating market timing. But I don't believe that the bottom line of whether or not it works is if it beats the market. After all, a diversified portfolio with a dollop of bonds won't beat it either. What's the difference if you allocate using the time axis versus allocating versus the "asset class" axis? Either way is a method to attempt to smooth volitility and risk.
__________________
bosco is offline   Reply With Quote
Old 06-17-2007, 01:01 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,693
Send a message via Skype™ to kcowan
Quote:
Originally Posted by bosco View Post
...
Mojena Market Timing ...
But I don't believe that the bottom line of whether or not it works is if it beats the market. After all, a diversified portfolio with a dollop of bonds won't beat it either. What's the difference if you allocate using the time axis versus allocating versus the "asset class" axis? Either way is a method to attempt to smooth volitility and risk.
Thanks for this insightful observation Bosco. It made me think and I have to agree with you.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 06-17-2007, 03:55 PM   #16
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 678
Quote:
Originally Posted by bosco View Post
If I can garner 80% of the additional gains above cash by being in the market 50% of the time, have I not come out ahead on a risk adjusted basis?
No. My goal is NOT to earn a percentage of the market return that is higher than the percentage of time I spent in the market. You may be able to accomplish that goal, but it is a meaningless goal to me.

My goal is to earn the highest possible return consistent with my risk tolerance. Therefore, I would MUCH PREFER to get 100% of the market return by being in the market 100% of the time, than to get 80% of the market return by being in the market 50% of the time.
__________________
JustCurious is offline   Reply With Quote
Old 06-17-2007, 04:00 PM   #17
Full time employment: Posting here.
 
Join Date: Sep 2006
Posts: 678
Quote:
Originally Posted by bosco View Post
I am certainly NOT advocating market timing. But I don't believe that the bottom line of whether or not it works is if it beats the market. After all, a diversified portfolio with a dollop of bonds won't beat it either.
Not true. A diversified portfolio of 90% stocks from around the world and 10% bonds earned 11.28% over the last 10 years.
Indexfunds.com | Index Portfolio 80 Purple | Index Returns and Allocations

This compares to the return of the entire U.S. stock market of 8.25% over the same time period.

https://flagship.vanguard.com/VGApp/...BarChart=false

If you can get the market return with no effort, and it beats market timing, then market timing is inferior.
__________________
JustCurious is offline   Reply With Quote
Old 06-17-2007, 04:08 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Oh dear...Mojena Market Timing. I used to watch that site back in the late 90's and had forgotten all about it. He used to use 90 day t-bills instead of money markets.

Basically, by jumping in and out of the S&P 500...sometimes with frightening regularity...his standard model eked out a small benefit over a buy-and-hold. His aggressive model severely underperformed.

In a nutshell, the linchpin to the whole 17 year performance benefit was getting the heck out of the market for most of the post 2000 drop. If you look closely at the buy/sell signals issued in the last 7 years, they almost universally called both buys and sells at the very wrongest time.

And thats without even broaching the subject of all those short term gains and losses and the tax implications.

But its a fine example of mechanical timing models...which fail to take into consideration the psychological influence on short term market movements.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 06-17-2007, 06:26 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,292
Quote:
Quote:
Originally Posted by Ed_The_Gypsy
I am not smart enough to be a timer and I don't trust anyone to make my decisions for me.

I have been fully invested for maybe 25 years and it has paid off well so far.


That is probably the best 25 year period ever. Let us hope it repeats.

Ha
You are probably right, Ha. I doubt that the next 25 will be as good. I will be happy with average.

I am figuring on moving some of it into TIPS for insurance as I get closer to endgame.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 06-17-2007, 10:33 PM   #20
Full time employment: Posting here.
Alex's Avatar
 
Join Date: May 2006
Posts: 696
IMHO, (and the learned opinion of many others far smarter than me) market timing is a losers game. Let's hear what experts say about stock market forcasts and market timing:

"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." Warren Buffet

"Forget about timing the market, it doesn't work. You'll lose money. Invest for the long haul and then sit back and wait--the market always goes up in the long-run." Paul Farrell, CBS Marketwatch

"Market-timing is bunk." Pat Dorsey, Director of M* Fund Analysis.

"There will always be someone predicting disaster and someone predicting great fortune. At one time or another, each will be closer to correct than the other. But it won't matter to you if you understand this and have invested responsibly. You have a long-term plan; stick with it." Peter Lynch

"Everyone wants protection from the bear. But it's best to get it through diversification, not by trying to outsmart the market in a game in which the deck is stacked against the investor." C.V.Sanders, Morningstar

"Transaction costs and taxes kill most active traders. That's why no market-timing letter beats buying an index fund and standing pat." Mark Hulbert

"The market timer's Hall of Fame is an empty room." Jane Bryant Quinn, Author, Columnist

"Market timing is an ineffective strategy for mutual Fund Investors." CDA/Wiesenberger

"Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningf
There will always be someone predicting disaster and someone predicting great fortune. At one time or another, each will be closer to correct than the other. But it won't matter to you if you understand this and have invested responsibly. You have a long-term plan; stick with it." Peter Lynch

"Everyone wants protection from the bear. But it's best to get it through diversification, not by trying to outsmart the market in a game in which the deck is stacked against the investor." C.V.Sanders, Morningstar

"Transaction costs and taxes kill most active traders. That's why no market-timing letter beats buying an index fund and standing pat." Mark Hulbert

"The market timer's Hall of Fame is an empty room." Jane Bryant Quinn, Author, Columnist

"Market timing is an ineffective strategy for mutual Fund Investors." CDA/Wiesenberger

"Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." John Markese, President, AAII Journal

"Among the 160 or so newsletters the HFD monitors, the market timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis." Mark Hulbert 1-18-01

"Over a 12.5 year period, 224 of 237 market timing newsletters went out of business." indexfundsadvisors.com

"I'm a strong advocate of buying and holding." Charles Schwab

"Buy and hold is a very dull strategy. It lacks pizzazz and doesn't inspire much admiration at cocktail parties. It has only one little advantage: It works, very profitably and very consistently." Frank Armstrong, Author

"For most investors the odds favor a buy-and-hold strategy." Carol Gould, New York Times

"Some people in the popular press talk about 'getting into' a bull market and 'getting out of' a bear market, but it is all marketing hype." Rick Ferri, Author

"Only liars manage to always be 'out' during bad times and 'in' during good times." Bernard Baruch

"It must be apparent to intelligent investors who if anyone possessed the ability to do so (market-time) he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public." David L. Babson, famed investor

"If you buy--and then hold--a total-stock-market index fund, it is mathematically certain that you will outperform the vast majority of all other investors in the long run." Jason Zweig, Money magazine

"The facts suggest that successful market timing is extroardinarily difficult to achieve." Burton Malkiel, author of Random Walk

"If we haven't said it enough, we'll say it again: Market timing is dangerous." Barron's Guide to Making Investment Decisions

"Don't trade in and out of funds. Stay invested.-- Not only does buy-and-hold investing offer better returns, but it's also less work." Eric Tyson, author Mutual Funds for Dummies

"If I have noticed anything over these 60 years on Wall Street, is is that people do not succeed in forecasting that's going to happen to the stock market." Benjamin Graham
"


__________________

__________________
Oh, you hate your job? Why didn't you say so? There's a support group for that. It's called EVERYBODY, and they meet at the bar.--Drew Carey
Alex is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
The Case for Market Timing doushioukanaa FIRE and Money 17 05-16-2006 02:22 PM
My favorite market timing metric wabmester FIRE and Money 15 05-07-2006 11:46 AM
Is this market timing? Spanky FIRE and Money 3 05-10-2005 11:15 AM
Market Timing Article today............. Cut-Throat FIRE and Money 22 09-01-2004 11:35 AM

 

 
All times are GMT -6. The time now is 08:25 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.