Market timing and the individual investor

[haha]

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Originally Posted by Lsbcal First, I do not know where we are at in the cycle and never will. Second, if you think this is an unusual market you have only to look at the SP500 in relation to past decades to see that this is not all that unusual. One chart I posted is available here: Where will the “teens” take equities?

Well, monetary policy sure seems unusual. As does governemnt debt, if by unusual we mean rarely occurred in the past. In fact never in the 20th century, other than in times of huge wars.

Ha

[Lsbcal]

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Originally Posted by haha Well, monetary policy sure seems unusual. As does governemnt debt, if by unusual we mean rarely occurred in the past. In fact never in the 20th century, other than in times of huge wars. Ha

I was referring to price behavior of the SP500, not all the driving forces. All those forces that drive prices are somehow put into a pricing machine and out comes what we have now. I don't know anyone who can predict better then the market's pricing at the moment.

We all tend to see the world through different lenses and that's what drives those prices. My approach to investing just relies on pricing and maybe a little valuation data. Others may choose to set their investments based on where they think prices ought to be but not me. I'm not saying I'm a believer in the strong version of the efficient market hypothesis but I could be OK with an approximately EMH concept.

[Animorph]

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Originally Posted by Lsbcal Did you ever test this approach in various markets going back some decades and compare to other approaches (such as taking your highest equity allocation and just doing buy-hold)? Monthly SP500 and EAFE data is available going back to at least 1970. You can get the SP500 stuff from Yahoo history and EAFE from MSCI. Whatever I've done has been back tested. No assurance of future success but at least it worked before.

Nope, just did it in 2008-2009. What I outlined above was only a plan for investing cash in a down market, sort of a trigger-based DCA. If you have the cash already, it beats just hanging onto it while the market dips and then recovers. There may be an optimum set of triggers and amounts to invest that would backtest nicely, but I haven't done that.

In order to raise that cash initially I have been following my retirement portfolio projections and selling when the market is ahead of plan. So far so good, but I'll remain flexible with it. That's my version of market timing.