Market Timing Schmarket Timing

[NW-Bound]

Trading, market timing, or rebalancing... I don't care. I just have not figured out a way to maximize my gains. It bothers me.

On the other hand, they say "no pain, no gain". OK, so my pains in the past were later rewarded. But what if that stops working some day? All pain, no gain? Where's the warranty?

Darn, this is what makes life interesting.

Feel the rain like an English summer
Hear the notes from a distant song
Stepping out from a back shop poster
Wishing life wouldn't be so dull​

 

[eta2020]

At 1970 was good time to shed junk and at 1850 good time to buy some quality.

But sell portfolio at 1970 and buy it back at 1887-1904 is example of trading does not work unless your initial portfolio has 0% gains.....in which case you are in huge troubles as far as investing goes.

This is because you have to pay taxes on gain of original portfolio plus all your dividends become non qualified for next 12 months.

I don't mean to be rude......This is how I see it

 

[NW-Bound]

...
But sell portfolio at 1970 and buy it back at 1887-1904 is example of trading does not work ...

Ah, you made me look. The value of the S&P was indeed at 1970 when this thread started on 7/30.

I was thinking about my own situation. My portfolio peaked on 7/3/2014 when the S&P was at 1985. That peak value was $180K more than the present value. I thought of selling some, but thought my stocks would continue to do well. Even on 7/30/2014, I still had $150K more than what I have now. The S&P peaked at 2011 on 9/18, but my portfolio has already ebbed.

When you are not an indexer, your top and bottom do not completely match the broad market. And trying to figure out why and how can keep one occupied.

PS. About 2/3 of my stash is in 401k/IRA, and the gains impervious to tax. I would not be able nor hope to capture 2/3 of that $180K "loss", as I could never sell all. But if I could sell, then buy back enough just to avoid say $40-50K of loss, I would be happy.

PPS. I guess that while indexers may talk about "market timing", I was thinking of the term more as "stock timing". And as different sectors move out of phase with one another, "rebalancing" between them looks lucrative, but of course difficult.

 

[eta2020]

Ohh and I forgot one more problem with "timing"

If I sold and due to taxes end up with 85% of my money not only I would have to pay non qualified dividends I would also OWN less shares and have LOWER dividend yield of portfolio.

As I said selling looser that peaked 2 months ago and buying something at discount that will perform well next X years....That is what I rate as a good deal

 

[NW-Bound]

... As I said selling looser that peaked 2 months ago and buying something at discount that will perform well next X years....That is what I rate as a good deal

I have been trying... I have been trying...

 

[eta2020]

I had backed up my pick up truck during a sell of and....increased my annual dividend by another 2k due to buying some equity.

But portfolio remain 95% qualified....since I made no big trade. I am still of as far as NW goes. By about 3.5 % just as S&P is.

 

[karluk]

This is because you have to pay taxes on gain of original portfolio plus all your dividends become non qualified for next 12 months.

This statement is flat out wrong. You appear to be confusing the holding period for long term capital gains with the (much shorter) holding period for qualified dividends. To quote one of many online sources:

You must have held the applicable share of the fund for at least 61 days out of the 121-day period that began 60 days before the fund’s ex-dividend date.

https://www.fidelity.com/taxes/tax-topics/qualified-dividends

So there is a very good chance that OP, having repurchased his shares on October 20, will already meet the qualified dividend holding period for a stock or mutual fund that goes ex-dividend in late December. The tax loss from not getting qualfied dividends is likely to be zero, not a full year's worth of dividends.

You are of course right to point out the possible tax consequences of OP's temporary move to cash, but since you don't know his situation, you have no real reason to say that he will be paying even $1 extra in taxes. His realized capital gains may all be taxed at the 0% Federal rate and the effect on qualfied dividends may be nonexistent.

 

[eta2020]

With 60k profit...it did not look to me OP had Mickie Mouse portfolio.

I am not good with taxes, but if I sold for example 4 million dollar portfolio with 2 million in gain I don't see how I would not pay any taxes on gain.

Yes with 100k portfolio and 50k gain somebody who does not work and this is all they earned...wil not pay any taxes.

This 3% movements will benefit only if portfolio is fully wrapped in IRA or 401K IMO, but I may be wrong.

 

[karluk]

With 60k profit...it did not look to me OP had Mickie Mouse portfolio.

I am not good with taxes, but if I sold for example 4 million dollar portfolio with 2 million in gain I don't see how I would not pay any taxes on gain.

Yes with 100k portfolio and 50k gain somebody who does not work and this is all they earned...wil not pay any taxes.

This 3% movements will benefit only if portfolio is fully wrapped in IRA or 401K IMO, but I may be wrong.

You did take the trouble to read through this thread before offering your opinion on the tax consequences, didn't you? If you had, you might have seen OP's post from the first page of the thread, in which he clearly states

It would have been a brutal hit but my assets are indeed nearly 100% in IRAs.

I fail to see how you reconcile the fact that almost all of OP's move to cash occurred in tax sheltered accounts with a belief that he will be taking a huge tax hit that will more than offset his gain from being out of the market while it was declining.

 

[eta2020]

In that case in OP's trade will work

But such trading should be examined from all angles. I am just pointing some things out .... It is just a friendly debate

 

[NW-Bound]

Sure. It's just chitchat as we tend to do our own thing and do not listen to others anyway.

A thing about buying stocks rather than index funds is that even when the S&P is flat, different sectors can move quite a bit in opposite directions. I like to own a bit of everything, so often spend time watching them move. Attempts to trade to capitalize on these opposite moves are not always fruitful, of course. But watching it gives a guy something to do.

PS. One can do the above with sectored ETFs. It is even safer.