I just sold it all

[youbet]

In other words, assymetric urgency drives prices.* Not quantity of buying or selling entites.

Aw, that's not right.* Assymetric urgency is what happens when the traders drink a lot of coffee in the morning before the market opens and the washrooms are out of order.* You know, traders standing around, knees slightly bent and legs pressed closely together, waiting for the janitor to unplug the potty.* Eating lots of spicey food the night before can be even worse.* Man, just look at those guys hopping around, red-faced suffering from "assymetric urgency!"

 

[brewer12345]

I don't know Brewer.  If you pull based on numbers or instinct you are market timing.  I don't have an argument with someone who knowingly chooses to do that but if us normals "go with our gut" the warnings are that we almost always blow it.  To my mind the alternatives are to allocate and stand tight knowing there may be times of scary declines (e.g 40-50%); or you just go with some sort of non-volatile income only deal with a bond ladder or the dreaded SPIA.

Agreed, an allocated index fund is probably the way to go if you don't wish to actively manage your money. I was commenting more for those of us who aren't (solely) indexers.

 

[donheff]

Agreed, an allocated index fund is probably the way to go if you don't wish to actively manage your money. I was commenting more for those of us who aren't (solely) indexers.

Yup. By "us normals" I meant the average Joe who can't or doesn't want to pay as much attention to market details as most guys do to sports stats. I don't pay much attention to either so timing would be a disaster for me.

 

[semtex]

I had filed the sell order today, but didnot pull the triger. The two markets are telling us different story. Bonds said a recession ahead. Equity said the great jump near. Who to follow? Usually bonds guys are smarter than stock people.

I will sell all my holding when naz close 2300, so 2% away.

 

[donheff]

I will sell all my holding when naz close 2300, so 2% away.

So what do you do if it goes to 2290 then heads downhill: 2000; 1800; 1600. Do you figure you missed your opportunity and stay in till the next rally or bail on the way down? If the later, at what point on the way down to you conclude it is on the way down?

 

[brewer12345]

So what do you do if it goes to 2290 then heads downhill: 2000; 1800; 1600.  Do you figure you missed your opportunity and stay in till the next rally or bail on the way down?  If the later, at what point on the way down to you conclude it is on the way down?

This is why I have an easier time with individual stocks and bonds than with indexes/funds. I can do oodles of fundamental work and come up with what I feel to be a pretty reasonablevaluation for a stock or bond. If it gets much above that, I sell it. Can't do this with any reasonable accuracy with an index.

 

[semtex]

donheff,
We miss opportunities all the time, what I what to say is I donot believe this rally. As you said, if the market hell down, like 2300, 2000, 1800, 1600. When I will jump in, it all depends. Have to say, I am a dirty timer too.

 

[uncledrz]

Thoughts, suggestions, insults..?

I have no intention to insult.  But I do have a thought and a suggestion.

Getting out of the market entirely on a whim is not the way to invest.  It sounds like fear, of the fear/greed equation, got the better of you.

You should have a written plan.  The plan may include enter and exit points (i.e. p/e, p/s, yield ratios, etc.).  Then if the point is hit, follow through with the plan and be ready to get back in when the enter point is hit.  Otherwise, bailing out on a whim will, as others have pointed out, be costly in the long term.

So decide on you AA and if you'd like, put it in a range, but only work on the edges.

 

[semtex]

brewer1234,
I am a bad picker, this year, two big bet:
TMFZ, bot 2.3, up to 4 then down to 1. still holding.
PDP.TO, bot 9.8, sold 19.3.
The loss and gain cancel each other.

But my qqqq play always wins. Parking money at MM untill QQQQ down below 37, bot around 36.8, still holding. I will sell it around 41.3.

Only three trades in a year.

 

[donheff]

donheff,
We miss opportunities all the time, what I what to say is I donot believe this rally. As you said, if the market hell down, like 2300, 2000, 1800, 1600. When I will jump in, it all depends. Have to say, I am a dirty timer too.

Actually, I was asking the opposite. If you miss the top - in other words if you are still in and the market starts to fall would you pull out (if so, when) or just stay in until the next time you think we are at a top?

 

[donheff]

This is why I have an easier time with individual stocks and bonds than with indexes/funds. I can do oodles of fundamental work and come up with what I feel to be a pretty reasonablevaluation for a stock or bond. If it gets much above that, I sell it. Can't do this with any reasonable accuracy with an index.

That doesn't sound like market timing. It sounds like stock picking. That makes much more sense to me - just not by me

 

[semtex]

donheff,
I donot expect to catch top or bottom. Here is my strategy: I park cash at MM most time. In one year, I will do two or three trades, each one target 3% to 4% gain. So the total will be 8% to 12%. I only trade qqqq, it is liquid and volatile. Usually I will buy in when qqq down 10%, so there will be a good chance to win.

When to buy, it depends. Like this year, I only did one trade.

This strategy is good for the 2004 until now kind of market, zig-zag.

 

[Nords]

Actually, I was asking the opposite.   If you miss the top - in other words if you are still in and the market starts to fall would you pull out (if so, when) or just stay in until the next time you think we are at a top?

Today marks at least our 10th all-time portfolio high this year and staying invested has worked for the last nine of them-- we're up 9.4% YTD.

But if our experience is a market indicator then you won't have long to sit on the sidelines...

If you're not a stockpicker then you could have been driven out by concerns over your asset allocation. Maybe before you swoop in at whatever low you're seeking, you could pick your desired asset allocation and either jump in at a price you like or DCA over the next few months.

 

[mathjak107]

donheff,
I donot expect to catch top or bottom. Here is my strategy: I park cash at MM most time. In one year, I will do two or three trades, each one target 3% to 4% gain. So the total will be 8% to 12%. I only trade qqqq, it is liquid and volatile. Usually I will buy in when qqq down 10%, so there will be a good chance to win.

When to buy, it depends. Like this year, I only did one trade.

This strategy is good for the 2004 until now kind of market, zig-zag.

Problem i see is you will miss most of the really big gains while getting whacked in dips every now and then.

Its like my wife said to me, if we only need 7-8% a year on average to make our numbers work then after we hit that why cant we just sell out for the rest of the year?

The answere is because long term we need those 30% plus years in order to make the down years average out to that 7% number. Miss any of it and the magic of the law of large numbers go away.

 

[semtex]

mathjak107,
I agree what you said. My strategy works at current sideway market, not bull or bear. But do you think we will have another bull market like 1980s to 1990s?

 

[modlair]

It is worth noting that the studies indicating that you must remain in the market were funded by mutual fund companies whose fees are only collected if you remain in the market.

I have always thought it was somewhat shaky for them to show something like "if you miss just the 10 big up days over a 20 yr period, then your overall gain in that period is 30% vs 130% if you capture them". I have noted that they never seem to quote what your 20 year results are if you manage to miss the 10 worst down days over that time.

Oh sure, no one seems to be able to do that, but if you're going to quote results that show market timing is a bad idea -- regardless of how possible it is to do -- then I would think academic purity requires you to present the alternate case too.

 

[brewer12345]

brewer1234,
I am a bad picker, this year, two big bet:
TMFZ, bot 2.3, up to 4 then down to 1. still holding.
PDP.TO, bot 9.8, sold 19.3.
The loss and gain cancel each other.

I'm generally not willing to buy anything that doesn't generate a lot of cash and that I am not willing to hold for years. The few times I have made exceptions have generally been mistakes, with the exception of PLMD (never generated much free cash because it has been growing so much).

 

[FinanceDude]

I'm generally not willing to buy anything that doesn't generate a lot of cash and that I am not willing to hold for years.  The few times I have made exceptions have generally been mistakes, with the exception of PLMD (never generated much free cash because it has been growing so much).

have you had any luck with companies selling for 2-3X their cash per share price? I know that used to be all the rage a few years ago. you have to think a company that has $3 a share in cash and is selling around $7-$9, with a good business model, should have the potential for price appreciation...........

 

[yakers]

It is worth noting that the studies indicating that you must remain in the market were funded by mutual fund companies whose fees are only collected if you remain in the market.

I have always thought it was somewhat shaky for them to show something like "if you miss just the 10 big up days over a 20 yr period, then your overall gain in that period is 30% vs 130% if you capture them". I have noted that they never seem to quote what your 20 year results are if you manage to miss the 10 worst down days over that time.

Oh sure, no one seems to be able to do that, but if you're going to quote results that show market timing is a bad idea -- regardless of how possible it is to do -- then I would think academic purity requires you to present the alternate case too.

Kind of a good point but it would become too complicated to calculate all the possibilities compared to just in Vs out of the market. I can see going to mostly cash if you feel there are no good asset classes to invest in, but when do you go to cash and when do you go back into the market? Sometimes its more evident when to buy when PEs are low or there is some appealing asset class. There is a nut case H##us who, I think, is following this approach. But it is not obvious that it is better holding cash than being in the market over long periods of time. From my very limited personal experience I feel confident in buying certain items at certain times, my problem is I cannot as accurately figure when to sell.

 

[brewer12345]

have you had any luck with companies selling for 2-3X their cash per share price?  I know that used to be all the rage a few years ago.  you have to think a company that has $3 a share in cash and is selling around $7-$9, with a good business model, should have the potential for price appreciation...........

I did exactly that with NLS a few years ago.  Selling for $12 with $4 a share in cash.  Let that one go well into the 20s.

Now I mostly concentrate on companies that are either selling at roughly asset value and companies that are selling at a depressed cash flow multiple.  Finding both attributes in a single stock is even better.

 

[FinanceDude]

I did exactly that with NLS a few years ago.  Selling for $12 with $4 a share in cash.  Let that one go well into the 20s.

Now I mostly concentrate on companies that are either selling at roughly asset value and companies that are selling at a depressed cash flow multiple.  Finding both attributes in a single stock is even better.

Good screen..........are you a fundamentalist or a technician, or maybe a hybrid? I know business schools teach pretty straight fundametal........but have you evolved??

 

[brewer12345]

Good screen..........are you a fundamentalist or a technician, or maybe a hybrid?  I know business schools teach pretty straight fundametal........but have you evolved??

Strictly fundamental analysis. I never believed any of the technical analyss stuff was more than self-delusion.

 

[HFWR]

When you buy stock, you're buying a company. If you were buying a Subway franchise, would you study the books/business plan of Subway stores, or look at charts?

 

[Nords]

have you had any luck with companies selling for 2-3X their cash per share price? I know that used to be all the rage a few years ago. you have to think a company that has $3 a share in cash and is selling around $7-$9, with a good business model, should have the potential for price appreciation...........

Apple Computer, Jan 2001, selling at $16/share with approx $5/share in cash, just before OSX came out.

We sold three months later for our 50% profit and never looked back. In retrospect we should have taken another look in 2003 but we'd moved on.

I'm still a sucker for that kind of price/cash ratio...

 

[wildcat]

I think the cash per share can be effective. Two important distinctions in my mind and this is from my experience.

1) The screen does well when you have a company/business/management that has done an exceptional job of allocating its cash in the past or has the potential to (i.e. assuming the business is a good one). The hope or idea is that the excess cash will be put to good use in a shareholder friendly manner.

2) The screen does not do as well when you have a company that has done the opposite or destroyed wealth. The lack of hope or idea is that the excess cash will just do enough to keep the business alive for the time being, until the cash is all burned up.

It is up to you to distinguish what will happen with the cash and to not just blindly throw money at a high cash per share stock.