LOL!'s Market Timing Newsletter

[LOL!]

Today's pop was my opportunity to get out of the recent buys of VEA and VEU both for a loss. Just following the plan I posted on 12/11.

The cash will be used for 4 Roth IRA contributions and a semester of college expenses over the next month.

[LOL!]

I sure could've timed that better.

This morning I did take some cash and buy some DGS (emerging markets small-cap) in a tax-advantaged account, so that I am unconcerned with buying a dividend. I have not had any luck with DGS, but my mantra is to buy low and this is the lowest price I have bought in at least 3 years.

Despite the recent pops, the market is still at a relative low point, so folks who rebalance late in December or early in January might be happy.

[NW-Bound]

Well, I am not a good market timer either.

The lot of EDC that I bought at 26.50 3 months ago is still underwater. It closed at 28.12 a month ago, but I did not sell. It is now at 21.80. Two days ago, I added a bit at 19.95. Will see if the whole thing makes me any money.

On the other hand, the semiconductor ETF I bought at $84.34 on Oct 17, then sold options to effectively sell it at $103 in Feb 2015, went as high as $146!

So, I sold the good one way too soon, while keeping the bad one too long. So far, loss cancels out gain, leaving me not too happy.

[steelyman]

Yesterday after the market closed, I placed orders for approx. equal amounts of FEMKX (emerging markets) and FNMIX (emerging bonds). I put the rest of this month's investment allotment in FAGIX (loosely high-yield bonds).

One more month to go in this 2-yr investing program. The 2014 return, according to my spreadsheet that factors in MRDs (and I believe is correct or very close) is 9.25%.

I'll post the actual allocation (with tickers) when done at the end of January.

[papadad111]

Does this imply market underperformance compared to indexing?

Can't wait to see the study.

And ask how well did you sleep at night ... That is an important vector to consider too.

[LOL!]

The 2014 performance numbers are now in. The results …

I suck at market timing, but I beat my small-cap and value-tilted benchmark by almost 1%, despite being more tilted to lower performing asset classes. I am not unhappy, but I have been happier about performance in past years.

Good things: Took advantage of the dips in late Jan to early Feb and in mid-October. Also did the tax-loss harvest thing in December. Had a 35% annualized return in emerging markets when EM ended up flat for the year.

Bad things: Too much international. Doubled-up on international in December when I should not have. Not enough US large-caps and sold REITs too early.

[papadad111]

What was your portfolio return including dividends for the year ? Did you manage to beat the SP500 for example ?

[steelyman]

Quote:

Originally Posted by steelyman The 2014 return, according to my spreadsheet that factors in MRDs (and I believe is correct or very close) is 9.25%.

The online fund company's data was not up-to-date when I posted the above on New Year's Eve. Now it seems to be, and the final return for this inherited IRA for 2014 is 10.93%.

I think that's less than the S&P 500, but better than my forward estimate of 6% annual return post-retirement, so I'm OK with that. After all, although the markets have rolled the past few years, they actually rock & roll

[Brat]

Thank God for a balanced portfolio. My total is actually up today while the DOW went down 330.

[NW-Bound]

Quote:

Originally Posted by Brat Thank God for a balanced portfolio. My total is actually up today while the DOW went down 330.

I see that some REITs are up. What about tomorrow, if the Dow & SP go up will that REIT go up some more?

And how about some other investments that you have? Mutual funds have not reported yet, have they? It's only 1 hour after market close as I write this.

I do not need my MF reports to know it's bad. I have more stocks than MFs, and they are getting a big hair cut today.

[Brat]

Yes, my O went up. Vanguard reported Wellington Income value as of 1/5/15 so I assume they have a mighty fast 'puter. Other holdings are ETFs which were down at the margins, international is still a stinker.

[clifp]

I was thinking last week as I was doing some last minute trading, that I bet we will see a wave of profit taking first of the year.

I guess the answer is yes, pity that my thinking saved me exactly zero dollars.

[NW-Bound]

Quote:

Originally Posted by Brat Yes, my O went up. Vanguard reported Wellington Income value as of 1/5/15 so I assume they have a mighty fast 'puter. Other holdings are ETFs which were down at the margins, international is still a stinker.

Right after reading your post, I went to Vanguard site, and saw that the MF quotes were still the value of Jan 2nd. Perhaps I did not see the same screen as you did.

Then, just now, 2-1/2 hours after market close, my Quicken screen just updated the MF price. Wellington is down -1.1%, in line with its stock AA and the S&P drop of -1.83% today.

Darn, several months of living expenses gone just like that. If this continues, I will need to learn to make scrapple to save what I can on grocery expenses.

[LOL!]

Back on Dec 11th, I wrote:

Quote:

Originally Posted by LOL! After I sell them, I will stay in cash until after a few other Vanguard ETFs go ex-dividend, then I will decide what to do with that cash. It is likely I will buy some VTI (total US market) in taxable and/or in Roth IRAs*, then exchange from FUSVX (S&P500 index) back into FSITX (bonds) in the 401(k). (*We will use some of the cash to make our Roth IRA contributions for both 2014 and 2015.) Got that? It's a bit complicated, but I typed it in here more as notes for myself to follow in the next couple of weeks.

So I have all this cash in my taxable account ready to do something. I will use some cash to make Roth IRA contributions, but leave it in cash in those accounts for now since I am in no hurry. I think I will have to wait until the end of January because of three things on the calendar:

1. ECB meeting on Jan 22
2. Greece vote on Jan 25
3. FOMC meeting on Jan 27

The state of the union speech is earlier.

I am going to bet that the Greeks will vote to stiff the ECB out of paying back their loans. I think the markets see this happening and are already factoring it in. I am going to lighten up on developed markets this week by about 0.7% of portfolio value because there is a small position of VEA left in an IRA. Otherwise, I will ride the foreign stock markets down with all other indexers.

It would not surprise me if Draghi and the ECB actually jump the gun and do something before the Greece vote despite saying that they don't want to do anything to influence the vote. They would have to do it before their meeting, too, otherwise it would not be a surprise. OTOH, nobody likes the Germans anyways, so who knows what will happen?

(I did invest some year-end dividends created in my IRAs into VTI and VCSH today, but these were small amounts not worthy of really messing with. Since VTI is down 2% YTD, there is a good chance that I will outperform VTI by 2% for the rest of the year.)

[Brat]

Wellesley is down only .44% today. I am just a smidge down.

[papadad111]

We will see 10% a swift correction in January. I can feel it / smell it ! Will bounce along the lows with the euro and oil prices being low til April or May and then slowly climb back.

Oil has yet to see capitulation, but am now long USO @ $20/shr and looking for a short term speculative gain/trade up t around $22/shr by August 2015.

Adding to VXUS on the down days to get international to be 20% of portfolio?

Cash position remains approx 10% and will stay at that level unitl a 10% correction (closing price) is achieved and then add approx 5%to existing positions across the portfolio

[FUEGO]

Quote:

Originally Posted by papadad111 Oil has yet to see capitulation, but am now long USO @ $20/shr and looking for a short term speculative gain/trade up t around $22/shr by August 2015.

I jumped in to oil too. 600 shares of USO at $18.23 today. A small position, about 1% of portfolio.

[LOL!]

I submitted a sell order today, but screwed it up. It was a limit order just as I was trying to get out the door and I set the limit a dollar higher than I had intended, basically a typo, so it was not executed when I checked after the market close. So no sales today.

[LOL!]

The trade I didn't get going yesterday was completed today after I resubmitted it with a reasonable limit price, so that typo made me some money. The position was an old position in SCZ small-cap foreign developed that had doubled in price. I will pay no taxes on the gains since I have enough carryover losses from 2009 to net it out to zero.

After that trade went through, I put in a buy order for VTI about 0.5% lower than it was trading with the expection that it would not execute, but it did on a small intra-day drop. So my percentage of equities is about the same, but just a very tiny shift from small foreign to US from previous allocations. I may even sell this new position in the short term.

I post this mostly because I wanted to stick my neck out (and my money) to show that I think developed foreign markets even though they lost money in 2014 are not in recovery mode yet and won't be for awhile. I cannot sell out all of my developed markets because I am not 100% sure about their demise, so I have to hedge a little bit by keeping more than a lot of that asset class.

I still have the other cash poised to buy more equities hopefully later in the month.

[LOL!]

Yesterday's trades were beneficial by about an extra 1% of the money exchanged over doing nothing. This is because SCZ didn't go up much after it was sold even including today, but VTI has gone up more both yesterday and today.

Today I see something similar happening: VEA (large-cap developed) is up about 1.2% now, but VSS (small-cap foreign including developed and emerging) is up half as much at 0.6%. This doesn't make sense to me since small-cap emerging is up 1.4% (DGS) or 1.1% (EWX) and large-cap emerging is up 1.9% (VW0). So I am going to sell some VEA (as noted above) and buy VSS. To some extent VSS does replace the SCZ sold yesterday while getting some small-cap emerging gains for free.

If these trades go through, then I will not increase my equities at all nor my ratio of US:foreign. This is a short-term trade at no cost, too.

Wish me luck!