LOL!'s Market Timing Newsletter

[NW-Bound]

The shorting of the S&P is currently showing a measly gain of ten bucks! This market is really strong and has not dropped much. I can close it out and take the money to a McDonald. Nah! I will wait a while.

On the other hand, previously strong sectors like semiconductor and biotech drop a lot more from their recent peak. I had some options becoming in-the-money and getting exercised last week. I was kicking myself for losing the shares, despite making 8% in just the 40 days I held the stock. Now, it has dropped to where the strike price was, so I just bought it back (and still gained the previous option). Wanted to sell another option, but there's no buyer, or rather the bid is awfully low compared to previously. Looks like traders are not as bullish on semiconductors as they were just a week or two ago.

PS. These option trades make me just a few hundred bucks each contract. They won't make me rich, but it is fun. And last year, it added another 1% to the portfolio return. So far this year, it's only about 0.1% YTD.

 

[Brat]

I don't play the options game, I just invest in the ilk of Wellesley, Wellington and Berkshire Hathaway - my returns this year have been stunning, almost frightening. I am tempted to sell the portion that represents our MRDs buy VFSUX. Is anyone else suffering from altitude sickness?

 

[Sunset]

Absolutely, this market is crazy.... yet it was crazy at 20,000 too.

I just bought 100 shares of CCL because we are going on a cruise, and CCL will give me $100 as a shareholder taking a cruise just for owning the shares.

If the market tanks, I'll have to take 50 cruises to get my money back

 

[audreyh1]

Absolutely, this market is crazy.... yet it was crazy at 20,000 too.

I just bought 100 shares of CCL because we are going on a cruise, and CCL will give me $100 as a shareholder taking a cruise just for owning the shares.

If the market tanks, I'll have to take 50 cruises to get my money back

LOL!

 

[NW-Bound]

I don't play the options game, I just invest in the ilk of Wellesley, Wellington and Berkshire Hathaway - my returns this year have been stunning, almost frightening. I am tempted to sell the portion that represents our MRDs buy VFSUX. Is anyone else suffering from altitude sickness?

I do not know your exact age, but your MRD is probably about 4% of your stash. If the market continues to go up another 10%, which is not very likely given what pundits are saying, you miss out on 0.4%. This works out to $4000 on a $1M portfolio, but it has to be totally invested in the S&P. It is most likely to be less as your AA is not 100% stock.

So, let's say you forfeit a $2000 gain by taking the RMD out now on a $1M stash. But the other 96% you left behind would still give you a $48,000 gain. That's nothing to complain about.

It is more likely that the market will go through a correction before it gets higher. You will then kick yourself for not taking out the money out now, although the loss you avoid on that RMD pales besides the loss on the entire portfolio.

What I am trying to say is that it does not really matter. But if I were skittish, I would take the RMD out now, and would not lament if the market continues to go up. It is not the same as taking the whole thing to cash.

 

[Brat]

I will keep our RMDs in the IRA accounts until the end of the year and let the short term bond fund continue to grow tax free.

 

[LOL!]

[...]I intend to buy either BND with the money from selling AGG, but after BND drops below 81.20 or VCSH if it trades below 79.80.

I didn't expect these ETFs to drop so much the next trading day, but it looks like there is a chance to reach the prices mentioned in my previous post by the end of the day ... although those prices might be only fleeting. So I am going to submit a limit order to buy in a moment just in case we get that last spike downwards.

Update: Limit not reached which is probably just as well.
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[NW-Bound]

My bet on the S&P dropping has not worked out. Instead of winning a dinner for 2 at Fleming's Steakhouse, I have lost a "petite filet mignon" so far. Not capitulating and still holding...

On the other hand, my "superior" stocks have more than made up for it. They gained 0.62% today, which when diluted by the hohum mutual funds and the little bit of losing bonds becomes 0.35% over the portfolio. That's a lot of steaks, and I hope they don't get burned tomorrow.

 

[HFWR]

Phoenix has always been called the Valley of the Sun.

More like "surface of the sun"...

 

[NW-Bound]

More like "surface of the sun"...

It's the same.

Sadly, people still flock here. Traffic jam is terrible. When I first came here more than 40 years ago there was a single freeway running through town. The freeway joining Phoenix with LA was not completed until several years later. Can you believe that? Now, they cannot build freeways fast enough, or actually do not have room left to place them.

But AZ does not have a long list of hazards like TX has (that REWahoo maintains) as deterrents, and with only the heat to scare people off, well, it happens. It will take a long power outage in the summer to weed out the weaklings. As long as the ACs are humming, they will not budge. The older natives can tell you about growing up without AC, not even evaporative coolers. That's how tough one needed to be to stay here.

 

[LOL!]

I didn't expect these ETFs to drop so much the next trading day, but it looks like there is a chance to reach the prices mentioned in my previous post by the end of the day ... although those prices might be only fleeting. So I am going to submit a limit order to buy in a moment just in case we get that last spike downwards.

I'm trying again today with a limit to buy. Things look more promising since several trades have already happened at my trigger price. Let's see if I can get a penny or two lower price.

Update: Success!
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[LOL!]

I should have waited one more day to buy those shares of VCSH, but at least I didn't lose by sticking with AGG the last few days. I bought more VCSH this morning.
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[NW-Bound]

And I logged into my account to see that two limit orders I set yesterday on two small-cap stocks hit late yesterday. I did not expect them to hit, but as the market dropped late yesterday, they got to the level I set.

Both are in the green now, with one up by 4%. These are small positions, so not a big gain in dollar amount, but every little bit helps.

 

[NW-Bound]

Forgot to do an update on my bearish bet on the S&P. As you may recall, although I have been long the market, I was willing to bet that my stocks were better than the S&P, and shorted a bit of the latter.

The position is small (it's a game), such that if the S&P drops 1% from where I started the bet, I would win enough for a fancy dinner for 2. As one might have guessed, it has not worked out well, and I have lost 2/3 of what I was planning on winning.

This loss works out to be in the order of 1/100 of the gains I have elsewhere since that point, but it shows me that I was too pessimistic on the S&P. Rather than capitulating and closing out this bet and accepting defeat, I just made another side bet using an option. It is such that if the S&P does not rise significantly further from where it is today within 50 days, I will end up being even (meaning I will make money with this 2nd bet to cancel out the loss on the 1st). If the S&P retreats, then of course I will have a net gain. If the S&P keeps going up more, then I will be back to losing the dinner.

Will post updates.

 

[LOL!]

Some things are setting 52-week highs today. I will not be surprised if I have hit another hard rebalance trigger point by the end of the day. I seem to always sell too soon, but it's what I gotta do.

 

[LOL!]

I should have waited one more day to buy those shares of VCSH, but at least I didn't lose by sticking with AGG the last few days. I bought more VCSH this morning.

So not too bad at all for a bond fund today. VCSH closed at its high for the day of 79.61, but that was because of a large trade at the close. That was only 3 cents off of yesterday's close when adjusted for the 14 cent dividend (today is ex-dividend date). And 79.61 is up 6.5 cents from today's earlier purchase price.

So this bond fund did what it was supposed to do and I like that. Stocks were great today, too.

 

[Sunset]

Absolutely, this market is crazy.... yet it was crazy at 20,000 too.

I just bought 100 shares of CCL because we are going on a cruise, and CCL will give me $100 as a shareholder taking a cruise just for owning the shares.

If the market tanks, I'll have to take 50 cruises to get my money back

I applied for the credit.
Then I sold the shares for a net $30 profit, so even if I don't get the $100 credit, I still profited by the idea

 

[LOL!]

It seems time to make an update. Since selling AGG it has dropped 1.4%, and the VCSH I bought has dropped about 0.5%. Both percentages take into account the monthly dividends paid earlier this week. So I saved myself some losses by my last trades, but since equities went down, too, I am not really happy.

Clearly, folks are kinda waiting for the FOMC meeting where a small hike in the Fed funds rate is all but certain to be announced. I think that's the major reason that bond fund NAVs have dropped in anticipation. That might suggest there will be no major changes in prices of bond funds and stock funds when the FOMC announcement is made next week.

At this point, patience is the word. I see no reason to make any trades right now.
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[LOL!]

And a very nice day in the stock and bond markets for everyone today now that the FOMC has announced.

AGG (total US bond) has popped 0.5% today although it is still about 1% below where I last sold it. But bond funds don't go up this quickly in one day and stay there, so I have submitted a limit order to sell some shares.

I have nothing in mind to buy when I get the cash, so I'll probably let bond funds drop a little and then buy back bond fund shares at that time. If the sell limit order is executed, that is. And if bond fund shares keep going up, then I'm screwed.
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Update: It looked like my limit order was going to fill too soon, so I raised the price. Then it was filled anyways.

 

[NW-Bound]

Where is everybody? Are they all over the other thread, watching the race against Boho?

I have not done any trade recently. I still have my overweigh in biotechs, industrial metals, and EM. I have several options on the S&P and biotechs expiring next week, and then next month. Currently, looking like these options limit my gains rather than help. The market is that strong.

So, I stopped writing any more calls, and wait to see what happens while these calls expire. Also run out of ideas for stocks to buy, so still sitting on 30% cash. Not buying bonds yet.

 

[LOL!]

Nobody is losing money in this thread. It is just not as interesting or entertaining to watch people just make gobs of money.

I couldn't stand having money in my account, so I bought some shares of VTI and VCSH when they dropped lower today. I intend to sell some VFIAX tomorrow to make up for this indiscretion.
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[Ready]

Just curious, and maybe this has been answered before but this thread is awfully long...

If you had just put 100% of your money into an equity index fund, and never touched it from the day you began this thread until now, how would it compare to your actual returns?

 

[LOL!]

It is hard to say because my portfolio is not 100% equities … I simply cannot accept that risk. My portfolio is about 60% equities, so I benchmark against 60/40 funds as described earlier in the thread. I consistently beat my benchmarks.

So far YTD, the portfolio is ahead of Vanguard Wellington by about 0.75% and Vanguard Balanced Index by 0.65% and a DFA 60/40 fund by about 0.6% which is about what it is supposed to do.

The advice in this thread is not supposed to be "hit it out of the park" advice, but I think it provides actionable advice in near real-time. I also discuss things that don't work out, too.

 

[Ready]

Fair enough...and not a bad return at all.

The only problem is that if you charged the typical fee that an active fund manager or financial advisor wanted to charge for your expertise, you'd be underperforming the market. But since your knowledge and expertise comes without a cost to you, I'd say you've done quite well!

 

[LOL!]

Actually, I may not have done quite well. Here are the performances of three 60/40 funds from Morningstar.com:

VSMGX is Vg LifeStrategy Moderate Growth. It has US and foreign stocks and bonds.

VBIAX is Vg Balance Index. It has only US stocks and US bonds, so no foreign holdings.

DGSIX is a DFA Global 60/40 fund. It is a small-cap and value tilted fund with a significant chunk of foreign holdings.

So the spread of performances at over 1% difference average annual return is rather high for a set of passively-managed funds all with a 60/40 asset allocation. If a fund owned foreign equities during a time of poor foreign stock performance, then it didn't do as well as an all-US fund. If a fund owned lots of small-caps and/or value funds when large caps and growth asset classes were doing better, then it didn't perform as well either.

There is really no way to predict which asset classes are going to end up best for the year … and they change from year-to-year. So if one jumps into VBIAX today, maybe it becomes the loser over the next few years. Or if one sticks to small-cap and value-tilted which did quite well in the past, maybe it is the worst going forward. You just cannot know. Nor can you switch your choices at will because of the tax consequences from selling assets held in a taxable account.

And yes, the typical fee of an advisor and any taxes will make returns worse. That is, I don't think there is any way someone with an advisor can outperform a reasonable set of index funds or ALL of the 3 benchmark funds I named in this post over time.

Plus just about anytime you touch your portfolio you detract from its return.
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