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Old 09-09-2016, 12:58 PM   #1281
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Exchanged 1% of portfolio value from VSCSX to VSIAX today.
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Old 09-21-2016, 03:39 AM   #1282
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I'm back from a great 10-day vacation up in Wyoming, so just checking on recent market timing trades ....

The VTI I sold on 9/3 is trading down about 2% (taking into account recent dividends, too) and the VSIAX I bought on 9/9 is down a little bit, but should finish at least even after today's (Wednesday) market close.

What the FOMC says later today is supposed to be a non-event, but even so it could move the markets.
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Old 09-21-2016, 01:27 PM   #1283
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So FOMC meeting outcome is that rates remain unchanged and a nice little rise in the markets. I'm glad I got some September dividends reinvested yesterday.
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Old 09-25-2016, 05:03 PM   #1284
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Many of my investments have paid out their September dividends although there are a few more to go. I reviewed my portfolio today to see what I could do with the divvies that show up tomorrow and at the end of the week.

Also, I need to "clean up" a few things. I don't know if anyone else does this or not, but I have some small random positions in a few ETFs that I simply purchased so I could be left with no cash in those particular IRAs.

For example, suppose I got a dividend of $300 and wanted to buy something. I could buy 8 shares of VEA selling at $37.44 and have about 50 cents leftover, but I would not want to buy 2 shares of AGG selling at $112.23 and have $75 leftover (although I could then buy 2 shares of VEA).

So my clean-up actions are to sell these small odds and ends this week and use the money to add to my larger positions in the same accounts. The idea is to go from say 5 holdings in some accounts back down to one or two holdings and have cash as low as possible.

Part of this is to sell ALL my VSIAX in one account and buy VBR in another account. These are both Vanguard small-cap value index fund, but are held in different IRAs at different firms. I hope to buy VBR at a relatively lower price than I sell VSIAX for and scalp a few hundred dollars doing so, but if I lose a few hundred dollars instead, I won't be too upset. (Note I can do this because both IRAs also have bond funds/ETFs in them.)

I have my plans and will execute them this week.
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Old 09-26-2016, 02:03 PM   #1285
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Sold some AGG earlier today to raise some cash to buy VBR, VEU, and VSS. All these equity ETFs are trading a little lower than my purchase prices right now.

I still have some more VBR to buy in this last hour. Unless things dump in the next hour, I will submit the exchange from VSIAX to VBTLX in another account.

Update: So I carried through with my plan. I didn't buy anything at its low price of the day and I sold VSIAX (US small-cap value) at or near the low price of the day. So I probably cost myself a few hundred dollars over all or about a tenth of a percent of the amounts traded. Oh, well.
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Old 09-28-2016, 03:36 PM   #1286
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Today was a very nice day in the markets with my ETFs closing at or near their highs. Thank you, OPEC.

Today would have been a better day to do my "clean up" since before lunch things were lower than yesterday, then they just trended up until the close. I could have been doubled up for a few hours and made some extra change.

But no matter. My trades from earlier in the week have made more money than doing nothing, so I am happy. For instance, while small cap value is up about 1%, the other things I bought are up 1.23% and 1.35%, so more gains over doing nothing.

Of course tomorrow could be a big down day, so I will live in the moment of turning a small loss into a nice 4-figure gain and increasing the lead over the performance of the 60/40 benchmarks that I make comparisons to.
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Old 09-28-2016, 04:44 PM   #1287
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Originally Posted by LOL! View Post
Today was a very nice day in the markets with my ETFs closing at or near their highs. Thank you, OPEC.

Today would have been a better day to do my "clean up" since before lunch things were lower than yesterday, then they just trended up until the close. I could have been doubled up for a few hours and made some extra change.

....
Yep, my crystal ball is out for repairs right now, otherwise I too could have killed it with borrowing 1MM and buying options for the day.

Oh well I got pillows at $2.99 ea at Kohl's instead.
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Old 09-28-2016, 08:22 PM   #1288
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Yep, my crystal ball is out for repairs right now, otherwise I too could have killed it with borrowing 1MM and buying options for the day.
That's a very nice thought. I have worked out I think a way to limit my downside when making trades, so I am never going to kill it.

I am trying to average gains of about a thousand dollars a day this year while doing so. That means even 0.3% gains are worthwhile to me just as $2.99 pillows are. One doesn't need them every day, but they will add up.
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Old 09-29-2016, 06:24 PM   #1289
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....
Of course tomorrow could be a big down day, ....
And we got a down day, so back to about where things stood earlier this week.

That's OK since there will be more dividends to invest tomorrow.
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Old 09-30-2016, 12:18 PM   #1290
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That was very nice of the markets to go down 1% yesterday, so that I could reinvest dividends received this morning, and then even nicer to go back up 1% after I did so.
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Old 09-30-2016, 01:56 PM   #1291
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That was very nice of the markets to go down 1% yesterday, so that I could reinvest dividends received this morning, and then even nicer to go back up 1% after I did so.
When you are king of the markets, anything is possible!
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How to Beat a Benchmark
Old 10-02-2016, 06:34 PM   #1292
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How to Beat a Benchmark

How to Beat a Benchmark

Executive Summary: There ain't no such thing as a free lunch. In order to Beat a Benchmark one has to cheat and either use an incorrect Benchmark or take on more risk than the Benchmark. One also must keep transaction and tax costs as close to zero as possible.

-----

There is a lot of talk about "beating the market" by articles, advisors, charlatans, salesreps, and so on. This write-up will not show readers how to beat the market, but it will show them how to beat a benchmark. So what's a benchmark? A benchmark is a model portfolio of a given asset allocation that one can invest in.

Generally, the benchmark will have investments in it that will follow a few market indices. For example, the Vanguard LifeStrategy Moderate Growth fund (VSMGX) has 4 separate index funds allocated to a 60% equities, 40% fixed income portfolio with both US and foreign investments represented. Another example is the Vanguard Balanced Index fund (VBIAX) which also has a 60/40 asset allocation, but instead of separate funds, VBIAX appears to invest in the underlying securities directly.

The suitable benchmarks and others like them will have managers that do the rebalancing among the stocks and bonds, just like an investor would be doing in their own portfolio. So not only does an investor get to try to match the underlying indices used by the benchmark funds, but also the investor gets to try to match the rebalancing moves of the fund as well.

Furthermore, suitable benchmarks will have virtually no annual expenses which means that the expense ratios of the benchmark funds should be very close to zero. VSMGX has an expense ratio of 0.14% while VBIAX has an expense ratio of 0.08%.

So how can an individual investor Beat Their Benchmark? Before we get to that, let's first consider how an individual investor can even hope to Match Their Benchmark. It should be immediately and intuitively obvious to the most casual observer that an individual investor can match their benchmark simply by investing in the chosen benchmark in a cost-free manner. That is, the investor could invest in the LifeStrategy Moderate Growth fund in an account that would have no commissions, no fees, and no taxes. Or perhaps the investor could invest in the underlying funds in the same manner AND perform rebalancing in a costless taxless manner with no friction and in lockstep with the managers of the benchmark fund.

As soon as the investor tries to do something with their portfolio that is different from the Benchmark, then the possibility exists that portfolio of the investor will not Match the Benchmark. So the something different could be detrimental and cause the portfolio to underperform the benchmark or it could be beneficial and cause the portfolio to outperform the benchmark.

Behavioral finance studies suggest that investors will have difficulty overcoming ingrained behaviors that prevent them from avoiding poor decisions. Many people advocate therefore that investors should just invest in the Benchmark Portfolio consisting of passively-managed, low-expense-ratio index funds and not even think about Beating Their Benchmark. That's fine, but even investors in index funds still need to make good decisions on rebalancing, adding to their portfolio from time to time and possibly tax-loss harvesting. Index fund investors can still suffer from "Loss Aversion" and other behavioral finance traps. They may avoid rebalancing after stock market drops of 10%, 20%, 30% and/or stock market gains of 10%, 20%, 30%. They may avoid adding new money to the portfolio and let it sit in cash because they think "bonds are going to drop when interest rates go up" or "stocks are at all-time highs, so it is time to wait for a correction."

So perhaps a prerequisite to "Beating Their Benchmark" is the ability to "Match Their Benchmark". In order to know if one's portfolio matches a benchmark, one will need to be able to measure and track prices, transactions, dividends, distributions, and asset allocation relatively accurately. Visits to internet social media sites such as bogleheads.org demonstrate over and over that this tracking is difficult and onerous to many people. But for our purposes here, let's just say that the investor does the tracking quite well and independently of any information given by their broker or financial institution about the performance of their portfolio. It also means that they don't leave out money or accounts such as the "20% cash used as dry powder and kept separate in case the market tanks."

OK, so far we know that to Match Their Benchmark, an investor needs to invest like the Benchmark and avoid some behavioral finance traps. And we know that to get a result different from the Benchmark the investor needs to invest differently than the Benchmark at least some of the time. And we know the investor can do worse than the Benchmark which is undesirable.

Now it should come as no surprise that to Beat Their Benchmark the investor has to cheat. One could say that the investor has to be lucky, but this article is not about luck because one could have bad luck or good luck and folks might attribute all that to chance. The rest of this article is how to legitimately and skillfully cheat in order Beat Their Benchmark.

At the outset I also want to rule out obviously unfair ways to cheat such as "Oh, I put 5% of the portfolio into cheese futures and lost all of it, so I will just ignore that in all my calculations."

The first way to cheat is to use a different benchmark. For instance, if one's portfolio is invested 60/40, then a suitable benchmark is probably the LifeStrategy Moderate Growth fund unless one's portfolio does not have international stocks. In that case, a suitable benchmark would be the Balanced Index fund. But a cheat would be to use the Vanguard LifeStrategy Conservative Growth fund (VSCGX) with its 40/60 asset allocation as a benchmark. One would then be comparing a 60/40 asset allocation to a 40/60 asset allocation. Over enough time, the higher stock allocation should outperform the lower stock allocation often enough (but not always).

That is, sandbagging on the Benchmark is one way to Beat Their Benchmark.

[End of Part 1]
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How to Beat a Benchmark [Part 2]
Old 10-02-2016, 06:48 PM   #1293
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How to Beat a Benchmark [Part 2]

Before discussing another way to cheat, let us first discuss the magnitude of Beating Their Benchmark. Let's look at the performances of VSMGX and VSCGX over a few time periods. In 2016 through September 30th, VSMGX outperformed VSCGX by 0.24% which is not much. That 0.24% is less than many of the single day movements in the NAVs (prices) of either of these funds. It is not above the noise level. I don't think we can predict right now which of the two funds will end up with a better performance by the end of 2016. But over the previous 5 years and 10 years, VSMGX outperformed VSCGX by an annual average amount of 1.95% and 0.36%, respectively. The point is that "outperforms" does not mean a 10% a year nor 5% a year nor even 2% a year. We are talking about Beating Their Benchmark by a small amount every year. This does add up over many years though.

One might choose to try to "Beat Their Benchmark" by 1% a year which can be quite difficult to do. Indeed, as just shown the 10-year average annual return of VSMGX did not Beat the Benchmark of VSCGX by 1% over at least one 10-year period (nor the 3-year period, nor the 15-year period ending on 9/30/2016).

Or one might think, it is not even worth trying to Beat Their Benchmark if one is only trying to Beat Their Benchmark by 1% a year. While that will be true for many investors, others might enjoy that 1% if they have large portfolios. For instance 1% of a five million dollar portfolio is $50,000. But this also shows that paying an advisor 1% of Assets Under Management (AUM) or using investments or funds with an extra 1% embedded cost (higher expense ratio?) is going to destroy any chance of Beating Their Benchmark. That is keeping costs as close to zero as possible is paramount.

Nevertheless, let's say that 1% extra return per year is the goal. Anything lower just gets lost in the noise and is probably not worthy of one's efforts. Besides, one wants an attainable goal that is sometimes missed. And a miss is not so bad as long as one at least matches the Benchmark or at least does not underperform the Benchmark by very much. One percent extra per year seems to fit the bill of not too easy and hopefully not too hard.

Now some math: In order to get that extra 1% per year, one's portfolio is going to need to be riskier than the Benchmark at least some of time during the year. Here are a few ways to get 1%:
  1. Invest 1% of the portfolio in something that goes up 100% or more. That is, it doubles in value. If stock market averages go up 10% during the year, then the investment has to go up not only that 10%, but the additional 100%.
  2. Invest 10% of the portfolio in something that goes up 10% more than the stock market averages.
  3. Invest 20% of the portfolio in something that goes up 5% more than the stock market averages.
  4. Disinvest 10% of the portfolio in something (in the Benchmark) that drops 10% more than the stock market averages.
It should be clear from the examples that one has to invest differently than the Benchmark either by taking on more risk when stock market is going up or less risk when the stock market is going down. One can also change risk level by changing duration and credit quality of the fixed income side of the portfolio. In other words, there ain't no such thing as a free lunch. There is only cheating. Cheating would be to temporarily change the risk level of one's portfolio by temporarily changing the asset allocation of one's portfolio. Another term for this might be "Market Timing."

Many people believe that "Market Timing" is a binary thing: Invest 100% in equities sometimes, then cash out and hold cash until the next time. Rinse and repeat. Good luck with that! For me, I would like to consider another kind of Market Timing: Maintain an asset allocation and set of investments similar (if not identical) to the chosen Benchmark, but change the asset allocation temporarily at selected times, then restore the portfolio back to match the Benchmark. Consider this: Suppose your portfolio is ahead of the benchmark by 1% in March. If you simply invest in the Benchmark from April through December, then you will be 1% ahead of the Benchmark at the end of the year, too. As they say in sports: Offense scores points; Defense wins championships. Or something like that (but see Does Defense Really Win Championships? - Freakonomics Freakonomics). Many people have seen sports teams run out the clock once they are sufficiently ahead on the scoreboard.

If one puts the previous two paragraphs together, then one can see that another way to cheat is to do a little bit of Market Timing. In fact, it is pretty much required to increase the risk in a portfolio above the risk of the Benchmark in order to outperform the Benchmark. That increase in risk could be market timed. That's not only cheating, but almost everyone says that Market Timing does not work.

Let's back away from Beating to "Not Underperforming" for a moment. I am not going to do any statistical research on the following for a while, so what I write may not be true, but I am going to write it anyways. If one has a 60/40 portfolio and goes to a 100/0 portfolio by exchanging all their bond funds into equities, then that is quite a bold change. If equities drop 2.5% which is well within a normal one-day movement of equities, then the 100/0 portfolio will underperform the 60/40 portfolio by 1%. Ouch! I personally think that is too much risk to take even for Market Timers. If one has a 60//40 allocation and shifts to a 70/30 allocation and equities drop by 2.5%, then the 70/30 portfolio will trail the 60/40 portfolio by 0.25%. That is a little more reasonable and probably in the noise. By the same token, if equities go up by 2.5%, then the 70/30 portfolio will only gain 0.25% on the 60/40 portfolio. That's not much of big deal for a one-time change.

But if one can successfully Market Time a shift from 60/40 to 70/30 four times in a year with an average 2.5% gain each time, then that adds up to a 1% outperformance and meets the goal of "Beating Their Benchmark" by 1% in the year. Or maybe one only needs a 5% increase after going to 70/30 twice a year. Or a 3.33% increase after going 70/30 three times a year. I hope you get the idea.

So the idea is to identify potential days to shift from a 60/40 asset allocation to a different asset allocation such as 65/35 or 70/30. Some folks might even call such a shift "Rebalancing" and not "Market Timing."

Of course, one cannot with certitude identify the days or weeks where equity markets are going to go up significant percentages. Predicting the future with any certainty is impossible. The goal is NOT to be 100% correct all the time. The goal is NOT to catch EVERY such day. The goal is NOT to miss potential down days with one's 60/40 asset allocation. After all, the Benchmark will not miss those down days anyways. Instead, the goal is catch enough of the UP days with an extra allocation to equities to counteract any down days that are also caught sometimes. One has to accept some extra losses sometimes, but also to keep those losses relatively small. The goal is to work some of the probabilities. The goal is also not to make a killing and not to be killed.

So we give up trying to do Market Timing perfectly and in a big way. We accept trying to do Market Timing with mistakes and in a small way. If we are wounded, we know we will live for another day and another year. And we know that we might have to do some tax-loss harvesting (TLH) along the way.

And speaking of TLH, we want all our transactions to be tax-free. That might mean our transactions are done in tax-advantaged accounts or if we have to sell and realize a gain in a taxable account, then the capital gain is always offset by a previous realized capital loss or otherwise not taxed.

[End of Part 2]
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How to Beat a Benchmark [Part 3]
Old 10-05-2016, 12:17 PM   #1294
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How to Beat a Benchmark [Part 3]

The two previous posts have presented the rationale for performing a little bit of a specific kind of market timing in order to try to have a portfolio exceed the performance of a benchmark performance by about 1% every year. Basically, the asset allocation to equities of one's portfolio has to be increased temporarily a few times a year. The Market Timing aspect is to identify those times of the shift in asset allocation, the amount of the shift, and the duration of the shift all while managing downside risk, transaction costs, and taxes. Furthermore, there has to be acceptance that sometimes Market Timing doesn't work and things go wrong and the portfolio loses more money than the benchmark portfolio would. One hopes that Market Timing works well enough or often enough to overcome the downsides that will occur, too.

When not making Market Timing maneuvers to one's portfolio, the assumption is that the Portfolio will be invested in a manner that tracks the Benchmark quite well. That is, the Portfolio will be invested with an asset allocation close the Benchmark. Normal portfolio management will still include rebalancing, tax-loss harvesting, possible reinvesting of distributions, along with additional sells for a portfolio in decumulation and/or buys for a portfolio in accumulation phase. That is, there should be no waiting for the market to drop if there is new money to invest nor any hesistancy to sell if money is needed for expenses even if the market has dropped.

Many investors cannot actually manage their portfolio unemotionally as required by the previous paragraph, so it may not even be possible for them to be successful with the Market Timing that will be described in the following paragraphs.

Longtime readers of LOL!'s Market Timing Newsletter should already have seen some of the track record for deciding when to shift asset allocation to more equities. One can say the timing is easy: Shift to more equities when LOL!'s Market Timing Newsletter announces a shift to more equities. In general, the increase in asset allocation to more equities occurs when an asset class drops a relatively large amount in a single day. It does NOT occur if an asset class drops a moderate amount daily many days in a row. While such a multi-day drop might trigger a normal rebalancing to buy more equities, such a drop does not mean increase allocation to equities above what the Benchmark allocation would be.

I will state that I think a relatively large drop in a single day is more a reflection of the psychology of other market participants and an overreaction to some news or perhaps even a sense of "get this over with" or capitulation. A classic example was the Brexit vote in June 2016. That does not mean that the drop will turn into a dip with prices recovering back to their previous levels. But I believe that prices have a decent probability to go up in the short term of a few days after such a large drop even if the long term trend is down. This is why one has to be prepared to unwind the shift to higher amounts of equities in a few days to restore the portfolio asset allocation back to the asset allocation of the Benchmark. This is problematic in a taxable account because the taxes on short-term capital gains wipe out the advantages of Market Timing. This is a reason to be judicious with tax-loss harvesting in a taxable account and/or to have tax-advantaged accounts where short-term transactions have no tax consequences.

A problem with the shift to higher equity allocation is deciding how long to maintain such an allocation different from one's Benchmark. I think one has to be realistic and set trigger points for selling BEFORE one makes the initial buys. That is, one needs to plan ahead of time for all possibilities including not only possible gains, but also further losses in investments that will be purchased. Readers of LOL!'s Market Timing Newsletter may recall that sometimes reasons for unwinding sales will be announced at the same time that a purchase is made. And sometimes after a further drop another purchase is made. It can be very difficult selling losers and unwinding a market timing trade that did not work, but one must remain unemotional about it. It is also much easier to sell a winner after 2 days if there are no tax consequences or other fees to do so.

Thus, one should think about what one will do in all situations before submitting the orders to purchase. I have found it psychologically helpful (OK, it is a mental crutch) to actually announce the plan publicly beforehand. This helps me stick to the plan. In that sense posting in LOL!'s Market Timing Newsletter has made me a better investor.

OK, I have not directly addressed the percentage of the portfolio to be shifted from bonds to equities. I have discussed that small shifts will just produce a result in the noise, so that meaningful shifts are probably at least 5%, 10%, or even 15% of the portfolio. Or maybe one can bunt the ball more often and go for 1% or 2% shifts. This is a personal decision that may be different for each circumstance. I might write more on this in the future.

Also I have been vague about what a "relatively large drop" is. I will write more later, but I will state that it is context sensitive, changes with what has happened in the past, is different for different asset classes, and is never a fixed percentage. Readers who want a simple rule-of-thumb are not going to get it because a simple rule-of-thumb such as "buy when it drops 3%" doesn't work. Also note that one doesn't "predict" a future relatively large drop. One experiences it and then reacts.

Thanks for reading.
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Old 10-14-2016, 03:07 PM   #1295
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There have been about 500 views since the last posting, but no comments.

Thanks for reading.

Jason Zweig in the WSJ (behind pay wall) writes
Quote:
The next time the stock market crashes, we will all step forward and buy stocks boldly — at least in our imaginations.

But buying stocks when the market collapses is far harder to do than to imagine. New research looks at how the great economist — and equally great investor — John Maynard Keynes waded into the wake of the Great Crash of 1929, when U.S. stocks fell by more than 80% from peak to trough. His experience should teach all investors the importance of preparation, courage and patience.

[…]

Still, Keynes knew, barging into bear markets to buy, rather than trying to sidestep them, is the way to prevail. Since, over the long run, stocks tend to go up more than they go down, one of the greatest advantages an investor can have is the gumption to buy stocks aggressively in falling markets.

That requires both cash and courage.

[…]

Write a binding contract with yourself, witnessed by a friend or family member, committing you to buy more stocks when they fall 25%, 50% or more. Years from now, you’ll be glad you did.
These statements sort of echo what I had been writing about in the past 3 posts:

1. Don't try to sidestep future market drops.

2. Invest more in markets when markets drop.

3. Write down what you are going to do ahead of time and show to others because that helps you follow through on those ideas better than if you just keep them in your head.
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Old 10-14-2016, 03:43 PM   #1296
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I think you scared folks with the long posts....

While it's true that buying in a market slump is great when it rebounds, it feels awful during the purchase phase.

One reason is nobody knows at the time, what is going to happen, example over a few weeks the market keeps going down, and ends 15% from its high. Could be a great time to buy.
So you buy with 1/3 of your money, or maybe 1/2 of it.
Of course it could stay at that level for a few years ...
Then over a few more weeks it drops another 10%, so you put the rest of your cash in as now it must go up.
Then your friend tells you he just go laid off, and who is going to hire an actor in 1929. .... oops hindsight tells us buying back then after a 25% drop or even 45% drop was not a great thing.

I know this time it's different, but the feeling you get when buying during big market movements down is not great until after it goes back up.
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Old 10-15-2016, 08:31 AM   #1297
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I've read about several timing strategies. There is some truth in each. However, there's a human factor involved. It may be that transferring the strategy to another thinker is quite difficult. The length of the explanation in several posts may prove my point.

My timing is long, and based on approximating the entire market in some way that makes rational sense to others. Losers are weeded out once a year. I have a watch list, and use that to fill holes that appear as some sectors under perform, while others are stagnant or go wild.

The intent is to hold forever, with the hope of generating sufficient income for retirement.
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Old 11-02-2016, 04:53 PM   #1298
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Let me try to put some lipstick on a pig. My last trades were on September 26 as noted in this thread.

My wife is happy that I exchanged VSIAX (small-cap value index) into VBTLX (total bond index) in her IRA on 9/26. That exchange has preserved nice gains YTD so far for her.

But I bought VBR (small-cap value index) in a 401(k), so I did not insulate myself from the loss. Nevertheless, I did not replace all of the small-cap value index that I sold. And that's where the lipstick comes in. VBR that I bought is down 4.3% since purchase, but I also bought VEU, VSS, and VTI which are down since purchase 2.3%, 3.3%, and 2.7%, respectively. Thus, I have stopped myself from losing an extra 2%, 1%, and 1.6%.

In other words, the color of the lipstick is red.

But the portfolio is about 1% ahead of its benchmarks and tracking the daily performance of them pretty well, so should stay ahead of them by 1% if I do nothing for the rest of the year. That's not to write that I will do nothing. As always, I will post transactions in near real-time as they occur.
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Old 11-02-2016, 09:46 PM   #1299
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There have been about 500 views since the last posting, but no comments.

Thanks for reading.

Jason Zweig in the WSJ (behind pay wall) writes


These statements sort of echo what I had been writing about in the past 3 posts:

1. Don't try to sidestep future market drops.

2. Invest more in markets when markets drop.

3. Write down what you are going to do ahead of time and show to others because that helps you follow through on those ideas better than if you just keep them in your head.

This is deceptive on Keynes investments:

1) Keynes NEVER added funds to invest in the market, he started with an amount and remained fully invested in that amount in what he called his “capital chest” throughout.

2) Keynes spent all dividends - actually gave them away to charity as he considered it a charitable fund and did not reinvest them in the market. He had no other investments in the market.

3) He invested by making a few large bets on a very small number of stocks and by reading stock reports 30 minutes in the morning and at night to decide what stocks to invest in.

4) Keynes outperformed the British Stock market during his investment period by eight percent a year, in 1932 when US was dropping huge UK market dropped 5 percent Keynes investments rose 44%. In 1934 with market dropping 1 percent Keynes portfolio rose 34 percent in 1936 the UK market rose 10 percent and Keynes portfolio rose 56 percent. He bought preferred stocks and made massive bets in individual issues as well as investment trusts selling for far below the value of their investments, but to get those funds he sold other stocks not adding cash as the article implies. For indexers to use Keynes as an advocate for index investing is disingenuous.

5) He had a job throughout the great recession and so never needed the funds to live on when the market dropped. As a matter of fact he worked up until his death at age 62 after forming the IMF . His “courage” in investing was that it mattered not at all to him or his lifestyle if all the money was lost as his life as a government employee was secure throughout his life and he spent his life advocating for even more government.

This does not diminish what he accomplished but his success would be similar to an individual investor with great ideas like Michael Burry not Joe the indexer
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Old 11-07-2016, 11:15 AM   #1300
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Yesterday morning on the other thread I wrote:
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Originally Posted by LOL! View Post
I am going to put this in my market timing newsletter later this week, but I'll give you all an early peek:

I noticed this weekend that with the recent slight dip in the stock market indexes that I am underweight in equities. I believe some of this is because of changed perceptions of the outcome of the election. However, news from this weekend leaves the outcome in absolutely no doubt, so on Monday (tomorrow), I will be buying equities to rebalance my asset allocation back to its desired levels.

The market hates uncertainty and since things will be certain later this week, the market is going to pop up.
Well, my plans were obstructed because the market is up too much at the open for me to be comfortable buying anything. Yep, things are up about 2% right now which is a good chunk of the kind of movement that I was expecting.

So I'll just sit tight except for some bond dividends that were paid today. I will buy more bond fund shares with those since bond funds have gone down slightly.
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