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Old 09-10-2014, 05:52 PM   #41
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I can't believe that smart well read folks still believe that market timing is a viable financial strategy. Have you ever read anything written by Jack Bogle?
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Old 09-10-2014, 05:58 PM   #42
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I don't know how this will turn out but it was nice (and courageous) of Running Man to share his strategy with the rest of us.
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Old 09-10-2014, 06:11 PM   #43
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Speculator vs Investor. Which is the proper path? Either can work along with many other strategies as long as one has a grasp of the risks involved. Win a few lose a few.
Personally now that ER is in sight I am being a little more conservative and adhering mostly to my plan. Although I admit I have peeled off some equities lately but keeping within 2 pts of my 45% equity AA. I want to secure the first few years of retirement in short term, SV and cash. Hopefully my equity stake will climb above 45% during this timeframe. Oh no, not only a minor market timer but now I'm a buckets person also.
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Old 09-10-2014, 06:13 PM   #44
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I have been watching the interaction between the markets as S&P500 hit 2000. While most people and reality show that 2000 should really not mean anything, it is apparent that it means something to the market.

Since S&P 500 hit 2000 long term bonds have reversed and rates have gone up. Yesterday came the announcement the FED may be changing the verbage in their forward statements. This convinced me that 2000 is meaning too much to too many important people so I sold this morning while S&P500 was at 1986. I will get back in if the market can close above 2020. Having had some huge gains the last 2 years, I am more than willing to try and time this market here.

I accomplished this by actually selling all my ETF holdings and closed end funds that I held and keeping my individual stocks which comprise 25% of my portfolio, as this is the minimum stock holdings I feel one must maintain.

The downside risk to my portfolio for this year is around .5% of upside but I'll be happier if I can see the market through this area with the factors that are also occurring coincidentally at the same time.
I haven't been watching the interaction between the markets as S&P500 hit 2000. While most people and reality show that 2000 should really not mean anything, it is apparent that it means something to the market, but not to me.

Since S&P 500 hit 2000 long term bonds have reversed and rates have gone up. Yesterday came the announcement the FED may be changing the verbage in their forward statements. This did nothing to convinced me that 2000 is meaning too much to too many important people so I did nothing this morning while S&P500 was at 1986. I will continue to rebalance whatever the market does. Having had some huge gains the last 2 years, I am more than willing to rebalance according to my plan.

I accomplish this by actually selling my ETF holdings when they are up and buying fixed income. I have no individual stock holdings.

I don't know the downside risk to my portfolio for this year, but I'll be happy rebalance my AA to a 60/40 whatever the circumstances.
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Old 09-10-2014, 06:38 PM   #45
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...Makes me wonder who really is the dumb money and who is the smart money.
As I recall, there is a poker expression (and I'm paraphrasing just a bit) that if you don't know who the dumb money is at the table, it's probably you.
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Old 09-10-2014, 06:45 PM   #46
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As I recall, there is a poker expression (and I'm paraphrasing just a bit) that if you don't know who the dumb money is at the table, it's probably you.
Which is why you pull your chips off the table as the OP has done.
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Old 09-10-2014, 07:07 PM   #47
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I can't believe that smart well read folks still believe that market timing is a viable financial strategy. Have you ever read anything written by Jack Bogle?
Yes but I prefer the advice of Benjamin Graham
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Old 09-10-2014, 07:27 PM   #48
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There is no short term predictor that works, and the long term predictors only sort of work. So selling out at 1980 with a plan to get back in at 2020 makes no sense to me. I could understand getting out now, since the PE10 is sort of high, but then the buy back would have to wait until the PE10 went way down, not up more!
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Old 09-10-2014, 07:35 PM   #49
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Yes but I prefer the advice of Benjamin Graham
+1 - Although I listen to Seth Klarman's advice more nowadays since he's alive and all that.
I went heavily into cash in June and July and have continued selling here and there in September. No buys.

Seth Klarman Truman Show Market - Business Insider

"But the zeitgeist is so damn pleasant, the days so resplendent, the mood so euphoric, the returns so irresistible, that no one wants it to end,
and no one wants to exit the dome until they’re sure everyone else won’t stay on forever."
"...what investors see in the inkblots says considerably more about them than it does about the market."
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Old 09-10-2014, 07:36 PM   #50
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I assume this cost you little or no tax?

I think you have good feel for markets, and may well be right. I cannot do this huge change without paying a lot of tax plus weird add on taxes. No 401k for me, just taxable and small IRA and Roth. I have sold a lot, anything in a tax deferred or tax free account, and any loss plus a fair mount of ltcg in taxable accounts.

Ha
Yes this was all in my 401K IRA with Fidelity. My individual stocks are in after tax accounts.
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Old 09-10-2014, 08:13 PM   #51
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.... So selling out at 1980 with a plan to get back in at 2020 makes no sense to me. I could understand getting out now, since the PE10 is sort of high, but then the buy back would have to wait until the PE10 went way down, not up more!
Yes, this is exactly what I don't understand about the OP's plan. What's magical about a 2% difference in market levels to trigger anything, either way (esp the sell-low-buy-high part of it)?

-ERD50
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Old 09-10-2014, 08:19 PM   #52
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Scooping up at a "discount rate" would be market timing.
Nope..the amount I use to buy doesn't really change but if they are purchased at a discount, then I'm not complaining!

Sent from my mobile device so please excuse grammatical errors.
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Old 09-11-2014, 07:54 AM   #53
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It sounds like you have locked in on a loosing strategy for the upside (get back in at 2020) but haven't defined what you will do on the downside. That is what makes me steer clear of substantial market timing. If you just wait long enough, the market will plummet. But when do you get back in? It only takes a few days to miss most of the upward momentum, particularly if you are worried about false recoveries.
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Old 09-11-2014, 04:39 PM   #54
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I went from 100% equities to 80 % equities and 20% "dry powder" (cash and bonds). Does having dry powder to take advantage of a correction make you a market timer?
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Old 09-11-2014, 05:00 PM   #55
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I went from 100% equities to 80 % equities and 20% "dry powder" (cash and bonds). Does having dry powder to take advantage of a correction make you a market timer?
Yes, it does. But maybe that depends on whether you have smart money or dumb money.
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Old 09-11-2014, 05:27 PM   #56
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It sounds like you have locked in on a loosing strategy for the upside (get back in at 2020) but haven't defined what you will do on the downside. That is what makes me steer clear of substantial market timing. If you just wait long enough, the market will plummet. But when do you get back in? It only takes a few days to miss most of the upward momentum, particularly if you are worried about false recoveries.
What I am doing is actually a conservative move by nature, to my way of thinking. I am not risking money I should not be investing, nor according to any retirement planning models I have used am I putting my retirement at risk by reducing my market exposure to 25%.

If on the other hand a significant decline happens instead I am quite comfortable that I will find a point below where we are now to get back into the market. It is actually a major decline at a start of a retirement that actually can cause a portfolio to fail, and this is a small speculative low cost hedge against this, with specific near term targets to guide me. Falling commodities, oil prices, reversal in the long term bond market, falling gold & silver, an under performing Russel 2000 and a long term meandering around 2000 on S&P 500 are giving me cause for concern.

I am foregoing at worst a .5 % positive impact from my investment potential because I believe this might be a major top @ S&P 2000, if it closes at a new high at 2020 that proves I was wrong about that so I get back in to the market.

It is possible my folly will be exposed as soon as tomorrow, it will be interesting to watch for me over the next days. But on my side is that I am not afraid if I am wrong to admit it and get back in, even if it then reversed from a close over 2020, which also could happen.
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Old 09-11-2014, 05:35 PM   #57
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My bad I suppose. Is the market down or something? What's this all about?
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Old 09-11-2014, 05:58 PM   #58
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I went from 100% equities to 80 % equities and 20% "dry powder" (cash and bonds). Does having dry powder to take advantage of a correction make you a market timer?
Bogle may call it a tactical allocation.
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Old 09-11-2014, 06:30 PM   #59
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It sounds like you have locked in on a loosing strategy for the upside (get back in at 2020) but haven't defined what you will do on the downside. That is what makes me steer clear of substantial market timing. If you just wait long enough, the market will plummet. But when do you get back in? It only takes a few days to miss most of the upward momentum, particularly if you are worried about false recoveries.
Right or wrong, this strategy looks to me to be unambiguously defined. He got out earlier this week. He stays out unless the S&P bests 2020. I did not pay close attention to whether this requires a close >= 2020, or just an intraday.

It is obviously a technical idea, with the advantage that he will not get back into a continuing downdraft. He didn't say, but I assume that there will be a new decision rule if the S&P falls to some much lower level tbd, without ever besting 2020.

I never understand the angst about when to get in. If it were me, I am willing not to ride as far as possible once I think value is no longer there. So absent taxes, I would just sell and sit down until value was evident. But some others are different, and his buy back at 2020 handles any anxiety about missing a runaway train. Of course to be consistent, one runs the risk of whip-saws. Buy and hold isn't easy either when a strong down market turns that into days and weeks and months of losses.

Ha
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Old 09-11-2014, 07:03 PM   #60
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One could certainly exit the market and establish that they would get back in at 2020 or 1700 whichever comes first.

The indexes don't really gap up, so getting back in would mean a opportunity loss of about 1% if you sold out at 2000.

Waiting until 1700 would mean an advantage of almost 15% over the buy and hold crowd.

This is of course ignoring dividends.
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