Timing the market

[lynxville]

Historicaly during a presidential election when is the best time to get out?

 

[REWahoo]

Historicaly during a presidential election when is the best time to get out?

Prior to winning the nomination.

 

[MichaelB]

Prior to winning the nomination.

But that only applies to the losers.

 

[73ss454]

Timing the Market, Hmmm, I think I've tried that once before.

 

[REWahoo]

But that only applies to the losers.

Don't be so sure...

 

[rescueme]

Timing the Market, Hmmm, I think I've tried that once before.

I'm too lazy even to think about it ...

Me thinks the OP may be on the wrong forum...

 

[Andre1969]

I might try and take advantage of some of the volatility and rebalance a bit here and there. Or buy on the dips. But I'd be afraid to try any kind of major market timing.

 

[frayne]

In the words of my investment adviser, Ron White, stay the course, scooter !

 

[ducky911]

I beleave that there will be a dip after the election and before the first of the year when congress will be threating not to make changes to avoid the fiscal cliff. Anyway I am sitting on 8% cash that will go into the market then. Some say that this is already built into the market.

What would worry me more is to see the market party up after the election. I am trying not to be a timer but it is tough. Right or wrong this cash will not make any big deal for me.

 

[rbmrtn]

Here's a chart of the average for election years since 1900. Generally your in until post inaugural. But averages hide a lot of volitility, same as expecting to get 7-8% average stock market returns. Plus 2000, 2004, 2008 didn't work to well...

http://www.seasonalcharts.com/zyklen_wahl_dowjones_election.html

 

[MichaelB]

Don't be so sure...

So you're saying if everyone got out beforehand we would all be winners? Hmmm, interesting. You may be onto something...

 

[Chuckanut]

So you're saying if everyone got out beforehand we would all be winners? Hmmm, interesting. You may be onto something...

You got it. We would all be above average.

 

[martyb]

LOL....that's why I come here...it's the sage investment strategy advice...! Yeah, I tried the ol' market timing once myself. Or, was it twice....or 3 times? Hmmm....I'm the kid who had to burn his hand about 30 times before he figured out the stove was hot....heh heh

 

[BTravlin]

when is the best time to get out?

As soon as you see me enter. Or so my timing would suggest.

 

[FinanceGeek]

If intrade is to be believed, the election is already a done deal. But the idea of tactical trading to capture/avoid a big move implies there is still uncertainty.

So what gives? I'd say stay the course, all information is already factored in.

 

[rbmrtn]

Interesting, I hadn't looked at intrade since last month. That is pretty dramatic shift over the month. I wonder what was behind that.

I thought the OP might have been asking about the generic election year cycle as opposed to who wins.

 

[BUM]

I time the market all the time. My timing is lousy, and in ER, time is not on my side - a fools game.

 

[foxfirev5]

My market timing is limited to hiding behind the rationalization of asset allocation rebalancing.

 

[MDJO]

Not a market timer. Even if you make the right call getting out, how do you decide when to get back in? Much better to determine an asset allocation that lets you sleep at night and then rebalance periodically. If you wait too long to rebalance, the market will do it for you ;-)

 

[haha]

Not a market timer. Even if you make the right call getting out, how do you decide when to get back in? Much better to determine an asset allocation that lets you sleep at night and then rebalance periodically. If you wait too long to rebalance, the market will do it for you ;-)

This is a question that has never made any sense to me. If you get out, and the market goes down, anytime that you get in at a lower point you have won. It doesn't have to be perfect.

I do not personally do this, but I sometimes do it with individual stocks. It is easy to make mistakes, but all you really need to do is cover the additional trading costs -small- and the taxes, which can be prohibitive.

Ha

 

[audreyh1]

People who get out because things feel scary and they are afraid of a major market sell off, are often even more afraid once the market does sell off. Because it feels even less safe. The market stays down while there are scary headlines. Once things seem safer and the scary headlines recede, and it seems OK to reinvest, the market will have already recovered.

Lots of people had a really hard time buying back in in 2009 because they "felt" like the market would just sell off again. Headlines were still scary.

 

[haha]

People who get out because things feel scary and they are afraid of a major market sell off, are often even more afraid once the market does sell off. Because it feels even less safe. The market stays down while there are scary headlines. Once things seem safer and the scary headlines recede, and it seems OK to reinvest, the market will have already recovered.

Lots of people had a really hard time buying back in in 2009 because they "felt" like the market would just sell off again. Headlines were still scary.

I think I understand what you are saying. However, I see that less as a criticism of the idea than that like any idea or plan, some people can do it, and some can't. Unless we have faulty mental maps that tell us that when prices are high, stocks must be good investments, and when prices are low, they must be bad.

I make a million mistakes investing, but not that one, which seems to be to be so easy to refute. In truth we have no idea what is going to happen, whether prices are high or low. But we can tell what the price is. Given the same surface to fall on, it is hard to get hurt more falling out a basement window than a window on the 20th floor.



Ha

 

[audreyh1]

Unless we have faulty mental maps that tell us that when prices are high, stocks must be good investments, and when prices are low, they must be bad.

In studies of investor psycology, it has be shown that many people have precisely this problem. Thus the adage that the stock market is the only market where people don't buy when things go on sale (fear). And the counterpoint about people chasing recent hot performers, or, "piling in at the top" (greed).

In truth we have no idea what is going to happen, whether prices are high or low.

Agreed. So a strategy that hedges bets, i.e. remains diversified, in the long run makes more sense than one that tries to jump all in to switch to one asset class or another based on near-term price predictions.

 

[target2019]

Thinking Fast and Slow.
m.cbsnews.com/fullstory.rbml?catid=57351940&feed_id=76&videofeed=43

 

[clifp]

Thinking Fast and Slow.
m.cbsnews.com/fullstory.rbml?catid=57351940&feed_id=76&videofeed=43

I very much liked Thinking Fast and Slow, but found the investing chapter the least compelling. Primarily because like virtual all of these studies, if you study the performance of mutual funds, or hedge funds, you are going to get different result than if you study the performance of the individual managers who make the buying and selling decision. Because individual managers turn over fairly quickly and it is difficult to measure their performance and determine if the add alpha, almost all academic studies measure fund performance.

There is no doubt that most people have horrible instincts regarding the stock market but not everyone does.

For at least 20 years, I have been more inclined to sell when the market goes up for an extended period of time and more inclined to buy when went down. Now my timing isn't always very good, and as value investor I almost always buy too early and sell too early, except for when I fall into a value trap which happens.

But S&P 1450 makes far more nervous than S&P 1100 for the reason that Ha said falling from the 20th floor hurts more than from the first.