Dirty Market Timer...

[GravitySucks]

... taking a well deserved profit, or scaredy-cat?

Stock funds are looking mighty fine so I decided to pull all of next year's expenses today and let it sit in a MMF till needed. Usually I only pull at 3 month intervals, but this time I think I'll err to the side of safety.
This mean the bonds maturing in December will be used to beef up the bond ladder and I can slide through the next 6 years fairly worry free.

 

[HI Bill]

If it was January 2nd, and the markets were where they are today, I'd consider pulling out at least half of the year's expenses. But as I'm still w$rking, the tax bite would be too large...so I'm holding!

 

[Chuckanut]

... taking a well deserved profit, or scaredy-cat?

Stock funds are looking mighty fine so I decided to pull all of next year's expenses today and let it sit in a MMF till needed.

I have done the same when the market is at or bumping up to all-time highs It's as close to timing the market as I get. Sometimes it even works.

 

[davismills]

Taking profits at a perceived peak is a good thing.

 

[Sunset]

I did the same thing last week, felt good about it until now when the market is slightly higher.
But overall, I feel good, and will feel smart and great if it dips.

I'm going to use the money to get a $500 bank bonus, before I start spending it

 

[stepford]

I admit I've been doing some low key market timing of this sort. After midyear if I'm overweight in stocks I wait until market highs to do piecemeal rebalancing (a percent or two at a time). If I'm still overweight in stocks by year end I rebalance around then.

So anyway I yanked out 1% in July when we first hit 3020 on the S&P500, then another 1% last week at 3060. I'm still at 51% equities with a target weight of 50 so if the highs hold I'll be taking a final percent sometime in the next couple of months.

I figure this kind of market timing in the name of annual rebalancing is relatively benign, though I realize it's subopotimal in either a steadily rising or steadily declining market.

 

[audreyh1]

This time of year I tend to get distributions which I take in cash. That accomplishes some trimming as sets up things nicely for rebalancing.

But this year distributions look to be down. So I’ll have to carefully look at where to trim to rebalance and decide whether to do it in this tax year or next year.

I’ll still be waiting until late December.

 

[jollystomper]

Since my plan is to withdraw money from my 401K to pay taxes (in lieu of doing the quarterly estimated taxes thing), rather than wait until the end of year (and remembering what happened the month of December 2018 ), I have been taking out money for taxes at perceived "peak" times. My 401K is still well ahead of where I want it to be, so all is well.

 

[Montecfo]

I have taken profits in nibbles and re-deploying into CDs and bonds at intervals since mid-year.

If you want to avoid selling equities when they are down, you have to do this.

If is buy low, sell high, right?

Having said that, as the market continues to go higher, it can seem in retrospect that selling equities was a bad idea, but it is validated through the lens of risk mitigation.

 

[pb4uski]

+1 I liquidated equities earlier in 2019 to buy some 3.5% and 3.0% 5-year CDs that I perceived were screaming deals at the time.... I still think they will be stable ballast that generate decent income... but Total Bond has been killing it this year as have equities and the two have been making me look not so smart.

As a result my AA at year end will be more like 55/41/4 rather than my target of 60/35/5.... my plan is let equities drift back up towards target and I might let cash drift below target and reset the cash target lower.

So I guess perhaps I am a DMT afterall... but I like to re-frame it and say I am a risk mitigator rather than a dirty market timer.

 

[DrRoy]

I also made a sale recently to raise spending $ for next year. One more sale to go.

 

[grasshopper]

The market lift did put a position I owned into a pre arranged sell. I needed some cash for the next couple of months and was able to sell with no LTCG. Next up Roth conversions and I am done for 2019.

 

[GravitySucks]

I'll chalk up any minor missed opportunities as risk mitigation.
The move to a shorter duration bond fund I made last year cost more in missed run ups than I'll lose from this cash out.

 

[Perryinva]

Some of the same here. Timing was good to not liquidate the 401k and roll in to IRA, so I did. All sitting in a 2% fund, ATM. No one gets the peak peak unless it is dumb luck, so I agree, these new highs were just too inviting.

 

[Perryinva]

Meant to say “timing was too good”, because I was planning on rolling over anyway to consolidate. First time I ever had one statement with over a Mil in it, vs my spreadsheets. I don’t know why that had more impact.

 

[OldShooter]

... the two have been making me look not so smart. ...

IMO there is no "smart" and "not so smart" in short-term market decisions. Short-term the market is random, so there can be only "lucky" and "unlucky."

Also IMO we are all market timers to some degree. Every year I decide to stay in equities up until time for paying my income taxes in December, thus betting on a good market. So far this year, I am looking lucky. Last year, maybe a little less lucky.

And where did "dirty" come from? Significant buy/sell decisions based on feelings about market timing may be statistically unwise but I don't see a moral dimension.

 

[stepford]

And where did "dirty" come from? Significant buy/sell decisions based on feelings about market timing may be statistically unwise but I don't see a moral dimension.

As market timing is mostly held in low regard around here a bit of preemptive self-deprecation tends to suppress complaints from the peanut gallery.

 

[foxfirev5]

I know I'm old school but nobody ever went broke by taking a profit. However I totally ignore bonds with this philosophy. The only purpose they serve to me is current income which is currently declining. Not much to be gained either way.

 

[HI Bill]

As market timing is mostly held in low regard around here a bit of preemptive self-deprecation tends to suppress complaints from the peanut gallery.

+1. I think most of us partake in some 'dirty' market timing, whether it be in timing distributions, rebalancing, or managing taxes on gains and losses. I'm sure some make automatic adjustments and distributions regardless of market conditions, but I'm assuming that those are rare characters, indeed!

 

[pb4uski]

.... And where did "dirty" come from? Significant buy/sell decisions based on feelings about market timing may be statistically unwise but I don't see a moral dimension.

Chill, OS.... we're just playing around and having fun... it is just that as a group we don't look favorably on market timing.

 

[NW-Bound]

Chill, OS.... we're just playing around and having fun... it is just that as a group we don't look favorably on market timing.

Eh, perhaps I am never part of the group.

I learned of the term DMT from this forum. Never thought of myself as "dirty" as I take daily shower, and floss twice daily.

When you attempt market timing and do it wrong, you buy high/sell low, and add to market instability.

If you are a successful contrarian, you will buy low/sell high, and that damps out market fluctuations. Like the late Templeton said, he tried to help other investors by selling to them when they clamored to buy, and buying from them when they wanted to liquidate at any price. You make money for yourself and provide liquidity to the market at the same time. What's not to like?

The problem of course is that it is too easy to do it wrongly. And if you find yourself doing it wrong too often, you find yourself a money-losing DMT. Then it's time to stop and just do buy-and-hold.