Make some Mad Money

[RetirementColdHardTruth]

Hey there team. Well market this post is going to be for Market Timing. I know it is a no no but I see an opportunity to make some Mad Money. If not I can hold for the long term anyway.

Theory: August 2nd will come with a last minute solution to the debt crisis. As such the stock market will rally over the next few days some 5-7%. I am going to buy into the market near open on August 1st, I expect the open to be really bad. I have been doing well with some bonuses and tax returns so will drop in 20k to shore up my AA anyway. I think it is a good opportunity for my money that needs to be invested anyway. The cash is allocated for my retirement funds so I will most likely stay in no matter what way the market goes.

Thoughts, Comments, Abuses, Name Calling etc are welcome. I know Market Timing doesn't work but I feel this time it will be a nice bounce, if I am wrong no real harm done.

My other option is just invest the 20k in equal chunks over the next 12 months on a weekly basis.

 

[frayne]

Good luck and let us know how it all works out. I'm staying the course and not touching a thing.

 

[Onward]

Boo Yah!!!

 

[Bestwifeever]

What are you buying?

 

[MasterBlaster]

The Sure Thing

Theory: August 2nd will come with a last minute solution to the debt crisis. As such the stock market will rally over the next few days some 5-7%.

That's one possible outcome.

The other possibility is that the default actually happens and the markets sell off in panic - perhaps 40% or so.

If i were a bettin' man though (and I'm not), I would bet on the first possibility.

 

[RetirementColdHardTruth]

Will go with the Vanguard S@P500 ETF to sure up my stock holdings.

 

[BigNick]

My current thinking is like this:

- They must reach a deal. Surely? Erm.
- There certainly doesn't seem to be any significant percentage chance of "no deal" priced into the markets right now.
- But that means that the downside is all one way. Should I cash out all of the zero-transaction-cost stock funds which I own, and buy them back the day after an agreement is reached ?
- If no deal is reached on Aug 2 but one comes along on Aug 5, will the market recover its previous levels ?
- Will we get all this again 6 months down the line ?
- Could America, just for once, please accept that if you're going to try to rule/lead (delete as applicable) the world, with military deployments in 150 countries, you can't also behave like children ?
- Why does John Boehner's skin look like he's a latex puppet ?

 

[RetirementColdHardTruth]

My current thinking is like this:
- Why does John Boehner's skin look like he's a latex puppet ?

That's because he is a puppet or maybe it is the 1/2 carton of cigs he smokes a day

 

[Telly]

I have been doing well with some bonuses and tax returns so will drop in 20k to shore up my AA anyway

So since the money did not come from the market, in the spectrum of being a dirty market-timer, this action is pretty benign!

Certainly no worse then receiving an inheritance, breaking it into two amounts, investing them a month or so apart in the market... and the time frame just happened to be the fall of 2007

 

[FIREd]

My "mad money" went to gold and Swiss Francs last November.

 

[Bestwifeever]

Will go with the Vanguard S@P500 ETF to sure up my stock holdings.

Thanks. I predict your strategy will be successful. Unless the outcome has already been taken into account by Mr. Market. In which case your strategy won't be. But doubtful you will lose money if you leave it there imho. Or not.

 

[LOL!]

Aren't you following my market timing newsletter in the other subforum?

You will make plenty of mad money if you make the same trades shown in the newsletter.

 

[DblDoc]

Aren't you following my market timing newsletter in the other subforum?

You will make plenty of mad money if you make the same trades shown in the newsletter.

I thought that thread was now a poll on the best looking avatar...

To the OP what you are suggesting is only market timing, not dirty market timing so thats OK. The former is timing an entrance point, the later requires an exit and entrance (or vice versa)

DD

 

[rescueme]

What are you buying?

Better yet, what are you smoking? ...

 

[stoutboy]

Will go with the Vanguard S@P500 ETF to sure up my stock holdings.

Not a bad plan, but why not Vanguard's Total Stockmarket ETF?

 

[RetirementColdHardTruth]

Not a bad plan, but why not Vanguard's Total Stockmarket ETF?

Well I already have a nice allocation into small caps too far out of whack. So this would toss my asset allocation out of whack. I am following the coffee house portfolio these days and am short approximately 18k shy of being ideally allocated to at 10%. Thought this might be a good way to get it back on track.

 

[Charlie_Boy]

Will this be settled in time or not?

Perhaps in times like this it is wise to consider Pascal's Wager. You can google Blaise Pascal for a better interpretation but the wager is about the existence of God and goes somewhat like this. If God does not exist and you live your life as if he did, then you miss out on so much fun in life. However, if you live your life as if he did not exist and he does, you face eternal damnation. The point is, the consequences is so lopsided.

 

[SandsofTime]

Will this be settled in time or not?

Perhaps in times like this it is wise to consider Pascal's Wager. You can google Blaise Pascal for a better interpretation but the wager is about the existence of God and goes somewhat like this. If God does not exist and you live your life as if he did, then you miss out on so much fun in life. However, if you live your life as if he did not exist and he does, you face eternal damnation. The point is, the consequences is so lopsided.

Well, the analysis based on the balancing of benefits/liabilities comes down to probabilities, I think. Pascal's Wager assumes a near parity or some realistic likelihood of scenario 2 (i.e., there is God and He does not like you having "fun" in pre-death timeframe) If the odds of there being a "God" and thereby finding oneself in "eternal damnation" are say, one in 100 trillion trillion (or a similarly huge number from your imagination), then the odds of the negative result is so remote as to be effectively impossible, for all practical purpose, and thereby, the logical course of action would be to "party up here and now" and "take your chances" with the "hereafter".

By the way, most of us ER types, take a chance that years of discipline and deferred gratification is worth the wager, when there is a realistic possibility of our demise prior to fruition of our ER plans.
Just my 2cents.

 

[MasterBlaster]

Here's a somewhat related topic...

Insiders at many large companies are bailing out.

insiders-selling-unusually-fast-pace-marketwatch: Personal Finance News from Yahoo! Finance=

Bad news, stock-market bulls: Corporate insiders are selling their companies' shares at an abnormally fast pace.
In fact, one measure of that selling activity shows insiders of NYSE- and AMEX-listed companies recently were selling at the fastest rate since data began being collected in the early 1970s, four decades ago

What do they know ??

 

[RetirementColdHardTruth]

Well yesterday about 11 AM I pulled the trigger on the vanguard s&p500 ETF. But I only put in half. The other 10k is going in on a weekly basis over the next 20 weeks. I guess I will find out if the 1/2 in strategy pays off over the next few weeks. It is always hard to try to push in larger sums of money, rather than a few hundred a week.

 

[Lsbcal]

The thought had also crossed my mind that we should be able to make up for last week's almost 4% drop with a passing of the debt ceiling bill. So why not put in a chunk of money and make a few quick grand (using tax deferred money)? It could be madness but it could be fun. But then ....

...ugly reality of the moment. The trading nightmare begins. Monday down, and Tuesday after the bill passage ... right now the SP500 is down 1.5%.

We seem to be going for 7 down days in a row as I write this. Doing short term trading is a tough game. So far I've resisted the urge, watching my portfolio decline is enough pain. Reasons for the decline? Probably has something to do with economics rather then politics. Bond market rallying while equities decline -- could be the market is predicting declining growth.

But I do think that at some point there is money to be made on the upside .... eventually.