Market timing

[swodo]

OK I give up. I just moved all IRA funds to a money market fund. ( I'm retired).
I believe that with the tapering of QE interest rates can only rise, driving down bond fund prices and adversely affecting equities. Can't see how you can avoid large losses in the short run. Not a market timer until now, but I now believe it to be wise to stay out of the market for 3-4 months until the Treasury quits meddling and the market achieves some sanity.

Comments please.

 

[REWahoo]

I'm humbled to share this forum with those who believe they know what the market will do in the coming months.

 

[swodo]

No need to be humbled. Just an opinion. Feel its better to be safe in an artificially propped up market.

 

[brewer12345]

Um, have you looked at what is actually in money market funds? No thanks. Give me an insured deposit sweep account.

 

[hlfo718]

Maybe your asset allocation is a bit aggressive for your taste? Maybe more allocation to CDs and annuities can help you sleep better at night.

 

[haha]

Maybe your asset allocation is a bit aggressive for your taste? Maybe more allocation to CDs and annuities can help you sleep better at night.

These two products are essentially opposites when it comes to damage from rising rates. The only difference is that in the case of the annuity, the guy who bought it earlier doesn't realize that the same amount premium would now buy more annuity.

It's the old tree falling in the woods when no one hears it. Trust me; it has fallen with or without your knowledge.

Ha

 

[akck]

Um, have you looked at what is actually in money market funds? No thanks. Give me an insured deposit sweep account.

In addition, there's a possibility that they'll no longer be equal to a $1. There's been talk at work that several money funds utilized may no longer be valued at par, going to market value instead. It could play havoc with short term cash needs.

 

[imoldernu]

As of market close today, the DJIA is down 671 since August 2.

 

[LOL!]

Let's make bets on whether the OP will buy back into the market at a higher or lower price than they sold out of the market.

 

[Dennis]

Well,
-you've been a memeber since 08' right?
-Been reading and learning along the way I hope?
-I gather you also Asked BEFORE taking any Action?
-If Taking your $ out and Staying on the sidelines Makes you Feel Better, than by all means do so..
-Based Upon what you had your $ into?
I would guess it's a 5%-10% +/- Decision
and that's not worth risking 100% of your $ for is it?

There's always Next Yr!

And I don't trust Wall Street or ANY Mutual Fund for that matter..!

I bailed back in 07' and sat in CD's thru Mid 09'...
Laughing at all the loosers..
Sure, I didn't make alot , but I sure Didn't loose alot, like they did..

I;m now waiting for those nice 7% LT Treasuries and 5% CD's to come back and will Put everything into them..
Just like my Daddy and Uncles did..

and I only need about 3% yr from my Savings..

Any extra $ they make I don't need, that will go back into my Mutual Funds..

 

[ERD50]

Wasn't there a thread some years ago where the guy was all worked up about getting out at DOW 14,000, then getting back in if went over? We warned that he might get whip=sawed, but it looks like it could have worked out for him (which doesn't change if it was a good idea or not).

But then, he would have had to have been in something that gave at least the divs of S&P500. That wasn't so easy to do and still be liquid enough to get back in. And that would just put you even with doing nothing (though maybe avoid drawing down while it was down).

I wonder how that worked for him? I'm not sure I could find the thread, anyone recall it?


-ERD50

 

[nash031]

Wasn't there a thread some years ago where the guy was all worked up about getting out at DOW 14,000, then getting back in if went over? We warned that he might get whip=sawed, but it looks like it could have worked out for him (which doesn't change if it was a good idea or not).

But then, he would have had to have been in something that gave at least the divs of S&P500. That wasn't so easy to do and still be liquid enough to get back in. And that would just put you even with doing nothing (though maybe avoid drawing down while it was down).

I wonder how that worked for him? I'm not sure I could find the thread, anyone recall it?


-ERD50

I am often struck by those for whom bad ideas work out and the mentality they have.

My favorite such story is the gentleman with whom I worked for two years about eight years ago. Nice guy, very smart.

We talked one day about how he ended up in the Navy. He had been living on a sailboat sailing the Caribbean with his wife for several years on the money he'd made in the late 90's day trading. He made roughly $100 million in one year, bought his boat, never looked back...

Well... he did look back I guess. He got back into day trading - for some reason it wasn't enough - and subsequently lost everything in 2001/2002, and joined the Navy to start over.

I asked him (once I knew him well enough) - do you ever regret your ventures day trading? Does it seem like wasted time now? He said no, citing that he got to live a really good life for a couple of years and I can't argue that.

But what struck me came next...

He said in a very proud tone: "How many people have you ever met that made $100 million in one year?"

Without even having to think about it, I answered: "The same number of people that I've met who LOST $100 million in one year."

I truly believe that some day, if I run into him again, he will be back into actively trading the market, believing that he's capable of consistently beating and/or timing the market. I hope he is, for his sake.

 

[Ready]

While I can't argue that the market has been heating up quickly (not withstanding the last week of losses), the question I always ask people who pull money out thinking we are at a peak is: at what point will you decide to get back in? Do you have a firm target in mind for the Dow, or S&P 500? Or if it continues to go down, will you keep waiting, insisting it may go down even more?

I don't like the ups and downs any more than the rest of us, but since I have equally no idea of when to get back in as I do when to get out, I just try to stick to a very conservative 60/40 allocation. When the market goes up, I know that I'm giving up some gains by keeping 40% in fixed income, but when the market goes down, the 40% keeps me sleeping well at night. Pulling money in and out trying to time it definitely doesn't help with the sleep, so I tend to avoid it, no matter how tempting it may be.

 

[ER Eddie]

I am nowhere near smart enough to figure out when to pull money out and when to put it back in. Unlike most areas of like, I think my ignorance works in my favor here. It keeps me from feeling confident that I know where the market is headed.

The other factor that keeps me pinned to my asset allocation is the research showing that most people who specialize in timing the market are no better than the indexes. Those are people who make a living at this. I spend maybe 10 minutes a week thinking about it. I'm going to beat them? Please.

And the third factor is that I am persuaded by all the literature I've read that says asset allocation and buy & hold is the way to go.

If I were to play around with market timing, I would do it with just a small portion of my money, testing my acumen. The rest of the money would stay in long-term parking.

 

[ziggy29]

As of market close today, the DJIA is down 671 since August 2.

671 points is less than 5%. Noise.

I'm not looking to be flippant, but if someone thinks a 5% drop in 2-3 weeks is proof the sky is falling, well, they shouldn't dabble in equities to begin with, IMO.

Yes, in the last few months I've lightened up from about 60/40 to 50/50 to lock in some gains from the rising market, but there's no way I think bonds (in a rising rate environment) or cash yielding 0.1% is the total answer.

 

[Animorph]

I went to quite a bit of cash (about 30%) and bear market hedges in 2007. Not exactly timing, I was all equities, just about to retire, and was concerned that the individual savings rate was a negative percentage.

After my first big cash out, the market continued to rise 10%. I was concerned about my hedges in particular, the cash I could eventually spend. I held on, and finally the market started down. When my hedges finally reached what I paid for them I sold them. Chickened out. I'm happy to bet that equities will go up, but not so willing to bet they'll go down. As the market eventually continued down, and DW decided not to retire, I was able to buy equities with my excess cash. I waited until the market was down 20% and then as the market declined another 5% I reinvested about 20% of my original excess cash. I used HELOC money for a final step. That was the bottom, thankfully, and things got much better from there.

So I was 10% off the peak, and completely clueless about the bottom, but was buying equities on the cheap with all of my excess cash. Can you do better? If the market continues up another 10% will you stay out? If it drops 20% will you go all in? -30%? -10%? When the talking heads say to start buying? When the Fed starts saying everything is really OK? What if it drops 10% and then jumps back to 5% over where you jumped out? Easy enough to jump out, but as others have said, when will you get back in?

 

[haha]

Today I have learned 1) that market timing never works; and 2) that lawyers only muck things up and never do anyone any good in business or real estate transactions.


Ha

 

[Spanky]

Easy enough to jump out, but as others have said, when will you get back in?

Right before the surge!

 

[easysurfer]

Well...at least the shift was done in an IRA

 

[jollystomper]

I won't be surprised if the market kind of muddles along at this level or even loses a little more (wait till Congress returns and the political shenanigans start impacting the market again), but I'm not going to try to time it. My AA allocation lets me sleep at night and I have enough in cash to avoid being forced to touch my equity or bond funds for many years.

 

[Shanky]

Market timing driven by fear precludes someone from jumping in before the "surge"
If the OP is driven by fear of what might happen, then equities is not ever the place to be.

 

[easysurfer]

AA and long time horizon is my friend

 

[CCdaCE]

Once you've tasted the spoils from a lucky streak of market timing, it's hard to get that out of your mind. But, don't confuse luck with skill.

I doubled my money, it took less than two years, and I think about it every day. What I should buy next? Luckily, it's only a few hundred bucks in the game. Maybe it's an addictive personality or another not-so-rare strain of personality/psychology. A shipping stock, no less. See this thread. Added NM at 3.05 on 10/6/11. Sold 8/21/13 at 6.20. Of course, it was over 6.40 at one point today.

So, how long can you market timing addicts go?

-CC

 

[karluk]

OK I give up. I just moved all IRA funds to a money market fund. ( I'm retired).
I believe that with the tapering of QE interest rates can only rise, driving down bond fund prices and adversely affecting equities. Can't see how you can avoid large losses in the short run. Not a market timer until now, but I now believe it to be wise to stay out of the market for 3-4 months until the Treasury quits meddling and the market achieves some sanity.

Comments please.

My comment is that it's easy to be wise on a message board, but not quite so easy when you're on record for the exact timing and amount of your trades. The date of your post indicates that you may well have sold your IRA funds at yesterday's closing price. If so, you are now down about 1%, based on today's strong stock market performance. Naturally you may very well make that up in coming days, if you're indeed right about future bumps in the road. But I'd like to see what you do as it happens. Care to go on record with what you've sold and for how much, so that we can track your performance? And of course please update your trades as you make them, so we can see if you get back into the market with a profit or a loss.

 

[karluk]

By the way, I encourage you to treat my challenge to reveal your trades and prove to us that you can successfully time the market as a legitimate offer which there is no reason to doubt you may win. You have posted your intention to do market timing on a board full of buy-and-holders. Naturally there is a lot of skepticism, but that doesn't mean that your fears aren't justified. Perhaps you've chosen the perfect time to sell and will be rewarded for your insight. If so, I will be more than happy to give you full credit. But a post without trade dates and numbers is useless from the point of view of deciding whether you'll eventually come out ahead or behind.