Market Timing Schmarket Timing

[robnplunder]

Quote:

Originally Posted by eta2020 My rule of being 100% in equities all the time prevents me from any market timing.

That in itself is a form of market timing.

Agreed on correction. I am hoping we get a fully defined correction this time.

[Animorph]

Sure you could lose a bunch if the market dips. But it will go up again after that (barring something new.) All you really need is enough cash or bonds to see you through the dip, spending bonds and not touching equities. That's a lot less than 100% of your portfolio.

Is 10% down enough, or will you wait for 20% down? What if it goes down 10% and then recovers? What if it goes up 10%? For the most part I never knew which of those situations might happen. During 2008-2009 I bought some equities for every 5% to 10% (from the peak) the market dropped, starting at 20% down. I'd suggest that partial approach rather than 100% moves.

[eta2020]

We know concept of Fund Returns being nearly always much better then investor returns. It is not unusual for fund to have double return of what investors in fund made.

This is because 99% of investors have no skills to correctly time markets.
Combine that fact with fear/panic when things go wrong and you can see reason why it is undisputed fact that Fund Returns are way better then Fund Investor Returns.

[LOL!]

Quote:

Originally Posted by eta2020 We know concept of Fund Returns being nearly always much better then investor returns. It is not unusual for fund to have double return of what investors in fund made. This is because 99% of investors have no skills to correctly time markets. Combine that fact with fear/panic when things go wrong and you can see reason why it is undisputed fact that Fund Returns are way better then Fund Investor Returns.

Morningstar.com shows investor returns for VTSMX (Vanguard Total Stock Market Index fund). It appears that it is an undisputed fact that investor returns are better than the total return for 3-, 5-, 10-, and 15-year periods shown. The 1-year returns we can call even.

Vanguard Total Stock Mkt Idx Inv (VTSMX) Fund Performance and Returns

[marko]

Quote:

Originally Posted by bob boag I went 100% into cash and short term bond funds today. .

After today's fiasco, maybe next time you get an idea like that, can you give me a jingle?

How 'bout some lottery numbers?

Ashamed? You're plugged into something!

[robnplunder]

Quote:

Originally Posted by marko After today's fiasco, maybe next time you get an idea like that, can you give me a jingle? How 'bout some lottery numbers? Ashamed? You're plugged into something!

... more importantly, tell us, bob boag, when you are going back in. I've got some cash for a rebalancing act.

[aim-high]

Rather than market timing, a friend of mind hedge with some Oct calls on the VIX for a very small percentage of his portfolio. That and another stock that isn't correlated to the market made him flat today.

[eta2020]

Quote:

Originally Posted by LOL! Morningstar.com shows investor returns for VTSMX (Vanguard Total Stock Market Index fund). It appears that it is an undisputed fact that investor returns are better than the total return for 3-, 5-, 10-, and 15-year periods shown. The 1-year returns we can call even. Vanguard Total Stock Mkt Idx Inv (VTSMX) Fund Performance and Returns

Yes if you look hard you can find cases where Investor returns will be higher then Fund Returns.

Even in your case 10 year return difference is 0.83%. If you have to cover taxes due to jumping in and out of the market you will end up with less money working for you then just keeping all in.

I can point you to 100's of web sites showing Investor Returns are way below Fund Returns.....

[LOL!]

Of course you can find all those web sites. There is no dispute about that.

But I didn't have to look hard to find one of the largest mutual funds on the planet.

[eta2020]

Quote:

Originally Posted by LOL! Of course you can find all those web sites. There is no dispute about that. But I didn't have to look hard to find one of the largest mutual funds on the planet.

LOL you pointed us to Morningstar report on VTI. Go and perform google search of "Morningstar investor returns"......

There is no dispute I can find 90% of research backs up my claim. I also don't have to look hard to find this.....

[nash031]

Quote:

Originally Posted by kaudrey Well, I am still in accumulation phase, and I am excited that I'll be buying low(er) tomorrow when my automatic 401(k) contribution gets made. I also have some cash in my taxable account....I think I have to figure out where my AA is a little out of whack and buy something there too!

Exactly. I just got a 2% discount for my upcoming purchases!

[NW-Bound]

My stocks went down 1.86% today, beating the S&P drop of 2.00%. Man, that's beaucoup de money. Still waiting to see how the MFs are doing.

[Lsbcal]

Quote:

Originally Posted by NW-Bound My stocks went down 1.86% today, beating the S&P drop of 2.00%. Man, that's beaucoup de money. Still waiting to see how the MFs are doing.

For a moment I thought you were using inappropriate abbreviations.

[Lsbcal]

Note to self: If you are going to market time, don't tell people about it. Nobody's going to thank you even if you are right. And there is a chance you won't be right.

This comes from a guy who thinks there really are rare times when market timing could be the way to reduce risk and even beat the market. Just not now, I hope.

[NW-Bound]

OK, all the numbers are in. I am down 1.25% today. Not bad for 70% equity AA.

[timo2]

Quote:

Originally Posted by bob boag A Anyway we're already up YTD more than our annual living expenses, so I'm taking the poorly-reasoned luxury of sitting on the sidelines and observing for a few months.

I understand this. Since you are already retired and if you now FI, why mess it up by unnecessary risk? But what about your 10 year money? that could still be in stocks?

When I achieved my personal minimum FI I did move to protect that more because I could never replace it. But I’m still working, so I'm still in stocks with my longer term money.

[clifp]

Quote:

Originally Posted by NW-Bound OK, all the numbers are in. I am down 1.25% today. Not bad for 70% equity AA.

down 1.64% My Schwab account is 90/10. Luckily my PenFed account was up for today like it is is everyday. Just wish I had bought some more of the 10 year 5% CDs and the 5 year 3% CDs.

[eta2020]

Quote:

Originally Posted by LOL! Morningstar.com shows investor returns for VTSMX (Vanguard Total Stock Market Index fund). It appears that it is an undisputed fact that investor returns are better than the total return for 3-, 5-, 10-, and 15-year periods shown. The 1-year returns we can call even. Vanguard Total Stock Mkt Idx Inv (VTSMX) Fund Performance and Returns

I would be interested to see historical data of fund inflow/outflow to find where 0.83 percent comes over 10 years.

Is this difference because people sell and buy due to market timing?

Or is this difference because MOST of the buying happens during market lows? This is when people who shun timing add the most.

VTI is kind of fund that on first thought I would think buy and hold will like.

[eta2020]

http://investors.morningstar.com/new...roductCode=mle

And actually this is exactly what I am finding. Large inflows into VTSMX/VTI as a market goes down while no evidence of outflows prior to crash.

In such case VTSMX would be actually example of how discipline beats market timing and not other way around.

[LOL!]

I just don't believe some of this investor returns reports. This is sometimes called the "behavior gap". Most are perpetuated by the flawed DALBAR studies which sells nice brochures for financial advisors to use for marketing materials.

Does The DALBAR Study Grossly Overstate The Behavior Gap? (Guest Post) | Kitces.com

DALBAR Study Overstates Investors’ Bad Timing

I do believe that investor behavior causes some of them to not do as well as they could. But also paying fees to advisors causes them to not do as well as they could. It has been shown that advisors also suffer from the behavior gap just as their clients do.

So does the problem exist? I think Yes. Is the problem exaggerated and hyped? I think Yes. Is the problem as big as some folks think? I think No.

Of course, almost nobody on this forum exhibits a behavior gap.