Market Timing Schmarket Timing

[bob boag]

Quote:

Originally Posted by eta2020 OP you may do well given the way market goes......

Watch me catch the falling knife ...

[aim-high]

Quote:

Originally Posted by bob boag Watch me catch the falling knife ...

You may not want to grab it now. It's still has a few stories to fall!

[robnplunder]

Bob boag, are you back in? What is your plan?

[bob boag]

Quote:

Originally Posted by robnplunder Bob boag, are you back in? What is your plan?

I'm ascared of Aug-Sept-Oct. I hope to go back to a 30/70 position at the end of Oct if things seem more stable or up. In my worthless opinion I think there might be a pop after the election

[bob boag]

OP here - Wanted to lock in my gains (avoided losses) so I reinvested my parked cash today.

Moved all my Vanguard money market cash to Wellesley (VWIAX) for the time being.

Moved my Fidelity money parked in their short-term bond fund into Total Market Stock (VSTVX).

Back-of-the-envelope indicates I avoided losing about $60K. Whether or not we're about to drop into a bigger correction in the near future, at least I saved that much.

I will fine-tune to get down to about 30/70 because I'm a nervous nelly and want to avoid a repeat of my irrational behavior. Good luck.

[NW-Bound]

I would save about $200K in losses if I sold when you did and bought back now.

Market timing works if you reduce losses. It does not have to result in a gain to be called successful.

Enjoy!


PS. Umm... Make it $180K if the market holds till close today. Things are improving. But still...

[bob boag]

Quote:

Originally Posted by NW-Bound I would save about $200K in losses if I sold when you did and bought back now.

Hmmm 200,000/.05 = 4,000,000 just in stocks

Yikes, can I park your car sir?

[NW-Bound]

Not necessarily. What made you think mine was a 5% loss?

I could have only $500K, but in a single stock that dropped 50%.

By the way, I have "lost" close to $700K in past downturns, meaning real downturns and not mere corrections. A $200K "loss" still hurts, but I must be getting used to pain.

[eta2020]

Gentleman by now we are off about 3.5% from where we were when this discussion started. (I think around 1970 S&P 500)

If I sold and bought back today I would have much less money then I had before due to taxes.....

But in IRA/401K account it would be different story. None the less I am not smart/lucky enough for any kind of timing

[robnplunder]

Quote:

Originally Posted by bob boag OP here - Wanted to lock in my gains (avoided losses) so I reinvested my parked cash today.

Good move. I say you are trading, and not really market timing. I do the same with a small portion of my portfolio.

[NW-Bound]

Trading, market timing, or rebalancing... I don't care. I just have not figured out a way to maximize my gains. It bothers me.

On the other hand, they say "no pain, no gain". OK, so my pains in the past were later rewarded. But what if that stops working some day? All pain, no gain? Where's the warranty?

Darn, this is what makes life interesting.

Feel the rain like an English summer
Hear the notes from a distant song
Stepping out from a back shop poster
Wishing life wouldn't be so dull

https://www.youtube.com/watch?v=9JiCzXPqDis

[eta2020]

At 1970 was good time to shed junk and at 1850 good time to buy some quality.

But sell portfolio at 1970 and buy it back at 1887-1904 is example of trading does not work unless your initial portfolio has 0% gains.....in which case you are in huge troubles as far as investing goes.

This is because you have to pay taxes on gain of original portfolio plus all your dividends become non qualified for next 12 months.

I don't mean to be rude......This is how I see it

[NW-Bound]

Quote:

Originally Posted by eta2020 ... But sell portfolio at 1970 and buy it back at 1887-1904 is example of trading does not work ...

Ah, you made me look. The value of the S&P was indeed at 1970 when this thread started on 7/30.

I was thinking about my own situation. My portfolio peaked on 7/3/2014 when the S&P was at 1985. That peak value was $180K more than the present value. I thought of selling some, but thought my stocks would continue to do well. Even on 7/30/2014, I still had $150K more than what I have now. The S&P peaked at 2011 on 9/18, but my portfolio has already ebbed.

When you are not an indexer, your top and bottom do not completely match the broad market. And trying to figure out why and how can keep one occupied.

PS. About 2/3 of my stash is in 401k/IRA, and the gains impervious to tax. I would not be able nor hope to capture 2/3 of that $180K "loss", as I could never sell all. But if I could sell, then buy back enough just to avoid say $40-50K of loss, I would be happy.

PPS. I guess that while indexers may talk about "market timing", I was thinking of the term more as "stock timing". And as different sectors move out of phase with one another, "rebalancing" between them looks lucrative, but of course difficult.

[eta2020]

Ohh and I forgot one more problem with "timing"

If I sold and due to taxes end up with 85% of my money not only I would have to pay non qualified dividends I would also OWN less shares and have LOWER dividend yield of portfolio.

As I said selling looser that peaked 2 months ago and buying something at discount that will perform well next X years....That is what I rate as a good deal

[NW-Bound]

Quote:

Originally Posted by eta2020 ... As I said selling looser that peaked 2 months ago and buying something at discount that will perform well next X years....That is what I rate as a good deal

I have been trying... I have been trying...

[eta2020]

I had backed up my pick up truck during a sell of and....increased my annual dividend by another 2k due to buying some equity.

But portfolio remain 95% qualified....since I made no big trade. I am still of as far as NW goes. By about 3.5 % just as S&P is.

[karluk]

Quote:

Originally Posted by eta2020 This is because you have to pay taxes on gain of original portfolio plus all your dividends become non qualified for next 12 months.

This statement is flat out wrong. You appear to be confusing the holding period for long term capital gains with the (much shorter) holding period for qualified dividends. To quote one of many online sources:

Quote:

You must have held the applicable share of the fund for at least 61 days out of the 121-day period that began 60 days before the fund’s ex-dividend date.

https://www.fidelity.com/taxes/tax-t...fied-dividends

So there is a very good chance that OP, having repurchased his shares on October 20, will already meet the qualified dividend holding period for a stock or mutual fund that goes ex-dividend in late December. The tax loss from not getting qualfied dividends is likely to be zero, not a full year's worth of dividends.

You are of course right to point out the possible tax consequences of OP's temporary move to cash, but since you don't know his situation, you have no real reason to say that he will be paying even $1 extra in taxes. His realized capital gains may all be taxed at the 0% Federal rate and the effect on qualfied dividends may be nonexistent.

[eta2020]

With 60k profit...it did not look to me OP had Mickie Mouse portfolio.

I am not good with taxes, but if I sold for example 4 million dollar portfolio with 2 million in gain I don't see how I would not pay any taxes on gain.

Yes with 100k portfolio and 50k gain somebody who does not work and this is all they earned...wil not pay any taxes.

This 3% movements will benefit only if portfolio is fully wrapped in IRA or 401K IMO, but I may be wrong.

[karluk]

Quote:

Originally Posted by eta2020 With 60k profit...it did not look to me OP had Mickie Mouse portfolio. I am not good with taxes, but if I sold for example 4 million dollar portfolio with 2 million in gain I don't see how I would not pay any taxes on gain. Yes with 100k portfolio and 50k gain somebody who does not work and this is all they earned...wil not pay any taxes. This 3% movements will benefit only if portfolio is fully wrapped in IRA or 401K IMO, but I may be wrong.

You did take the trouble to read through this thread before offering your opinion on the tax consequences, didn't you? If you had, you might have seen OP's post from the first page of the thread, in which he clearly states

Quote:

It would have been a brutal hit but my assets are indeed nearly 100% in IRAs.

I fail to see how you reconcile the fact that almost all of OP's move to cash occurred in tax sheltered accounts with a belief that he will be taking a huge tax hit that will more than offset his gain from being out of the market while it was declining.

[eta2020]

In that case in OP's trade will work

But such trading should be examined from all angles. I am just pointing some things out .... It is just a friendly debate