Market Timing Schmarket Timing

[robnplunder]

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]

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]

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]

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]

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]

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]

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]

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/ne...v=no&region=USA&culture=en_US&ProductCode=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.

 

[REWahoo]

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

+1

No one here would ever behave like this guy...

 

[eta2020]

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.

For some people advisors are there to protect investor from himself/herself.
Usually from panicking which results in sell low.

 

[NW-Bound]

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

DALBAR Study Overstates Investors’ Bad Timing...

These articles have a valid point questioning the way investor returns are calculated. I wonder if there has been any rebuttal.

 

[eta2020]

These articles have a valid point questioning the way investor returns are calculated. I wonder if there has been any rebuttal.

DALBAR is just one of many many different studies that tell us same thing.

 

[Mulligan]

+1

No one here would ever behave like this guy...

I always love this chart. It reinforces to me my investing thoughts are neither original or successful.


Sent from my iPad using Tapatalk

 

[NW-Bound]

DALBAR is just one of many many different studies that tell us same thing.

We discussed this question earlier on another thread recently, but I do not remember how we left it.

Well, for every investor that sells low, there's another that successfully buys low. Who's the latter? Any study that unearths them?

 

[sengsational]

Well, for every investor that sells low, there's another that successfully buys low. Who's the latter? Any study that unearths them?

Probably the dollar cost averager or the rebalancer. Too boring to write an article about.

 

[eta2020]

We discussed this question earlier on another thread recently, but I do not remember how we left it.

Well, for every investor that sells low, there's another that successfully buys low. Who's the latter? Any study that unearths them?

I agree. I wonder how much money is made by computer trading systems ran by people like Goldman. Look for example on VXUS and number of large buy and sell positions few cents above and below current market price.

If you are fool and buy those less liquid ETFs at market price they will make money on you.

I am not expert here and I don't know much about it but all here how those trading systems make money at our expense..... Which is another reason why I do NOT trade.

 

[38Chevy454]

A small blip is nothing to get concerned about. I view this as buying opportunity

Why is it that human psychology with most things is buy low and sell high, but with equities it seems to be reversed? People want to buy when market is up and pay high, but then panic and sell low

As many have stated, stay the course, keep your asset allocation where you are comfortable and don't try to time market. Now go enjoy retirement or planning for retirement if you are not there yet - without getting worried over a short-term market reaction.

 

[BTravlin]

Not market timing but I did get lucky and replenish my cash position close to the peak.