This time is different!!
- Thread starter Hopeful
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Ronstar
Moderator Emeritus
Exactly. Have to be right twice. I went 100% cash in my 401 k in 2000 at the right time. And thought I timed getting back in ok too. But my boss who had a similar balance as me when i got out had more than 100k more than me when I got back in.
Asabino
Dryer sheet aficionado
I’ve been trying to time the market since 1986. Been buying and selling through all the tough times and even retired in 2006 right before the market crashed. My lesson: stay in it to win it!
teejayevans
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No I’m not...I’m not relying on luck when I drive or buy lettuce.
Update: What is great about the non trading weekend, you can read up on the pundits, the news casts, Jeffrey Gundlach and whether the coronavirus is going to subside. I have concluded it is going to get worst before it is going to get better.
My 90% treasuries portfolio had consisted of 30% ST treasuries, 30% Intermediate treasuries and 30% LT treasuries. Since it appears that the situation is going to get worst (my opinion), I just put in an order to reallocate to 15% ST treasuries, 25% intermediate treasures and 50% LT treasuries. This is a more aggressive treasury portfolio.
The 10% equities is intended to comply with my original plan to go back to equities since the market has dropped 10%. The 50% LT treasuries has higher risk but higher reward. I now want to maximize my reward. The 15% ST treasuries is like a cash account because the volatility of ST treasuries is very very low but the reward is also lower. I use ST treasuries to lock in my profits.
As I stated previously, investors should learn how treasuries work. In my opinion.....you should think equities in a bull market. You should think treasuries in a bear market or an upcoming bear market. This is why the yield curve inverted because the yield curve is a reflection of market sentiment by active investors.
My 90% treasuries portfolio had consisted of 30% ST treasuries, 30% Intermediate treasuries and 30% LT treasuries. Since it appears that the situation is going to get worst (my opinion), I just put in an order to reallocate to 15% ST treasuries, 25% intermediate treasures and 50% LT treasuries. This is a more aggressive treasury portfolio.
The 10% equities is intended to comply with my original plan to go back to equities since the market has dropped 10%. The 50% LT treasuries has higher risk but higher reward. I now want to maximize my reward. The 15% ST treasuries is like a cash account because the volatility of ST treasuries is very very low but the reward is also lower. I use ST treasuries to lock in my profits.
As I stated previously, investors should learn how treasuries work. In my opinion.....you should think equities in a bull market. You should think treasuries in a bear market or an upcoming bear market. This is why the yield curve inverted because the yield curve is a reflection of market sentiment by active investors.
Not really. If you're at the casino, the longer you stay the higher the odds that you lose. If you're in the stock market the longer you stay fully invested the higher the odds you do extremely well. We have almost a 100 years of history that proves that.
pb4uski, I'm 60:40 with the 40 % entirely in BND, in my 401k. If you were in my situation at this point in time what you would do with the BND holding? Thanks in advance for your thoughts!
Looking4Ward
Full time employment: Posting here.
I've been looking every day to see how much it's gone up or how much it's gone done.
But I'm not touching anything except for my regularly scheduled monthly withdrawals.
But I'm not touching anything except for my regularly scheduled monthly withdrawals.
OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Really? Do you arrange to have no other vehicles near the roads and intersections when you drive? Do you have bridges inspected before you drive over them? Have you arranged to have the pickers of the lettuce you eat to be inspected for e coli? There are a lot of dead people who risked driving and lettuce and lost the gamble.
Actually I don't think there is anyone, ever, who has "gambled" on US government bonds and lost.
NW-Bound
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There are risks in whatever we do.
Here's a trivia statistics for ya: a Web site claims 450 people die each year by falling out of bed.
It does not say whether that's worldwide or just in the US. And I happen to have a Scandinavian style bed, which is low to the ground, because I like the look of it compared to big, tall, and heavy beds with a canopy. My risk is even smaller. 
What people fail to address is that risks are not constant, but change with time and external circumstances. Right now, the risk of getting caught in a lockdown or a quarantine is high when traveling to some places, while it was non-existent just a month ago. You cannot close your eyes and ignore things happening around you.
Here's a trivia statistics for ya: a Web site claims 450 people die each year by falling out of bed.
It does not say whether that's worldwide or just in the US. And I happen to have a Scandinavian style bed, which is low to the ground, because I like the look of it compared to big, tall, and heavy beds with a canopy. My risk is even smaller. What people fail to address is that risks are not constant, but change with time and external circumstances. Right now, the risk of getting caught in a lockdown or a quarantine is high when traveling to some places, while it was non-existent just a month ago. You cannot close your eyes and ignore things happening around you.
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I belong in the camp that there is very little difference between gambling and investing. In both cases, you do not know whether it was a good gamble or a good investment until after the fact. In both cases, successful gambling and investing partly depends on both luck and experience. There are successful gamblers and successful investors and there are unsuccessful ones.
Going to the "car to buy luttuce" analogy: It takes experience to drive your car and avoid an accident. It also takes luck that a drunk driver does not plow into you from your blind spot.
I may have reallocated from a 60/40 portfolio to 100% treasuries 6 months before the decline but I freely admitted there was some luck involved since I did not predict the corona virus. NOBODY could have. The corona virus comes close to that drunk driver plowing into you from your blind spot.
IMO the only difference between gambling and investing is that the odds are better with investing and that some people are lucky and experienced while some people are not.
teejayevans
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Gambling is all luck, unless you can count cards or cheat in some way. Yes, you can improve the odds but the house still has the advantage. So your chances of success are less than 50%.
As noted a bazillion times, a proper portfolio taking out 4% or less is almost guaranteed to be successful. Can something go wrong, yea sure, but that’s not gambling, that’s just life. I think most people understand the difference.
Assuming you have a 50% chance of being correct, that means you have a 25% chance of success with market timing. Because you have to be correct twice, when you pull money out, and when you put it back in. I prefer better odds with the money I need to live off of.
To each his own...
As noted a bazillion times, a proper portfolio taking out 4% or less is almost guaranteed to be successful. Can something go wrong, yea sure, but that’s not gambling, that’s just life. I think most people understand the difference.
Assuming you have a 50% chance of being correct, that means you have a 25% chance of success with market timing. Because you have to be correct twice, when you pull money out, and when you put it back in. I prefer better odds with the money I need to live off of.
To each his own...
There is a lot of truth to that, but a key question is WHEN do you need the money? If you may possibly need it soon, the stock market is not the place for it. If you can leave it invested for 10+ years, you can likely ride out anything Mother Nature can throw at you.
I also think, based on the fact we were at the end of the longest bull run ever, that a little market timing before this crash was a wise decision.
No matter how many times you flip a coin, the next toss is always a 50% chance of heads. You can't really say that after a bull market starting in 2009 the odds of having a good return this year are the same as the odds of a good return earlier in an earlier year of the bull run. It's not random.
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Well I gamble a lot (casinos and markets). I'm not an investor (I'm a swing trader) so I can see many similarities. However, from my POV there are some important differences between the two like: Casino's limit how much I can bet on each bet, (spin of the wheel, turn of the card or roll of the dice), markets don't have such limits. OTH, casinos are pretty much a 100% win or lose proposition per "bet", markets are not since I can sell if I don't like the way the bet is going.
Until today, my biggest one day loss was in a casino.
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ownyourfuture
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Agree.
FYI: Certainly not sticking up for drunk drivers, but in 2016, the Minnesota Department of transportation released data showing that distracted driving caused 4 times more accidents with injuries than drunk driving.
Didn't wanna see those !@#$!@#$ left out
I was a passive investor but I became an active investor using only 10% of my portfolio in order to learn the "tricks of the trade" while leaving the remaining 90% of my portfolio as a passive investment You do not learn without doing it. As you probably know by now, I re-allocated my entire 60/40 portfolio to 100% treasury bonds about 6 months before the recent decline. The reasons leading to this decision are already noted. I acknowledge luck played a part but experience also played a part too.
My entire strategy was based on avoiding the next bear market. After the yield curve inverted, I knew by experience that treasuries were going to make some money and not lose money. I also knew that if the bear market did NOT come, my portfolio will under perform compared to the S&P500. Hence after assessing the risks and the rewards, I pulled the trigger. This is because "under performance" is better than losing money in which passive investors are now experiencing. For example: Passive investors will feel better now if treasuries makes 20% and the S&P500 still makes 10% (under-performance situation) versus a 10% or more decline of your portfolio which can be painful.
I agree with you that you cannot time the market but only at the very highest peak at the end of the bull market and the very lowest decline of the bear market. I was about 6 months early so I missed it by six month which supports your position that you cannot time the market. As far as finding the lowest valley of the bear market, I intend to rotate back to equities from 100% treasuries as follows: 10% market decline = 10% equities/90% treasuries, 30% decline = 30% equities/70% treasuries, etc. No guessing where the bottom will be. This is a systematic re-allocation of buying equities at depressed prices. My portfolio will be 20% equities/80% treasuries very soon now. Since I have avoided the initial loss, making money during the recovery is a certainty and the only variable is "how much".
In other words....I solved the first market timing event by reallocating "early" by accepting the potential consequences of under-performance. I solved the second market timing event by reallocating back to equities systematically. I do not have to time the market perfectly.
I will always respect people who engage in passive investing because I was a passive investor too. However, passive investors should also respect my active investing system that I have employed.
harley
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
So you're ready to buy back into equities now at 20%? Not a terrible plan, but as I remember in 2008/2009 the market would drop, rise, drop more, rise a bit, on and on. That's why it was so hard for me to decide when to get back in. I ended up missing the final upswing and by the time I was sure there wasn't another drop coming I had missed a lot of the gains. How will your plan deal with that? Also, do you reset to the current market price or are you basing the numbers on the highest point? I wish you well, but I see a lot of opportunity to miscalculate.
Also, you've repeatedly spoken of people having lost money during the Great Recession. Only those who sold lost. The ones who rode it out recovered in due time.
Also, you've repeatedly spoken of people having lost money during the Great Recession. Only those who sold lost. The ones who rode it out recovered in due time.
How do I deal with another drop after I re-allocate back to equities? Easy. I accept the drop without fretting about it. This is because recovery is a certainty so I think long term and not short term. In the short term I may lose money but in the long term I will make money.
The joy that I am experiencing when my portfolio is going up (VUSUX) while the market is going down is like winning a sport bet on your college team against your college arch rival.
I intend to do this again in about 8 years for the next bear market.
