Trend or just a microcosm of my friends/family....?

[Turboslacker]

Wow, I can't think of a no more dangerous suggestion than to consider what people "feel" and regard it as a key data point. As to "fundamental data" and "technical indicators", several hundred years of investing history demonstrates repeatedly that no such thing exists.

Well then I guess that simply reduces your strategy to just guessing LoL. There ain't nothin left since you excluded facts, data, information and psychology.

Good luck with that plan.

 

[CaliforniaMan]

Well then I guess that simply reduces your strategy to just guessing LoL. There ain't nothin left since you excluded facts, data, information and psychology.

Good luck with that plan.

Can't speak for Options, but for myself I don't think it means guessing at all. Only that you cannot use "fundamental" or "technical" analysis to beat the market. That is why I think a large majority of us here use indexing.

 

[jollystomper]

My experience has been that more people take a lot more risk in the market than they need to, are driven by emotion, and ignore the context. A market down about 5% after a 30% run up in a year (not to speak of the 5 year record) is a "meh" event and frankly to be expected. But, media outlets need to keep and increase their viewers, so the message of OMG THE END IS NEAR is what gets people's attention and scares them and causes them to ask those questions.

 

[ziggy29]

From the contrarian point of view, this would be a bullish anecdotal sign. When many everyday people are talking about getting out, a contrarian would say it's time to get in. And vice-versa; when everyone from your plumber to your waitress at the local greasy spoon to your hairdresser to the local dog catcher has stock tips and goes all in, a contrarian would say that's a sign to pull back.

FWIW, I put a lot of stock (no pun intended) in contrarian thought but I don't make huge money moves because of it.

 

[easysurfer]

Can't speak for Options, but for myself I don't think it means guessing at all. Only that you cannot use "fundamental" or "technical" analysis to beat the market. That is why I think a large majority of us here use indexing.

+1

IMO, a lot easier indexing and just working with percent allocations (I learned fractions in 5th grade, this I can handle ) than trying to predict market psychology.

Sometimes boring is good

 

[Lsbcal]

...(snip)...
So... Is it time to throw more money into the market since there appears to be some panic in the general population?

3 people is not a big sample

I love these echoes of 2008. That is what we are all experiencing, memories of fear ... but some greed creeping into the picture too.

We need to remember there will always be sellers and buyers. That is what defines the current price levels.

 

[seraphim]

I doubt the general population, directly, has much effect on the stock market. There are other factors with far more influence. But, when it drops, time to buy more.

In each case, though, it depends on the individual's personal situation. We haven't that information, so we can't advise. In my situation, should it drop significantly I'll hold what I have, and when it hits a particular point I'll buy more. If it continues upward, I'll eventually sell to lock in profits. I have my own trigger points.

Personally, I wouldn't give out generic advice to people. Might work for some and backfire for others. Encourage them to learn more about what they're doing...

 

[Turboslacker]

Can't speak for Options, but for myself I don't think it means guessing at all. Only that you cannot use "fundamental" or "technical" analysis to beat the market. That is why I think a large majority of us here use indexing.

I do agree that indexing does fairly well. I've been a fan if it and invested in S&P500 more than anything else. It certainly is easier to BE the market rather than try to BEAT the market.

The 15% who beat the market on avg annually are likely applying classic analysis of fundamentals, technicals and price movements. Maybe I'm wrong but I believe all investors are following a form of a System...for example buy and hold seasoned with AA periodically.

 

[CaliforniaMan]

I do agree that indexing does fairly well. I've been a fan if it and invested in S&P500 more than anything else. It certainly is easier to BE the market rather than try to BEAT the market.

The 15% who beat the market on avg annually are likely applying classic analysis of fundamentals, technicals and price movements. Maybe I'm wrong but I believe all investors are following a form of a System...for example buy and hold seasoned with AA periodically.

Bolding mine.

I agree that we are all are following some sort of system. The difference is that some use a system which assumes that they are smarter than the others in the market, others use a system which assumes that they are not. As far as those that "beat the market on avg annually", there are no more of these than would be predicted by chance. Lots of studies have shown this to be true. A quick search turned up this one: Measuring Chance | The University of Chicago Booth School of Business

I don't think this means we should not gamble a little. We might get lucky and get a great hit. Just not gamble with the grocery budget so to speak. Do whatever we want in that regard, but just call it what it is, gambling.

 

[Turboslacker]

Bolding mine.

I agree that we are all are following some sort of system. The difference is that some use a system which assumes that they are smarter than the others in the market, others use a system which assumes that they are not. As far as those that "beat the market on avg annually", there are no more of these than would be predicted by chance. Lots of studies have shown this to be true. A quick search turned up this one: Measuring Chance | The University of Chicago Booth School of Business

I don't think this means we should not gamble a little. We might get lucky and get a great hit. Just not gamble with the grocery budget so to speak. Do whatever we want in that regard, but just call it what it is, gambling.

Agreed. It's definitely a gamble.

 

[RobLJ]

The OP is talking about a contrarian strategy.

Regarding throwing more money into the market, I've never understood this idea. The same for people who talk about making a large amount of money in 2008 by buying after the decline. Aren't people already fully invested? Where is the money coming from to add additional money? If one has a long-term CD, you can't cash it out. No one should have large amounts of cash sitting around because it should have already been in the stock market. And if one doesn't use market timing then again, the money is invested. Making a change in asset allocation doesn't make sense. So are people selling real estate to put money in the stock market?

There is nothing wrong with having cash, particularly if it is part of your allocation strategy. One reason my basic allocation is 55% stock is that I'm willing to hold up to 15% cash.
Finally, while I agree with the critique of market timing, I took gains in Fidelity Contra in 2000 (or was it 2001?) when the S&P was climbing to above 30 P/E levels. Crazy, I know. Also started harvesting gains below my stock allocation in '06 and '07. Crazy and I gave up some gains in '07 and '08, until they all got puked up.
I give my self a 5% margin + or - around 55% stocks based on P/E and other factors and the cash either gets used, slowly, or gains get harvested. If I'm wrong, I'm wrong. Generally I stay around the allocation level, although it was 80% back in 2000 and 65% in 2006.
Markettiming, but to me the issue is whether I'm likely to sell when the market crashes. Didn't do it in the early oughts or 2008-'09, although I did harvest a few gains in late '09 and '10.

I've let stock creep up to 63% in early January and was getting ready to sell about 2% to reduce to 60%, then the market did the adjusting for me.
YMMV.