Trying to time the markets

[RobbieB]

I did nothing, same as it ever was.

 

[Out-to-Lunch]

Even though the first dip was not big enough to bring me to my rebalance bands, I rebalanced anyway out of [-]greed[/-] good practice. Then the BIG dip brought me to just short of my rebalancing trigger. I rationalized NOT rebalancing, but this was simply out of fear. But at least I didn't sell.

 

[CCdaCE]

I got lazy and lucky. In 2014, I got a substantial (for me) raise for a short term gig. At the time, I assumed it would only last a year, and it ended up being two. Not wanting to become used to the additional pay, I put the excess into my 457. I figured the market was way overpriced back then! So, for '14-15, the single fund (VASGX) I had chosen ranged from between $28-30/share. But, I put all my excess into money market (MM), thinking the market would crash. And it never really did, in the next few months/years, other than the fund was around $26 in early '16 for a few weeks. Kinda forgot about it until the statements came and I thought I should change my allocation in the 457. Which ended up being 50/50 after the 2 years of adding to the MM. But, never took action despite repeated pestering from the broker/salesman.

Along comes Feb and March. of this year, and I nearly died, and laid in a hospital bed for several weeks, and had lots to think about. So, I call up 'my guy' after Covid hits and lowers the market, on Mar. 13. VASGX was 30.58 that day. I missed 5-6 years of dividends if nothing else, and I figured it was time to get back in. I had him move 1/4 of my MM cash into the fund. And, maybe it got executed that day or the following Monday, at 27.78, or the day after. The statement doesn't say share price, just dollar value, and I haven't taken the time to calculate what I got in for. Just glad I got in for roughly what it would've been in '14-15. Then it went down to $26.50 around Mar. 23, and I wondered if I should move the rest. But, there it sat as I got out of the hospital and had "other things" going on, obviously.

So, on one hand I didn't learn, and on the other hand, I am at 75/25 and thinking the market will crash and I have dry powder.

In everything else, I DCA/contribute monthly and rebalance. It is interesting to figure myself out, if nothing else, because I'm never gonna figure out the whims of Mr. Market.

-CC

 

[DrRoy]

In order for market timing to work, you have to know when to sell, and then when to buy back. If the odds of being right for each is 50%, then the odds of getting both right is 25%. So, occasionally you will benefit from the round trip, but most of the time you will lose.

 

[Andre1969]

I tried a little market timing back in late 2018, when prices were crashing. I was thinking that I could sell a few things while prices were down, write the loss off on my taxes, and buy back after the wash sale period. Well, damn if the market didn't rebound so quickly, that once the wash sale period was up, I was at the risk of doing the "Sell Low and Buy High" thing.

This time around, I've pretty much left things alone. Although, I did have a bunch of Cedar Fair (amusement park) stock that I sold off, as it was plummeting. They stopped their dividend, so I felt confident it would keep falling. I also took a hit with some Boeing stock, and some oil company stocks.

Overall, I have a rate of return around 5.69% as of this morning. That's a little bit higher than the 4.67% peak I hit on February 19, just before the whole COVID crash.

I have done a little rebalancing here and there...if some positions seem like they're getting a bit too high, I'd sell a little off and move it into something more conservative. And then if there was a dip, I'd buy a little back. But, I've haven't done any huge shifts. Just enough, to feel like I'm doing *something*, but in reality, not enough to really hurt anything, if I chose poorly.

 

[Nick12]

I never timed the market. Just kept investing monthly regardless of market conditions since the early 1990s. FIRE'd at 51 because I could. I leave the market timers to someone else.

 

[Amethyst]

Yep, just like those who brag about making a killing by flipping houses. Then others try it, and flop, because timing is all.

The problem with this sort of thing and with amateur stock picking, too, is that people who "win" are the people who post. The people who do not win generally do not post. This creates an illusion of easy success that is not reality. .

 

[OldShooter]

In order for market timing to work, you have to know when to sell, and then when to buy back. If the odds of being right for each is 50%, then the odds of getting both right is 25%. So, occasionally you will benefit from the round trip, but most of the time you will lose.

Yeah, I have done that arithmetic in my head a few times. It is probably a crude approximation but it does make the important and correct point that there are people who win. That's the nature of a random process -- someone is always going to win but that someone will be subject to the same odds next time they roll. Win again? Sure, once in a while. That's why the S&P SPIVA reports show that a few percent of funds beat their benchmarks even after ten rolls/years.

Yep, just like those who brag about making a killing by flipping houses. Then others try it, and flop, because timing is all.

I actually am a little surprised that we haven't had one or two "winners" posting into this thread and describing their schemes. One of Taleb's themes in "Fooled by Randomness" is people who have gotten lucky and from that concluded that they are geniuses.

 

[Chuckanut]

It does appear... that doing the opposite of what seems rational (or obvious) works more often than not. Easier said than done.

Except that given what I have read here, what is rational often flipps by 180 degrees. Now what do I do?

I remember a column written by a psychologist that I read years ago. It's message was clear - You are part of the mob you're betting against. His advice was to only buy or sell when your fingers are shaking so much you can barely hit the buttons to call your broker. (Yes, it was written a long time ago.) I have no idea if that is really good advice. I have never tried it.

The last time I adjusted my AA I sold a bit more than normal to pad my buckets, just in case this CV thing lasted through next year. That's my pathetic approach to market timing. And, I'm comfortable with it.

 

[indiajust]

Problem with timing is you have to be right... twice. First part is easy.

I just read an excellent article on deep value dispersion. Gist is, which companies will explode and gain popularity is unknowable, so own a slice of a bunch. Idea is to have enough to get lucky with one or two big winners. Complete inversion of market timing approach.

 

[OldShooter]

Problem with timing is you have to be right... twice. First part is easy.

I just read an excellent article on deep value dispersion. Gist is, which companies will explode and gain popularity is unknowable, so own a slice of a bunch. Idea is to have enough to get lucky with one or two big winners. Complete inversion of market timing approach.

As Jack Bogel advised (paraphrasing): "Don't go looking for the needle. Buy the haystack."

 

[HI Bill]

I got lucky this year. When the 'Covid Crash" occurred, I was driving around the South Island of New Zealand, with only intermittent cell phone access and data connections. Checked the stocks each afternoon and stared in disbelief at $60K+ daily losses. Shrugged it off, and came back to the US, fully believing that the markets would go further down, then recover in 2 to 3 years.

Stayed the course. When the markets had mostly recovered in June, I sold enough stock for a 50% down payment on the retirement home. I'll be paying some capital gains this year, which is less painful than having 15 years of carryover losses!

In 2008, I sold about $100K of equities at a $60K loss. I had carryover losses for quite a few years, and learned my lesson the hard way. Timing the exit's easy. Timing the re-entry, impossible.

 

[Dynaflash]

I retired 2 years ago but still keep up with some old work mates. A few of them pulled out of the market when it was close to the bottom. They watched it and just saw the money flowing the wrong direction but did not jump out in the early stages. They will most likely never recover

 

[gwix98]

Thanks for sharing your story. It took me years to figure out that staying fully invested was the best approach. I do have a small portion of my portfolio that I swing trade with good luck. But it’s a small percentage of my portfolio. This has been a good year up 14.5%.

 

[melijov]

For me, re-balancing my 70% VTI 30% BND portfolio gives me an exact timing on when to act, no emotions involved. During Feb-March drop my portfolio became 65/35, so I sold 5% of my BND and bought 5% of VTI.

After the market recovery my portfolio became 75/25 so this time I sold 5% of VTI and bougth 5% of BND. It worked like magic. .

Since I discovered re-balancing I don't care if the market goes up or down. I keep rebalancing after a 5% move.

 

[flyboy541]

Buy and hold

I only follow three rules. Buy and hold, don't panic, don't look. My wife asks me why TSLA is $400. I don't check the market much. I see a 5 for 1 split. I look at my AAPL, 4 for 1 split. I only own five different stocks. 300% gain in the last year. Now sitting at around $10 mil. No skill, all luck. I tried the day trading 20 years ago. Absolutely, positively, you can not time the market. If you sell at a gain, you pay it in taxes. If you sell at a lose, you write off $3000 for 20 years. One question... When the hell is AMZN going to split...those bastards.

 

[SnowballCamper]

I've learned the hard way, that there is one thing to do when I think I know I should get in or out of some investment. Rebalance to my specified AA.

Provided one has enough diversification (and doesn't change the AA), you'll alway be selling appreciated assets, and buying into assets that are underpriced (relative to the last time you rebalanced).

It's the only way to sell high and buy low on every transaction...

Unless you have the aptitude and time to do market research along the lines of Warren Buffet, I think doing anything else based on the current state of the market is unnecessarily risky and speculative. There is some difficulty in figuring out what "enough" diversification is for our personal preferences. But now that I've figured that out, when the market looks out of whack, I just rebalance. Then I've done something about whatever the crazy situation is, and when I look at what I did some time later, I see that I bought low, and sold high. And I sleep well at night. ;-)

 

[OldShooter]

... Unless you have the aptitude and time to do market research along the lines of Warren Buffet, I think doing anything else based on the current state of the market is unnecessarily risky and speculative. ...

Warren Buffet knows better:

"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two."

"Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell. ... Lethargy bordering on sloth should remain the cornerstone of an investment style."