Market Timing

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Market Timing

Postby Luke Duke » Tue Jul 16, 2013 11:33 am

Let me start out by saying that I wish that I found this forum years ago.

Here's my basic situation:

35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?
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Re: Market Timing

Postby blurryvision » Tue Jul 16, 2013 11:35 am

You're young. I would go in all at once, and this time stay the course.
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Re: Market Timing

Postby zebrafish » Tue Jul 16, 2013 11:38 am

Enos! This is your superior officer RosCOOOOOOOOO P. Bogle! I agree with blurryvision.
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Re: Market Timing

Postby YDNAL » Tue Jul 16, 2013 11:41 am

Luke Duke wrote:Let me start out by saying that I wish that I found this forum years ago.

Here's my basic situation:

35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.
  • You are 35yo with perhaps another 30 years of accumulation. Whatever your assets are today, it typically pales in comparison to tomorrow. I would direct all new savings to Stocks until you reach the AA that meets your Ability & Need for risk.
Last edited by YDNAL on Tue Jul 16, 2013 11:45 am, edited 1 time in total.
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Re: Market Timing

Postby keystone » Tue Jul 16, 2013 11:44 am

If I discovered that my current asset allocation did not fit in with my desired allocation, I would adjust it immediately.
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Re: Market Timing

Postby Luke Duke » Tue Jul 16, 2013 11:48 am

YDNAL wrote:
Luke Duke wrote:My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.[list][*]That makes little sense.[*]


This is the basis for the question.
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Re: Market Timing

Postby YDNAL » Tue Jul 16, 2013 11:55 am

keystone wrote:If I discovered that my current asset allocation did not fit in with my desired allocation, I would adjust it immediately.

That makes sense when you expose yourself to unnecessary risk.
  • With the opposite, too low risk, all you give up is any potential upswing in riskier assets in the near term - but this cuts both ways.
  • A 35yo's risk may be failure to meet goals, from taking less risk than necessary, in what 30 years ? This is easily correctable with new contributions in a short (usually) period of time.
Luke Duke wrote:
YDNAL wrote:
Luke Duke wrote:My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses. That makes little sense.

This is the basis for the question.

Again, use new contributions to get you - presumably quickly depending on ratio: new contributions/current assets - where you want to be.
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Re: Market Timing

Postby MindBogler » Tue Jul 16, 2013 12:50 pm

I agree. I also don't see any reason to sell low and buy high. Perhaps the OP can give us some more information? Rough portfolio size and yearly contributions?
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Re: Market Timing

Postby G-Money » Tue Jul 16, 2013 1:22 pm

I like Landy's idea. Helps reinforce the discipline of staying the course.
Don't assume I know what I'm talking about.
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Re: Market Timing

Postby jbourne99 » Tue Jul 16, 2013 1:38 pm

You already made a mistake with market timing. Basing your decision to get back into your desired AA with more marketing timing thinking (thinking that you would be buying equities at a high) is simply more of the same.
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Re: Market Timing

Postby FNK » Tue Jul 16, 2013 1:44 pm

If you go Landy's way, also direct dividends from bonds towards buying stocks. That will get you there faster.
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Re: Market Timing

Postby avalpert » Tue Jul 16, 2013 1:53 pm

YDNAL wrote:
Luke Duke wrote:Let me start out by saying that I wish that I found this forum years ago.

Here's my basic situation:

35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.

Yeah,nothing corrects the mistake of thinking you know whether the market is near a high or low like assuming the market is near a high and a low.

Your risk-based argument for slowly ramping up below is sensible, this one here is not. He no more know today whether stocks are high then he did a year ago when he moved out of them.
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Re: Market Timing

Postby Kevin M » Tue Jul 16, 2013 2:01 pm

This is essentially a lump sum vs. DCA decision. I really like the answer provided by Ken French (of Fama/French fame) in the short video interview on this web page: Dollar Cost Averaging - Fama/French Forum.

I personally give serious thought to minimizing regret, even though it may not be rational. When I last had a large lump sum of cash to deploy (before I had really found Bogleheads), I moved very slowly, and used a Value Averaging type of approach to build up my allocation to both stocks and bonds. It worked for me.

Another idea, which may already have been mentioned above, is to move now into an AA that you would be comfortable with if stocks declined by 50% tomorrow, which may not be the 75/25 you had before. (Were you invested during 2008/2009, and if so, how did you react?) Then, perhaps during the next large decline (20% or more?), you might revisit your willingness to take risk, and perhaps increase your stock allocation at that point.

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Re: Market Timing

Postby YDNAL » Tue Jul 16, 2013 2:16 pm

avalpert wrote:
YDNAL wrote:If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.

Yeah,nothing corrects the mistake of thinking you know whether the market is near a high or low like assuming the market is near a high and a low.

Your risk-based argument for slowly ramping up below is sensible, this one here is not. He no more know today whether stocks are high then he did a year ago when he moved out of them.

I don't understand what you mean (said) - especially since I make no specific mention of whether Stocks are high/low/otherwise.

Let me respond anyways.
    1. OP has already purchased 80% in Bonds. Bonds have declined ("adjusted down") - unless you have other data.
    2. OP also sold Stocks. Stocks have increased ("adjusted up") - and he "missed out on some pretty good gains."
    Luke Duke [OP] wrote:35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. (my emphasis)
Does that address your observation that "this one here is not [sensible, I presume]" ?
Last edited by YDNAL on Tue Jul 16, 2013 2:36 pm, edited 1 time in total.
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Re: Market Timing

Postby barnaclebob » Tue Jul 16, 2013 2:26 pm

How much money are we talking relative to how long it would take to get you to your desired allocation?

I would aim to do whats needed to get you to your desired allocation in 3 years or so. Meaning if you can get where you need to be with just new contributions and directing dividends to stock then do that. If you need to sell some bonds to get closer but not all the way there then that's fine too.
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Re: Market Timing

Postby avalpert » Tue Jul 16, 2013 3:46 pm

YDNAL wrote:
avalpert wrote:
YDNAL wrote:If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.

Yeah,nothing corrects the mistake of thinking you know whether the market is near a high or low like assuming the market is near a high and a low.

Your risk-based argument for slowly ramping up below is sensible, this one here is not. He no more know today whether stocks are high then he did a year ago when he moved out of them.

I don't understand what you mean (said) - especially since I make no specific mention of whether Stocks are high/low/otherwise.


Well, either you were saying he would be buying stocks high or the second clause of that first sentence quoted above has no meaning.

Let me respond anyways.
    1. OP has already purchased 80% in Bonds. Bonds have declined ("adjusted down") - unless you have other data.
    2. OP also sold Stocks. Stocks have increased ("adjusted up") - and he "missed out on some pretty good gains."

That is a great synopsis of what happens - it tells him nothing of what will happen next and thus provides no basis on what he should do now. No need to succumb to anchoring on past performance, he made a mistake, move on.

Luke Duke [OP] wrote:35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. (my emphasis)
Does that address your observation that "this one here is not [sensible, I presume]" ?


No, it doesn't at all. What isn't sensible about it remains the assertion that buying high and selling low which presume the same foreknowledge of what will happen tomorrow that got him in trouble in the first place.
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Re: Market Timing

Postby Meg77 » Tue Jul 16, 2013 3:57 pm

If he's moving from funds purchased through a financial advisor into Vanguard funds, he's going to presumably have to sell everything (incurring cap gains/losses) in his current account(s) and start from scratch in the new Vanguard account(s) anyway. The question of whether to do this all at once or over time still stands, but the solution offered of just moving new contributions into stocks isn't going to accomplish the goal of moving assets from the advisor.

Assuming you aren't dealing with too many taxable gains or any kind of early liquidation penalties from selling some funds, then I would be inclined to sell everything at once and transfer it all into my bright shiny new Vanguard account. Immediately invest the entire balance into cheap (preferably Admiral shares) of a handful of funds according to your newly inspired 75/25 AA model. This method (as opposed to slowly transitioning) has the advantage of immediately minimizing all your investment fees, immediately putting you into your desired - and much more appropriate - asset allocation, immediately cutting ties with said advisor, and allowing you to quickly get back to your natural "set it and forget it" state quickly without having to remember to manage this transition over months or even years (a hassle for anybody but particularly somebody who self-procliams to be an autopilot type).

By the way interest rates are likely to rise and bond values are likely to keep falling so slowly moving from bonds to stocks makes even less sense than it normally would in today's market. It's not market timing to immediately set your AA target and stick to it all at once (DCA has been shown to be less good than lump sum investing), but even if you wanted to time the market all signs would point to dumping bonds now.
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Re: Market Timing

Postby BigOilTexan » Tue Jul 16, 2013 4:32 pm

No, it doesn't at all. What isn't sensible about it remains the assertion that buying high and selling low which presume the same foreknowledge of what will happen tomorrow that got him in trouble in the first place.


In general you are correct but I think the larger point is that your current AA not being risky enough is very different from your current AA being too risky.

Why take a capital gains loss on bonds now to chase higher returns in stocks instead of rebalancing to a new AA using new money? Might he miss out on even more returns if stocks continue to increase by not moving back 100% today? Sure, but isnt that thinking market timing as well?
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Re: Market Timing

Postby avalpert » Tue Jul 16, 2013 5:28 pm

BigOilTexan wrote:
No, it doesn't at all. What isn't sensible about it remains the assertion that buying high and selling low which presume the same foreknowledge of what will happen tomorrow that got him in trouble in the first place.


In general you are correct but I think the larger point is that your current AA not being risky enough is very different from your current AA being too risky.


I agree to an extent which is why I said the risk-based justification Landy gave was sensible.

Why take a capital gains loss on bonds now to chase higher returns in stocks instead of rebalancing to a new AA using new money?

What is the relevance of taking a capital loss on bonds? Taking a loss is not in of itself good or bad and is irrelevant to the decision at hand (save possible tax implications for gains) - the only thing that matters is what is the right answer for him going forward.

Might he miss out on even more returns if stocks continue to increase by not moving back 100% today? Sure, but isn't that thinking market timing as well?

If 100% stocks is his right asset allocation in any market condition than no it isn't market timing at all. The question he needs to answer is what asset allocation should he be in on a go-forward basis (forget the mistakes of the past) and what is the most cost effective way of getting there.
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Re: Market Timing

Postby YDNAL » Tue Jul 16, 2013 6:15 pm

avalpert wrote:Well, either you were saying he would be buying stocks high or the second clause of that first sentence quoted above has no meaning.

That's exactly what happened, avalpert. I don't want to debate nonsense with you.

When you sell Stocks at $10 and buy at $15, $20, you sold low to buy high. In fact, OP acknowledge as much and that is all that matters and he understands.
Luke Duke [OP] wrote:35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. (my emphasis)

Buy Bonds higher to sell lower... same deal; and there's no other way to skin that cat.
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Re: Market Timing

Postby hsv_climber » Tue Jul 16, 2013 6:21 pm

OP, (like KevinM has suggested), are you sure that you are ready to take the risk of 75/25?

It will be very painful to go from conservative to risky and then watch the risk to show up. To do something in the middle is always a good idea.
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Re: Market Timing

Postby avalpert » Tue Jul 16, 2013 6:22 pm

YDNAL wrote:
avalpert wrote:Well, either you were saying he would be buying stocks high or the second clause of that first sentence quoted above has no meaning.

That's exactly what happened, avalpert. I don't want to debate nonsense with you.

When you sell Stocks at $10 and buy at $15, $20, you sold low to buy high. In fact, OP acknowledge as much and that is all that count and not how you interpret any quote.

Buy Bonds higher to sell lower... same deal; and there's no other way to skin that cat.

Whether buying now is buying high or not depends on what happens next, not what happened in the past - you don't know if buying stocks today is buying high anymore than his advisor did when he sold them a year ago.

The only nonsense here is trying to help someone correct the mistake of thinking his advisor knew when stocks were high by pretending like you know when stocks are high.
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Re: Market Timing

Postby Best of Both Worlds » Tue Jul 16, 2013 6:26 pm

I would use a portion of the bonds to buy into equities (or other fixed income) that have a greater loss than your fixed income funds (percentage wise). This accomplishes 2 things:

1. Sell low, but buy lower (e.g. sell VG IT-Bond for Emerging Markets, TIPS)
2. Moves you closer to your desired equity/bond allocation.
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Re: Market Timing

Postby inbox788 » Tue Jul 16, 2013 9:19 pm

Luke Duke wrote:35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?


No, no, no. You sir are bad karma. The minute you move all your holdings back to stocks is when the stocks will tank, and all of us here will be upset at you for doing that. Also, everyone, please don't wash your car for the next 48 hours, since I just finished painting the outside.

Kevin M wrote:This is essentially a lump sum vs. DCA decision. I really like the answer provided by Ken French (of Fama/French fame) in the short video interview on this web page: Dollar Cost Averaging - Fama/French Forum.

I personally give serious thought to minimizing regret, even though it may not be rational. When I last had a large lump sum of cash to deploy (before I had really found Bogleheads), I moved very slowly, and used a Value Averaging type of approach to build up my allocation to both stocks and bonds. It worked for me.

Another idea, which may already have been mentioned above, is to move now into an AA that you would be comfortable with if stocks declined by 50% tomorrow, which may not be the 75/25 you had before. (Were you invested during 2008/2009, and if so, how did you react?) Then, perhaps during the next large decline (20% or more?), you might revisit your willingness to take risk, and perhaps increase your stock allocation at that point.

Kevin


Most people take lump sum to be one time right now, while many think DCA is spread over small monthly changes over 1 year or more. Personally I like to split the difference, which technically is still DCA by many definitions, but averaged over 2. So do one-half lump today and in 3-6 months do another half-lump, so you're done in 6 months, and if a cliff happens in 6 months so be it. Chances of that are as likely as tomorrow or any other day. Now between now and 6 months, several things can happen. Thing go up, and you've split the difference between buying low and higher later, so you've only missed half the train. Things go down, and you've bought high, but half at lower, so you gain or lose half and have half the regret. Or they go up/down or down/up and you're exactly where you are now, so no difference either way. If half isn't enough, quarters every 3 months should be. Now if this year turns out to be the best year in a while and right after you adjust, next year becomes the worst year, then go back to what I said at the beginning.
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Re: Market Timing

Postby YDNAL » Wed Jul 17, 2013 8:07 am

avalpert wrote:The only nonsense here is trying to help someone correct the mistake of thinking his advisor knew when stocks were high by pretending like you know when stocks are high.

One last time, NO ONE knows tomorrow's prices; and to suggest or imply a person may think that, IS nonsense. This is YOUR initial post using my quote where I responded to OP.
avalpert wrote:
YDNAL wrote:If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses. That makes little sense.

Your risk-based argument for slowly ramping up below is sensible, this one here is not. He no more know today whether stocks are high then he did a year ago when he moved out of them.

Here's an illustration based on OP's case.
    Yesterday: $750/$250 sold to $200/$800
    Today: (20% Equity gain): $900/$250 versus $240/800 <- for simplicity since we all know that Bonds have decreased in NAV
    Difference: $110 ($1150 vs $1040)
For OP to get back to 75/25 AA today, he has less capital to invest because OP sold LOW to buy HIGH. Period.
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Re: Market Timing

Postby avalpert » Wed Jul 17, 2013 8:58 am

YDNAL wrote:
avalpert wrote:The only nonsense here is trying to help someone correct the mistake of thinking his advisor knew when stocks were high by pretending like you know when stocks are high.

One last time, NO ONE knows tomorrow's prices; and to suggest or imply a person may think that, IS nonsense. This is YOUR initial post using my quote where I responded to OP.
avalpert wrote:
YDNAL wrote:If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses. That makes little sense.

Your risk-based argument for slowly ramping up below is sensible, this one here is not. He no more know today whether stocks are high then he did a year ago when he moved out of them.

Here's an illustration based on OP's case.
    Yesterday: $750/$250 sold to $200/$800
    Today: (20% Equity gain): $900/$250 versus $240/800 <- for simplicity since we all know that Bonds have decreased in NAV
    Difference: $110 ($1150 vs $1040)
For OP to get back to 75/25 AA today, he has less capital to invest because OP sold LOW to buy HIGH. Period.

No, you are really missing the story. Yes, he has less capital than yesterday - that is true whether he sells today or not. He doesn't have less cpaital because he would be 'selling low' today, he has less capital because he originally allowed an advisor to convince him he was selling high a year ago. Here you are, apparently without even recognizing what you are suggesting, trying to convince him that he would now be buying high today if he moved back - which you admittedly don't know and go so far as to call nonsense, yet that is exactly the basis of your argument whether you realize it or not.

The loss has already happened. Selling low and buying high is only interesting as a reference to future prices - he does not know today if he were to sell his bonds he would be selling them low relative to where they will be tomorrow and that is all that matters.

You are just codifying an anchoring bias on past returns, which would be digging a deeper hole for the OP keeping him from focusing on what really matters and that is his expected future returns, future risk and future needs.
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Re: Market Timing

Postby YDNAL » Wed Jul 17, 2013 11:24 am

avalpert wrote:No, you are really missing the story. Yes, he has less capital than yesterday - that is true whether he sells today or not...

OP has "less capital" to buy at HIGHER prices today in order to return the AA to OP's desired level.

I will ignore personal comments... you are out of line, nonetheless!
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Re: Market Timing

Postby avalpert » Wed Jul 17, 2013 12:09 pm

YDNAL wrote:
avalpert wrote:No, you are really missing the story. Yes, he has less capital than yesterday - that is true whether he sells today or not...

OP has "less capital" to buy at HIGHER prices today in order to return the AA to OP's desired level.

I will ignore personal comments... you are out of line, nonetheless!

Yes, he has less capital today to buy - that is true whether it were at higher or lower prices. He just has less capital, pointing that out doesn't provide any guidance on what to do to get back to the risk/return allocation he is looking for.

What he should do next is independent of what he did a year ago - so he shouldn't dwell on it.
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Re: Market Timing

Postby Phineas J. Whoopee » Wed Jul 17, 2013 12:18 pm

YDNAL wrote:
avalpert wrote:No, you are really missing the story. Yes, he has less capital than yesterday - that is true whether he sells today or not...

OP has "less capital" to buy at HIGHER prices today in order to return the AA to OP's desired level.

I will ignore personal comments... you are out of line, nonetheless!

I rise in alvapert's defense.

You, Landy, are in fact analyzing the situation incorrectly, using the common cognitive bias of anchoring, as alvapert has said more than once in this thread. I realize you're a professional financial adviser. If you weren't I probably wouldn't have thought it necessary to respond.

PJW
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Re: Market Timing

Postby MindBogler » Wed Jul 17, 2013 12:32 pm

This whole discussion is beating up a straw man right now because the OP hasn't shared:

-Size of current portfolio
-Annual contributions

To say that changing immediately is the "one true" solution is disingenuous, as is the reverse, because we don't know anything beyond what the OP has told us, which isn't much. These are opinions which do not take into account the facts of the OP's financial situation as well as his/her need, ability and willingness to take risk.
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Re: Market Timing

Postby YDNAL » Wed Jul 17, 2013 12:51 pm

Phineas J. Whoopee wrote:
YDNAL wrote:
avalpert wrote:No, you are really missing the story. Yes, he has less capital than yesterday - that is true whether he sells today or not...

OP has "less capital" to buy at HIGHER prices today in order to return the AA to OP's desired level.

I will ignore personal comments... you are out of line, nonetheless!

I rise in alvapert's defense.

You, Landy, are in fact analyzing the situation incorrectly, using the common cognitive bias of anchoring, as alvapert has said more than once in this thread. I realize you're a professional financial adviser. If you weren't I probably wouldn't have thought it necessary to respond.

PJW

What else can I say:
YDNAL in the only post to OP wrote:
Luke Duke wrote:Let me start out by saying that I wish that I found this forum years ago.

Here's my basic situation:

35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.
  • You are 35yo with perhaps another 30 years of accumulation. Whatever your assets are today, it typically pales in comparison to tomorrow. I would direct all new savings to Stocks until you reach the AA that meets your Ability & Need for risk.

It so happens that avalpert chose to make whatever point by selecting a piece of the above post, while distorting the complete thought process that is expressed to OP. Then, an ensuing process of a discussion in circles takes place that benefits no one. I try hard to only respond to OPs in an effort to be helpful. Other posters do whatever they wish to do (their right - within Forum policy).

This is one reason why posting in this Forum has become an unwanted/unneeded challenge. Thanks for your point of view.
Landy
Be yourself, everyone else is already taken -- Oscar Wilde
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Re: Market Timing

Postby avalpert » Wed Jul 17, 2013 12:59 pm

YDNAL wrote:It so happens that avalpert chose to make whatever point by selecting a piece of the above post, while distorting the complete thought process that is expressed to OP. Then, an ensuing process of a discussion in circles takes place that benefits no one. I try hard to only respond to OPs in an effort to be helpful. Other posters do whatever they wish to do (their right - within Forum policy).

This is one reason why posting in this Forum has become an unwanted/unneeded challenge. Thanks for your point of view.

When you are rooting your response in anchoring bias maybe it is you who causing the unneeded challenge. It is great that you are making an effort to be helpful, maybe you should respect it when others correct your misdirections in an effort to do the same.
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Re: Market Timing

Postby YDNAL » Wed Jul 17, 2013 1:32 pm

avalpert wrote:
YDNAL wrote:It so happens that avalpert chose to make whatever point by selecting a piece of the above post, while distorting the complete thought process that is expressed to OP. Then, an ensuing process of a discussion in circles takes place that benefits no one. I try hard to only respond to OPs in an effort to be helpful. Other posters do whatever they wish to do (their right - within Forum policy).

This is one reason why posting in this Forum has become an unwanted/unneeded challenge. Thanks for your point of view.

When you are rooting your response in anchoring bias maybe it is you who causing the unneeded challenge. It is great that you are making an effort to be helpful, maybe you should respect it when others correct your misdirections in an effort to do the same.

Correct "mis-directions" ?
avalpert wrote:
YDNAL wrote:
Luke Duke wrote:Let me start out by saying that I wish that I found this forum years ago.

Here's my basic situation:

35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.

  • ↑ What happened to the feedback to help OP?

Yeah,nothing corrects the mistake of thinking you know whether the market is near a high or low like assuming the market is near a high and a low.
1) This is a baseless personal comment - against Forum policy - with no benefit to OP.
2) Regardless, there is nothing in the "partial" quote above suggesting where the market is going.
3) OP wants to add Stocks (at a higher price) than he sold (at a lower price)... that's ALL.


Your risk-based argument for slowly ramping up below is sensible, this one here is not. He no more know today whether stocks are high then he did a year ago when he moved out of them.
See above.

I don't post for the sake of posting, avalpert. I have nothing further to discuss with you to benefit OP.
Landy
Be yourself, everyone else is already taken -- Oscar Wilde
YDNAL
 
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Re: Market Timing

Postby avalpert » Wed Jul 17, 2013 3:04 pm

YDNAL wrote:
avalpert wrote:
YDNAL wrote:It so happens that avalpert chose to make whatever point by selecting a piece of the above post, while distorting the complete thought process that is expressed to OP. Then, an ensuing process of a discussion in circles takes place that benefits no one. I try hard to only respond to OPs in an effort to be helpful. Other posters do whatever they wish to do (their right - within Forum policy).

This is one reason why posting in this Forum has become an unwanted/unneeded challenge. Thanks for your point of view.

When you are rooting your response in anchoring bias maybe it is you who causing the unneeded challenge. It is great that you are making an effort to be helpful, maybe you should respect it when others correct your misdirections in an effort to do the same.

Correct "mis-directions" ?
avalpert wrote:
YDNAL wrote:
Luke Duke wrote:Let me start out by saying that I wish that I found this forum years ago.

Here's my basic situation:

35 yrs old. I've got a financial advisor (Mistake #1) who felt that the market was due for a downturn. I agreed to let him move me to a very conservative AA (20/80) in order to avoid potential large losses (Market timing, Mistake #2). As a result, I have missed out on some pretty good gains that I would have seen if I had stayed the course. The bad part is that I have always been a set it and forget it type of investor and I let my advisor talk me out of that (Mistake #3). I have seen the error of my ways and I blame myself, not my advisor. I plan to move my money to a Vanguard account (Bogglehead 3 fund) and get rid of the advisor.

My question is should I return to my original AA (75/25) gradually or all at once?

If you sell Bonds (adjusted down) to buy Stocks (adjusted up), you are selling LOW to buy HIGH and locking losses.
  • That makes little sense.

  • ↑ What happened to the feedback to help OP?

Yeah,nothing corrects the mistake of thinking you know whether the market is near a high or low like assuming the market is near a high and a low.
1) This is a baseless personal comment - against Forum policy - with no benefit to OP.

Maybe the style can be improved, but I don't see how that is a personal comment - it is going to the content, not the person. And the benefit to the OP is to recognize that 'locking in losses' or what he bought/sold at when he made the mistake a year ago is not relevant to his decision today and taking it into account is likely to lead to the same type error that was made then.

2) Regardless, there is nothing in the "partial" quote above suggesting where the market is going.

Buying high/selling low is a statement relative to where the market is going - if it is supposed to be useful to the OP. If I am buying high relative to a year ago but it will be much higher in another year then either the statement 'buy high' is anchored on the past and is useless to the OP or it is a statement about where prices will be in the future.

3) OP wants to add Stocks (at a higher price) than he sold (at a lower price)... that's ALL.
[/quote]
And what he sold at is absolutely irrelevant to what he is buying at today. The mistake of yours I am trying to help him avoid is focusing on today versus yesterday when all he should be concerned with is today versus tomorrow.
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