Anyone else time the market short term (index funds/ETFs)?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
invester123
Posts: 35
Joined: Sun Apr 26, 2020 3:55 pm

Anyone else time the market short term (index funds/ETFs)?

Post by invester123 »

Given current market volatility, I've been giving myself time to drop $ into total market funds. For example, I'll drop small amounts regularly like 1-2k regardless of a red/green day. With a giant dip like the ones around 4/20 and 5/12, I drop significantly larger amounts. Yes this involves holding onto money but not for an extended period of time. The math has been working out pretty well for me so far. Sure time in market is great but what's wrong in some well timed investments?
User avatar
ApeAttack
Posts: 193
Joined: Wed Dec 23, 2020 8:28 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by ApeAttack »

invester123 wrote: Sat May 15, 2021 12:26 am Given current market volatility, I've been giving myself time to drop $ into total market funds. For example, I'll drop small amounts regularly like 1-2k regardless of a red/green day. With a giant dip like the ones around 4/20 and 5/12, I drop significantly larger amounts. Yes this involves holding onto money but not for an extended period of time. The math has been working out pretty well for me so far. Sure time in market is great but what's wrong in some well timed investments?
Are you selling routinely as well, or just buying?

If you would've put all your money into VTSAX at the beginning of year, you would've made more than trying to time the market on 4/20 and 5/12.

Edit: If dollar cost averaging allows you to get money into the market with less mental distress than lump summing, then it probably is fine.
Just another lazy index investor who recently found out about I-Bonds (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm).
Topic Author
invester123
Posts: 35
Joined: Sun Apr 26, 2020 3:55 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by invester123 »

ApeAttack wrote: Sat May 15, 2021 12:36 am
invester123 wrote: Sat May 15, 2021 12:26 am Given current market volatility, I've been giving myself time to drop $ into total market funds. For example, I'll drop small amounts regularly like 1-2k regardless of a red/green day. With a giant dip like the ones around 4/20 and 5/12, I drop significantly larger amounts. Yes this involves holding onto money but not for an extended period of time. The math has been working out pretty well for me so far. Sure time in market is great but what's wrong in some well timed investments?
Are you selling routinely as well, or just buying?

If you would've put all your money into VTSAX at the beginning of year, you would've made more than trying to time the market on 4/20 and 5/12.

Edit: If dollar cost averaging allows you to get money into the market with less mental distress than lump summing, then it probably is fine.
Only buying. Been DCAing for the most part. But I'll wait give myself a week or two after getting paid. There have been so many ups and downs lately. Those two were just examples of some of the bigger dips recently.
davedci1
Posts: 16
Joined: Sun Jan 03, 2021 7:17 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by davedci1 »

I contribute to Roth and taxable weekly and wait usually buy on dip days of that week. Not sure if it's the best tactic but it's what I'm doing. We'll see...
Jaymover
Posts: 91
Joined: Wed May 12, 2021 8:19 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by Jaymover »

The math has been working out pretty well for me so far. Sure time in market is great but what's wrong in some well timed investments?
I know a few people that try and time the little dips and rises. It is stressful, unless you like watching the market every day. It costs money to buy and sell in the form of trading costs and buy-sell spreads which may cancel the incremental gain. And there are robots out there that are doing this by the millisecond so maybe humans might struggle to compete with them (you might become their prey).

Seems like my friends win 50 percent of the time and lose 50 percent of the time so effort for no reward in the end.

I think where I have seen market timing pay off are those who buy at the bottom of a major correction. They hunt around for low PEs and mispricing whilst everyone is worried about the end of the world. Hard to do and you have to trade bold amounts. I know people who did this in March/April 2020 and have added substantially to their net wealth (but probably have huge tax bills waiting for them if they cashed in).
Jaymover
Posts: 91
Joined: Wed May 12, 2021 8:19 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by Jaymover »

I'll drop small amounts regularly like 1-2k regardless of a red/green day. With a giant dip like the ones around 4/20 and 5/12, I drop significantly larger amounts.
I get it now. Sort of strategic dollar cost averaging with new savings. If you cant help but compulsively watch the market every day then this might be worth it, especially if the trades are free. I think I did this when I put my money in during late 2019 but found it stressful praying for the market to fall each day so I could tip even more in. I think it did make a small difference though. But then it all went to hell in March 2020 anyway and it didn't really matter.

Someone has probably done a study on it and found that regular increments are as good as strategic increments in the end.

It might be good psychologically, like getting excited about the market falling even though all your investments are falling. Or it could just make you too obsessive which can lead to mistakes.

They say that the best returns are usually found when the owner died long ago and no-one was around to take over their investments.
snowox
Posts: 504
Joined: Wed Nov 08, 2017 9:17 am

Re: Anyone else time the market short term (index funds/ETFs)?

Post by snowox »

I think because your buying ETF like the VIT vs the VTSAX it makes total sense because you get the spot price vs the close. Buying the dip right now makes total sense in my opinion since your putting the money in anyhow and not hoarding it for months on end just buying on red days. Your bound to get a stretch of a couple every month anyhow especially now.
User avatar
markjk
Posts: 196
Joined: Wed Oct 07, 2020 6:01 am

Re: Anyone else time the market short term (index funds/ETFs)?

Post by markjk »

invester123 wrote: Sat May 15, 2021 12:26 am Sure time in market is great but what's wrong in some well timed investments?
There is nothing wrong with it per se. If it helps get you in the market, go for it. It's certainly better than not investing at all. However, it's a sub-par strategy compared to lump sum investing. Market timing of any sort has proven to be sub-par. To be clear, that doesn't mean it can't win or never wins. It just means it's not as likely to win over the alternative of lump sum investing. It also requires more of your time/energy so you have to factor that "cost" in as well.
User avatar
watchnerd
Posts: 9113
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Anyone else time the market short term (index funds/ETFs)?

Post by watchnerd »

invester123 wrote: Sat May 15, 2021 12:26 am Given current market volatility, I've been giving myself time to drop $ into total market funds. For example, I'll drop small amounts regularly like 1-2k regardless of a red/green day. With a giant dip like the ones around 4/20 and 5/12, I drop significantly larger amounts. Yes this involves holding onto money but not for an extended period of time. The math has been working out pretty well for me so far. Sure time in market is great but what's wrong in some well timed investments?
Time the market short term?

With stocks? No.

The stock market is too efficient to easily generate alpha.

All my stock positions are long.

With crypto? Yes.
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% crypto & securitized gold || LMP TIPS/STRIPS || RSU + ESPP
Xrayman69
Posts: 748
Joined: Fri Jun 01, 2018 8:52 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by Xrayman69 »

We make regular investments weekly and monthly as a means for DCA.

Have a sizable cash or equivalent stockpile for living expenses (probably 2-3 years). Would not need to sell any equities if market crashed and could weather the decline. We do “time” in a sense when there is a self “perceived “ opportunity. For example March and April 2020 we bought equities at double the rate through June 2020. This got our cash reserve / EF back to 2 years.
livesoft
Posts: 76686
Joined: Thu Mar 01, 2007 8:00 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by livesoft »

Sure. I use index ETFs to market time short term. I have a nominal AA of about 60/40. When something has an RBD, I buy it with the intention of selling it shortly thereafter. To get the money to buy, I sell shares of a bond index ETF. In effect, I am switching my AA away from 60/40 to have more equities for a short time. That is, I am not doing DCA and I do not have cash sitting around as the proverbial "dry powder." I am fully invested all the time and get more fully invested.

I don't care if sometimes this market timing does not work well because when it doesn't the losses are small versus not having done it. My experience is that it works most of the time with the gains being more than the losses. In order to make sure that I am not fooling myself, I track portfolio performance against some benchmarks.

And we are about to buy a car, so we raised some cash by market timing the sale of index ETFs when they have a really good day. VTI is trading below where we sold shares recently.
Last edited by livesoft on Sat May 15, 2021 2:23 pm, edited 1 time in total.
Wiki This signature message sponsored by sscritic: Learn to fish.
Marseille07
Posts: 4219
Joined: Fri Nov 06, 2020 1:41 pm

Re: Anyone else time the market short term (index funds/ETFs)?

Post by Marseille07 »

Yes, I'm timing on a couple of fronts:
a) My DCA methodology uses simple TA to time the entry (though I don't sell anything once bought).
b) Funny money trades are timing the market.
neverpanic
Posts: 802
Joined: Sun May 10, 2020 12:26 am

Re: Anyone else time the market short term (index funds/ETFs)?

Post by neverpanic »

Yes, and it's been a fun couple of years during a can't-seem-to-miss bull market. This is an extremely short-term activity. Over 30-40 years, there is no way I would consider doing so.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
Doctor Rhythm
Posts: 905
Joined: Mon Jan 22, 2018 3:55 am

Re: Anyone else time the market short term (index funds/ETFs)?

Post by Doctor Rhythm »

As the Klingons are fond of saying:
Today is a good day to die buy.
Post Reply