You Can't Time The Market

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catfish48084
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You Can't Time The Market

Post by catfish48084 » Sat Feb 15, 2020 11:13 am

Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over

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watchnerd
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Re: You Cant Time The Market

Post by watchnerd » Sat Feb 15, 2020 11:53 am

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th
Dude...

That's not shaving a few percentage points, taking a little off the table, or rebalancing.

If you felt the compulsion to go 75% out of the market, aside from marketing timing, your stock AA is possibly too high if it leads you to freak out like that.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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Cyclesafe
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Re: You Cant Time The Market

Post by Cyclesafe » Sat Feb 15, 2020 11:59 am

To a much lesser degree, I sorta did the same thing, but I haven't yet seriously regretted it. In any event, I once again demonstrated that I know nothing and that it is foolish to act on what are really only hunches - regardless of supposed sophisticated and rigorous "analysis".
"Plans are useless; planning is indispensable.” (Dwight Eisenhower) | "Man plans, God laughs" (Yiddish proverb)

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MNGopher
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Re: You Cant Time The Market

Post by MNGopher » Sat Feb 15, 2020 12:01 pm

It's kind of a cliché, but you are finding out that you really do have to be right twice for this to work. First, when to sell and then when to get back in.

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1789
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Re: You Cant Time The Market

Post by 1789 » Sat Feb 15, 2020 12:03 pm

I wouldn't worry about it. Sometimes we do not believe the data and we want to do the experiment ourselves. So now you know. But the question is what would you think if it turned out that you did it correctly? I think you should focus on this part, imho.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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JoMoney
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Re: You Cant Time The Market

Post by JoMoney » Sat Feb 15, 2020 12:14 pm

Thank you for sharing. I hope writing it down and discussing helps you, and others, avoid similar problems.
Personally, I don't see any issue with the idea of reducing your risk when times are good... but the objective needs to be getting your risk profile to a place you're happier with. I have a rule that I don't sell anything I want to own with the expectation that someone else will sell it back to me cheaper. Framing it that way keeps my expectations in check with regard to why I want to own something else more so than what I currently own.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

cashboy
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Re: You Cant Time The Market

Post by cashboy » Sat Feb 15, 2020 12:45 pm

thanks for sharing your experiences.

many investors feel the urge to do the same thing at times (including me :( ).

then i go to my IPS and see point number 1: stay the course

(but i still feel the urge...and it is hard to resist under certain circumstances. :happy )
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)

Luckywon
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Re: You Cant Time The Market

Post by Luckywon » Sat Feb 15, 2020 1:05 pm

If it's any consolation, I've done much worse. Just take your licking and buy back in, and don't repeat.

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Stef
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Re: You Cant Time The Market

Post by Stef » Sat Feb 15, 2020 1:11 pm

When will you invest it again? What happens if the market keeps going up for another 10 years?

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goingup
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Re: You Cant Time The Market

Post by goingup » Sat Feb 15, 2020 1:11 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
... My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.
I'm not understanding this. You sold in December to avoid capital gains in January on a tax-deferred account.

Yes, market timing is ill-advised, but what was your rationale?

Monsterflockster
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Re: You Cant Time The Market

Post by Monsterflockster » Sat Feb 15, 2020 1:15 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
What if it crashes next week? Would you feel better?

You felt good with your position so called it. When you are up and cash out that’s a win.

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Stinky
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Re: You Cant Time The Market

Post by Stinky » Sat Feb 15, 2020 1:17 pm

Stef wrote:
Sat Feb 15, 2020 1:11 pm
When will you invest it again? What happens if the market keeps going up for another 10 years?
That’s my question too.

OP, are you back in the market now? Will you go back next week?

And, if you’re going back in, will your equity percentage be lower or higher than your pre-freak-out exposure?
It's a GREAT day to be alive - Travis Tritt

rockstar
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Re: You Cant Time The Market

Post by rockstar » Sat Feb 15, 2020 1:20 pm

And the market can tank when Q1 earnings come out. Who knows. It’s really psychological.

I shifted from 100% equites to 75/25 thinking the asset values were too rich. But I was able to buy treasuries above inflation. Now as those treasuries mature, I find myself replacing them with negative real yield treasuries. This sucks. But I feel better about my AA now.

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yangtui
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Re: You Cant Time The Market

Post by yangtui » Sat Feb 15, 2020 1:38 pm

The only thing worse than being wrong in this type of situation is being right. You would end up believing that you were correct because of skill instead of luck ultimately setting yourself up for an even bigger loss down the road.

thelateinvestor43
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Re: You Cant Time The Market

Post by thelateinvestor43 » Sat Feb 15, 2020 1:49 pm

I don't even have a $50k PF balance, so I can't relate. But I did the same thing and maybe missed out on $500 appreciation! :)

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mrspock
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Re: You Cant Time The Market

Post by mrspock » Sat Feb 15, 2020 1:55 pm

yangtui wrote:
Sat Feb 15, 2020 1:38 pm
The only thing worse than being wrong in this type of situation is being right. You would end up believing that you were correct because of skill instead of luck ultimately setting yourself up for an even bigger loss down the road.
+1 Very good point.

I’m curious if anyone has the opposite disease: The urge to deviate from your AA by increasing your equity exposure, when times are good? (FOMO?)

This is my challenge. I constantly have to resist this urge and stick with my 70/30 as I know when the downturn happens I will thank myself. But my (flawed) instincts are the total opposite.

GaryA505
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Re: You Cant Time The Market

Post by GaryA505 » Sat Feb 15, 2020 2:03 pm

yangtui wrote:
Sat Feb 15, 2020 1:38 pm
The only thing worse than being wrong in this type of situation is being right. You would end up believing that you were correct because of skill instead of luck ultimately setting yourself up for an even bigger loss down the road.
This is one of the most brilliant things I have ever read.

kiddoc
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Re: You Cant Time The Market

Post by kiddoc » Sat Feb 15, 2020 2:06 pm

I can empathize. I had similar thoughts a while back and started using a CAPE based asset allocation strategy for a much smaller part of my portfolio. So far, it has cost me less than 1% annualized over 5 years viewtopic.php?f=1&t=300061&p=4941862#p4941862
It helped me keep my sanity and maintain a reasonable asset allocation even when I hear "people are greedy; time to be fearful". Limiting the maximum timing to ~10-12% of my portfolio limits the downside when the market goes up.

75% is too big a bet based on a hunch even for me. Are you planning to get back to a reasonable asset allocation based on your desire and need to take risk? If you are nervous, you may want to come up with a dollar cost averaging to get back in the market instead of the academically sound lump sum. In investing, consistently maintaining a reasonable plan might be more useful than coming up with the perfect plan.
"The four most dangerous words in investing are: 'this time it's different.'" - Sir John Templeton

justsomeguy2018
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Re: You Cant Time The Market

Post by justsomeguy2018 » Sat Feb 15, 2020 2:09 pm

rockstar wrote:
Sat Feb 15, 2020 1:20 pm
And the market can tank when Q1 earnings come out. Who knows. It’s really psychological.

I shifted from 100% equites to 75/25 thinking the asset values were too rich. But I was able to buy treasuries above inflation. Now as those treasuries mature, I find myself replacing them with negative real yield treasuries. This sucks. But I feel better about my AA now.
I sort of did the same but not that extreme....I was around 10% to 15% bonds and decided to shift it to 25% in November, as I am approaching my 40s. As the market keeps climbing I now wonder if I should actually go to 70/30 instead (capture the increased equity and not get stuck in an ill-timed age based glide path out of equities), though part of me also wonders if I should've just stuck with the greater equity exposure and ride it out the next 26 years. I do think I feel better with the 75/25 even with the recent equity gains since November though.

bck63
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Re: You Cant Time The Market

Post by bck63 » Sat Feb 15, 2020 2:18 pm

Cyclesafe wrote:
Sat Feb 15, 2020 11:59 am
To a much lesser degree, I sorta did the same thing, but I haven't yet seriously regretted it. In any event, I once again demonstrated that I know nothing and that it is foolish to act on what are really only hunches - regardless of supposed sophisticated and rigorous "analysis".
I took a significant amount of risk off the table this year as well, but not in order to time the market. I'm getting older and couldn't deal with the sleepless nights and churning stomach brought about by an asset allocation that was too aggressive for me. I'll accept lesser returns, but am sleeping like a baby.

rockstar
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Re: You Cant Time The Market

Post by rockstar » Sat Feb 15, 2020 2:21 pm

justsomeguy2018 wrote:
Sat Feb 15, 2020 2:09 pm
rockstar wrote:
Sat Feb 15, 2020 1:20 pm
And the market can tank when Q1 earnings come out. Who knows. It’s really psychological.

I shifted from 100% equites to 75/25 thinking the asset values were too rich. But I was able to buy treasuries above inflation. Now as those treasuries mature, I find myself replacing them with negative real yield treasuries. This sucks. But I feel better about my AA now.
I sort of did the same but not that extreme....I was around 10% to 15% bonds and decided to shift it to 25% in November, as I am approaching my 40s. As the market keeps climbing I now wonder if I should actually go to 70/30 instead (capture the increased equity and not get stuck in an ill-timed age based glide path out of equities), though part of me also wonders if I should've just stuck with the greater equity exposure and ride it out the next 26 years. I do think I feel better with the 75/25 even with the recent equity gains since November though.
I do have a 20% position in QQQ, which been pretty go for me. More risky than my main VOO holding.

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arcticpineapplecorp.
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Re: You Cant Time The Market

Post by arcticpineapplecorp. » Sat Feb 15, 2020 2:28 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.
the part in red was the problem. It's a common bias to investors known as "Overconfidence Bias". look it up.

Now for the zen koan part: the only thing you can be certain of is not being certain of anything.

when you understand that, you may have found a way to deal with that particular bias. Unfortunately, there are dozens more to contend with. best of luck.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

minimalistmarc
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Re: You Cant Time The Market

Post by minimalistmarc » Sat Feb 15, 2020 2:52 pm

I’m 100 equities but usually let 20k build up before putting lumps in.

I’m in this for many decades so my biggest fear is missing gains. I don’t understand the psychology regarding short term loss aversion if you are investing with a multi decade time frame.

Wanderingwheelz
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Re: You Cant Time The Market

Post by Wanderingwheelz » Sat Feb 15, 2020 2:56 pm

I rotated 5% of my VTI to VXUS right before the virus news broke. Oops. I was at 15% and finally got it in my head that it’s best to be at 20%, and as would be expected, it was I’ll-timed. I haven’t computed what it “cost” me, but I’m a believer in VXUS long-term.

On a positive note I did boost my equity exposure 5% in late November so that’s been a well timed bump, so far.

There’s just no way to be perfect at this!

dacalo
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Re: You Cant Time The Market

Post by dacalo » Sat Feb 15, 2020 4:30 pm

I just tell myself that I don't know anything, and the only thing I can control is how I invest. Therefore, I just keep buying regardless what the market says. Coronavirus? Buy. Bernie leading the caucus? Buy. Companies blowing away earnings? Buy. Trump news? Buy. All the events are just noise, I don't know how the market will react.

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watchnerd
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Re: You Cant Time The Market

Post by watchnerd » Sat Feb 15, 2020 4:41 pm

Wanderingwheelz wrote:
Sat Feb 15, 2020 2:56 pm
I rotated 5% of my VTI to VXUS right before the virus news broke. Oops. I was at 15% and finally got it in my head that it’s best to be at 20%, and as would be expected, it was I’ll-timed. I haven’t computed what it “cost” me, but I’m a believer in VXUS long-term.

On a positive note I did boost my equity exposure 5% in late November so that’s been a well timed bump, so far.

There’s just no way to be perfect at this!
10 years from now you won't remember and such small short term implications will be washed away by long term returns.
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Taylor Larimore
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Re: You Cant Time The Market

Post by Taylor Larimore » Sat Feb 15, 2020 4:58 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
catfish:

It takes honesty and guts to admit we made mistakes such as "market-timing." Thank you for sharing so that Bogleheads don't make the same mistake. We learn from each other.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "After nearly 50 years in this business, I do not know of anybody who has done market timing successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently."
"Simplicity is the master key to financial success." -- Jack Bogle

flaccidsteele
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Re: You Cant Time The Market

Post by flaccidsteele » Sat Feb 15, 2020 5:21 pm

Brutal

Sorry to hear about you liquidating 75% of your index funds

Good luck

You *can* time the market. You just made the same mistake as the 99% by trying to predict the market

Timing the market doesn’t involve predicting the market
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

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LilyFleur
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Re: You Cant Time The Market

Post by LilyFleur » Sat Feb 15, 2020 5:49 pm

GaryA505 wrote:
Sat Feb 15, 2020 2:03 pm
yangtui wrote:
Sat Feb 15, 2020 1:38 pm
The only thing worse than being wrong in this type of situation is being right. You would end up believing that you were correct because of skill instead of luck ultimately setting yourself up for an even bigger loss down the road.
This is one of the most brilliant things I have ever read.
Exactly. Thank goodness I discovered Bogleheads after a very dramatic portfolio increase with "being right" in a risky position. Now I have an age-appropriate asset allocation and, for the most part, I am sticking to it. I miss the adrenalin rush, though :oops:

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Re: You Cant Time The Market

Post by Fallible » Sat Feb 15, 2020 6:17 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
...
Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
Do you have an IPS? If not, you need one NOW.

The good advice here is an example of what can go in your IPS, based on your experience:
_no one can predict the market:
_no such thing as certainty, especially in the market;
_knowing the signs of giving in to temptation to timing;
_realizing that even if the market happened to do what you predicted, this does not mean you won on skill, but just luck;
_writing all this down, including why you gave in to the temptation and how you can prevent it from happening again.

Perhaps the best advice here is from Taylor Larimore thanking you for posting your experience so others can benefit. It's an important perspective because we all make mistakes.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

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mmmodem
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Re: You Cant Time The Market

Post by mmmodem » Sat Feb 15, 2020 6:51 pm

Thank you for sharing, OP. There's a post next to yours at the moment from a person that is perplexed why the market has not fallen despite well researched and documented data.
viewtopic.php?f=10&t=303938
Their post is reminiscent of yours in that they they were certain the market should've dropped but hasn't. OP is perplexed as to why not. You know why. It's not an easy lesson to learn. Well done.

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Re: You Cant Time The Market

Post by willthrill81 » Sat Feb 15, 2020 6:54 pm

MNGopher wrote:
Sat Feb 15, 2020 12:01 pm
It's kind of a cliché, but you are finding out that you really do have to be right twice for this to work. First, when to sell and then when to get back in.
That's only true if you were trying to get out of stocks exactly at the peak and get back in exactly at the trough. Otherwise, you need to be right in one way: the price you buy back in should be lower than the price at which you sold.

I agree with others that the OP needs an IPS desperately.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: You Cant Time The Market

Post by Triple digit golfer » Sat Feb 15, 2020 6:57 pm

As Fallible said, you need an IPS.

You need to decide on an asset allocation and get there as soon as you can. Ignore what you think the market may or may not to. You already learned the hard way that it doesn't work.

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Re: You Cant Time The Market

Post by Fallible » Sat Feb 15, 2020 7:01 pm

LilyFleur wrote:
Sat Feb 15, 2020 5:49 pm
GaryA505 wrote:
Sat Feb 15, 2020 2:03 pm
yangtui wrote:
Sat Feb 15, 2020 1:38 pm
The only thing worse than being wrong in this type of situation is being right. You would end up believing that you were correct because of skill instead of luck ultimately setting yourself up for an even bigger loss down the road.
This is one of the most brilliant things I have ever read.
Exactly. Thank goodness I discovered Bogleheads after a very dramatic portfolio increase with "being right" in a risky position. Now I have an age-appropriate asset allocation and, for the most part, I am sticking to it. I miss the adrenalin rush, though :oops:
I think the "adrenalin rush" we all have experienced is part of human fallibility and thus here to stay. As WSJ columnist Jason Zweig has said, "When you win, lose, or risk money, you stir up some of the most profound emotions a human being can ever feel." Fortunately, the Bogleheads Philosophy is also here to stay and prepare us to deal with that "rush."
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

Rosencrantz1
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Re: You Cant Time The Market

Post by Rosencrantz1 » Sat Feb 15, 2020 7:21 pm

Many thanks to the OP for posting this. I can relate... A few years ago, I became convinced the US equity market would experience a correction and (several years ago) sold off about 20-25% of my equity position (and bought CDs). I've spent the past couple of years rebuying into VOO/VTI every month or two as those CDs mature.

To be fair to me, I "discovered" Bogleheads about a year ago and after some serious thread reading, I've finally come to a conclusion as to what my asset allocation needs to be (retired with COLA pensions - setting AA at 70/30). Prior to that, I mostly winged it. To remind myself as to what "could be" in this market, I ask myself IF I would be okay (emotionally okay - I know I'd be okay financially with the pensions) with a 50% equity drop in my portfolio. So far, the answer to that is yes, I'd be okay and I can still sleep.

Now if the market were to drop 80%, it'd be really scary.... but, I'd still eat :happy

JonnyB
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Re: You Cant Time The Market

Post by JonnyB » Sat Feb 15, 2020 7:26 pm

willthrill81 wrote:
Sat Feb 15, 2020 6:54 pm
MNGopher wrote:
Sat Feb 15, 2020 12:01 pm
It's kind of a cliché, but you are finding out that you really do have to be right twice for this to work. First, when to sell and then when to get back in.
That's only true if you were trying to get out of stocks exactly at the peak and get back in exactly at the trough. Otherwise, you need to be right in one way: the price you buy back in should be lower than the price at which you sold.
You don't even have to buy back at a lower price. You only have to buy back at a price lower than the the return you received in an alternate investment, for example bonds.

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Nicolas Perrault
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Re: You Cant Time The Market

Post by Nicolas Perrault » Sat Feb 15, 2020 7:27 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
You say that you feel bad because you left the market and from what I understand you have not yet gone back in. Yet you speak as if you feel bad about an error made in the past (not staying the course and leaving the market), but that error is not in the past, it is in the present. You are continuously in error every moment, like the present one, that you are not staying the course. You did not just make an error on December 27th, but also a fresh error every day between then and now. There is nothing sensible you can do to recoup this loss, and hoping for a dip is not sensible.

It looks like you made a plan and then failed to follow it. I would suggest either 1) going back to your plan, or 2) making a new plan with more bonds and fewer equities, and then sticking to that one through thick and thin. The worse you can do is continue what you're doing right now, hoping for a crash, which is no plan at all.

That said, I sympathise with your loss. The best you can do now is to make an expensive lesson out of this expensive error.

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willthrill81
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Re: You Cant Time The Market

Post by willthrill81 » Sat Feb 15, 2020 7:32 pm

JonnyB wrote:
Sat Feb 15, 2020 7:26 pm
willthrill81 wrote:
Sat Feb 15, 2020 6:54 pm
MNGopher wrote:
Sat Feb 15, 2020 12:01 pm
It's kind of a cliché, but you are finding out that you really do have to be right twice for this to work. First, when to sell and then when to get back in.
That's only true if you were trying to get out of stocks exactly at the peak and get back in exactly at the trough. Otherwise, you need to be right in one way: the price you buy back in should be lower than the price at which you sold.
You don't even have to buy back at a lower price. You only have to buy back at a price lower than the the return you received in an alternate investment, for example bonds.
True.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: You Can't Time The Market

Post by Vanguard Fan 1367 » Sat Feb 15, 2020 8:16 pm

I have done the same thing. I really appreciate John Bogle and his books encouraging folks to not time the market. It has really helped my investing results. I also sleep better at night, not worrying about whether or not I should buy or sell individual stocks. Buying and holding low expense index funds has made all the difference.

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Re: You Cant Time The Market

Post by JonnyB » Sat Feb 15, 2020 8:54 pm

willthrill81 wrote:
Sat Feb 15, 2020 7:32 pm
JonnyB wrote:
Sat Feb 15, 2020 7:26 pm
willthrill81 wrote:
Sat Feb 15, 2020 6:54 pm
MNGopher wrote:
Sat Feb 15, 2020 12:01 pm
It's kind of a cliché, but you are finding out that you really do have to be right twice for this to work. First, when to sell and then when to get back in.
That's only true if you were trying to get out of stocks exactly at the peak and get back in exactly at the trough. Otherwise, you need to be right in one way: the price you buy back in should be lower than the price at which you sold.
You don't even have to buy back at a lower price. You only have to buy back at a price lower than the the return you received in an alternate investment, for example bonds.
True.
And this isn't just a trivial difference. For example, people often say that if you sold the S&P 500 index in 1997 when the "irrational exuberance" speech came out, you never would have been able to purchase the S&P 500 again at a lower price.

True but irrelevant, assuming you sold the S&P and put your investment in the Total Bond fund. The S&P index was 850 at the beginning of 1997. Because the bond fund out-performed the S&P, you could have bought back the S&P in 2013, 16 years later, at 1500 and come out ahead. So selling the S&P at 850 and buying back at 1500 would have been a winning strategy.

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willthrill81
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Re: You Cant Time The Market

Post by willthrill81 » Sat Feb 15, 2020 9:19 pm

JonnyB wrote:
Sat Feb 15, 2020 8:54 pm
willthrill81 wrote:
Sat Feb 15, 2020 7:32 pm
JonnyB wrote:
Sat Feb 15, 2020 7:26 pm
willthrill81 wrote:
Sat Feb 15, 2020 6:54 pm
MNGopher wrote:
Sat Feb 15, 2020 12:01 pm
It's kind of a cliché, but you are finding out that you really do have to be right twice for this to work. First, when to sell and then when to get back in.
That's only true if you were trying to get out of stocks exactly at the peak and get back in exactly at the trough. Otherwise, you need to be right in one way: the price you buy back in should be lower than the price at which you sold.
You don't even have to buy back at a lower price. You only have to buy back at a price lower than the the return you received in an alternate investment, for example bonds.
True.
And this isn't just a trivial difference. For example, people often say that if you sold the S&P 500 index in 1997 when the "irrational exuberance" speech came out, you never would have been able to purchase the S&P 500 again at a lower price.

True but irrelevant, assuming you sold the S&P and put your investment in the Total Bond fund. The S&P index was 850 at the beginning of 1997. Because the bond fund out-performed the S&P, you could have bought back the S&P in 2013, 16 years later, at 1500 and come out ahead. So selling the S&P at 850 and buying back at 1500 would have been a winning strategy.
Correct, though I would never rely on one person's subjective viewpoint to make investment decisions, Bogle included.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

JonnyB
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Re: You Cant Time The Market

Post by JonnyB » Sat Feb 15, 2020 9:30 pm

willthrill81 wrote:
Sat Feb 15, 2020 9:19 pm
Correct, though I would never rely on one person's subjective viewpoint to make investment decisions, Bogle included.
Yes, but it does show that there can be more than one road to Dublin.

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willthrill81
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Re: You Cant Time The Market

Post by willthrill81 » Sat Feb 15, 2020 9:32 pm

JonnyB wrote:
Sat Feb 15, 2020 9:30 pm
willthrill81 wrote:
Sat Feb 15, 2020 9:19 pm
Correct, though I would never rely on one person's subjective viewpoint to make investment decisions, Bogle included.
Yes, but it does show that there can be more than one road to Dublin.
No, there can't be! You're either a die-hard adherent to the Boglehead principles (which Bogle himself did not strictly adhere to) or an ignorant, masochistic dunderhead!! :wink:
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: You Can't Time The Market

Post by Godot » Sat Feb 15, 2020 10:50 pm

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
So if the market dives 15% tomorrow, will you: a. feel lucky b. feel like a genius c. be predisposed to doing the same thing again in the future? d. buy back the shares you sold? e. wait for a deeper dip?
Estragon: I can't go on like this. | Vladimir: That's what you think. | ― Samuel Beckett, Waiting for Godot

Ornery Old Guy
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Re: You Can't Time The Market

Post by Ornery Old Guy » Sun Feb 16, 2020 1:38 am

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
You know it's funny ... the market always seems to go down a couple points at the end of the year. I assume firms want to lock in their gains to be able to tell clients they're great. I read though that any pattern that you notice - smarter people see it too and will exploit it until it goes away. So this year I just ignored what I thought was going to happen and figured I'd lose out on what I could have taken advantage of... But I was thinking the same as you.

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Re: You Can't Time The Market

Post by smectym » Sun Feb 16, 2020 2:08 am

Regret is pointless. OP was trying to do the right thing for his portfolio at the time that he made his judgment call. The subsequent rise in equities was by no means inevitable. 0P is not “stupid” or anything else for attempting to reduce risk in his portfolio.

Not that I disagree with the truism that you can’t time the market—especially this one. This current bull market that has run since March 2009 Is already one for the record books, and for some time now hasn’t been susceptible to rational analysis. I can’t explain it, you can’t explain it, and the poor permabear David Stockman can’t explain it. It will run and run until it stops, and no one knows when that will be.

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Re: You Can't Time The Market

Post by Ornery Old Guy » Sun Feb 16, 2020 2:45 am

smectym wrote:
Sun Feb 16, 2020 2:08 am
Regret is pointless. OP was trying to do the right thing for his portfolio at the time that he made his judgment call. The subsequent rise in equities was by no means inevitable. 0P is not “stupid” or anything else for attempting to reduce risk in his portfolio.

Not that I disagree with the truism that you can’t time the market—especially this one. This current bull market that has run since March 2009 Is already one for the record books, and for some time now hasn’t been susceptible to rational analysis. I can’t explain it, you can’t explain it, and the poor permabear David Stockman can’t explain it. It will run and run until it stops, and no one knows when that will be.
Although to be honest, It pretty much ended Dec 2018 - down 19-point-something - just BARELY failing to break the bull. Then it went screaming up after that...

TomCat96
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Re: You Can't Time The Market

Post by TomCat96 » Sun Feb 16, 2020 5:08 am

catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
Despite the many hard lessons I learned earlier in my investing (more like gambling in those days) career, I've once again proven I know nothing.

Late this past December, I broke from my principle of recent years, and thought I'd be smart and try to skim a few extra percentage points. My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.

We'll, here I sit with what I calculate to be nearly 50K in missed appreciation had I left those funds alone like I'm supposed to. Now the torment is watching the market continue this crazy climb, with the voices in my head whispering "dont chase it - the pull back is now even more likely"

You cant time the market, and here I thought I had learned that lesson many times over
Break down what it is you actually did. You realized the market would have a 2-5% pullback, and so got out of the market.
But that's not all you did.

When you really look at what happened--you had an idea, and automatically assumed the timing of the market pullback would coincide with the day you realized your idea. That was your implicit assumption. That tends to be the implicit assumption of market timing.

The day after I get a notion the market is going to pullback is the day it will actually happen.

It's all a little too convenient isn't it?

In fact, it makes no sense when you put it that way. Why would the market pullback right after I realize it? There has to be some randomness to when the notion pops into my head.

After all the market has been going up since october. Why didnt you call a pullback in late october, mid november? early december? Mid december?
It's all been up hasn't it?

That's my point, and a point for the future. Your market timing, whether you realized it or not, was based on a completely random event--the day the notion popped into your head the market was due to pull back 2-5%

Don't believe me? Here's how I can prove it to you that that was your implicit assumption:

The market WILL have its 2-5% pullback. Everyone knows that.

But when?

Do you double down now?

After all the market has gone up even more now. Isn't it even more overdue for a pullback? Aren't you even more likely to be right?

All Good questions. But thats the thing, if you're hesitating now, it just serves to underscore your previous false sense of certainty was based on pure random chance--the day your mind conceived of the notion, and an accompanying implicit assumption the market would reflect your notion shortly after it entered your head.

You played a random gut shot. You just didn't fully realize it at the time.

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catfish48084
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Re: You Cant Time The Market

Post by catfish48084 » Sun Feb 16, 2020 9:48 am

goingup wrote:
Sat Feb 15, 2020 1:11 pm
catfish48084 wrote:
Sat Feb 15, 2020 11:13 am
... My rationale was that after the huge run in 2019 - particularly in the last 2 months of the year - we were certain to have a pull back of 2~5%, and with interest of avoiding capital gains in 2019 that would commence in early January.

So I sold 75% of our index funds (held in tax deferred accounts) Dec 27th which we've owned for several years, thinking I'd jump right back in after the market dipped a few percentage points, and go back to being a "smart" buy and hold investor.
I'm not understanding this. You sold in December to avoid capital gains in January on a tax-deferred account.

Yes, market timing is ill-advised, but what was your rationale?
No, I expected that there would be large selling in the market after the huge run in 2019, but that this would occur in January rather than creating capital gain in 2019

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catfish48084
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Re: You Cant Time The Market

Post by catfish48084 » Sun Feb 16, 2020 9:55 am

yangtui wrote:
Sat Feb 15, 2020 1:38 pm
The only thing worse than being wrong in this type of situation is being right. You would end up believing that you were correct because of skill instead of luck ultimately setting yourself up for an even bigger loss down the road.
And I knew that before I did what I did. My post was nothing more than an admission that I did the wrong thing - actually regardless of outcome. If the market tanks in the next weeks and I do get back in at lower prices than I temporarily exited - I still did the wrong thing

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