Timing the Market

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MarkAT
Posts: 4
Joined: Fri May 22, 2020 9:36 pm

Timing the Market

Post by MarkAT » Mon May 25, 2020 8:58 am

Let me begin by saying that I understand the futility of trying to time the market. Nevertheless, it was fear of losing retirement funds that immobilized me and kept me from putting my Vanguard Roth 401(k) in anything but a money market fund And missing out on earning thousands of dollars over the past three years. At the suggestion of several of you on this forum, I have begun the process of reading the wiki and I’m convinced that the three fund approach is the way to go. However, given what is going on in the market right now I still need to ask if tomorrow is the day that I should initiate the three fund approach or wait a bit longer. I can almost guess what your responses e will be, but being a newbie, I could use the confirmation.

retired@50
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Location: Living in the U.S.A.

Re: Timing the Market

Post by retired@50 » Mon May 25, 2020 9:03 am

MarkAT wrote:
Mon May 25, 2020 8:58 am
Let me begin by saying that I understand the futility of trying to time the market. Nevertheless, it was fear of losing retirement funds that immobilized me and kept me from putting my Vanguard Roth 401(k) in anything but a money market fund And missing out on earning thousands of dollars over the past three years. At the suggestion of several of you on this forum, I have begun the process of reading the wiki and I’m convinced that the three fund approach is the way to go. However, given what is going on in the market right now I still need to ask if tomorrow is the day that I should initiate the three fund approach or wait a bit longer. I can almost guess what your responses e will be, but being a newbie, I could use the confirmation.
The passage above is dangerous. You seem to think that you should consider this in any important way. You shouldn't. If you have a long time horizon, then by the time you even consider selling your stocks and bonds, they will be worth double, triple, or perhaps even more, than you initially paid.

As an example, I started buying the Vanguard S&P 500 fund back in the 90s. It was under $100 per share. As of 5/22/20 it's at $273.64.

Regards,
Last edited by retired@50 on Mon May 25, 2020 9:19 am, edited 1 time in total.
This is one person's opinion. Nothing more.

ScubaHogg
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Re: Timing the Market

Post by ScubaHogg » Mon May 25, 2020 9:06 am

My two cents is today is best, but of course the markets are closed so tomorrow is second best. I’d say you have two ways to be able to sleep well.

1) time the market perfectly such that nothing bad ever happens. This of course is futile.

2) set you asset allocation such that you can sleep regardless of what’s happening in the market (it also helps if you never ever watch the “news”).

You’ll probably have more success with #2. Best of luck.
“There is no problem so bad you can’t make it worse.” - Chris Hatfield, Astronaut mantra

magicrat
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Joined: Sat Nov 29, 2014 7:04 pm

Re: Timing the Market

Post by magicrat » Mon May 25, 2020 9:23 am

In the same post you say you realize that market timing is futile, yet ask if you should time the market. Why the dissonance?

SteadyOne
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Joined: Fri Mar 22, 2019 5:26 pm

Re: Timing the Market

Post by SteadyOne » Mon May 25, 2020 9:36 am

MarkAT wrote:
Mon May 25, 2020 8:58 am
Let me begin by saying that I understand the futility of trying to time the market. Nevertheless, it was fear of losing retirement funds that immobilized me and kept me from putting my Vanguard Roth 401(k) in anything but a money market fund And missing out on earning thousands of dollars over the past three years. At the suggestion of several of you on this forum, I have begun the process of reading the wiki and I’m convinced that the three fund approach is the way to go. However, given what is going on in the market right now I still need to ask if tomorrow is the day that I should initiate the three fund approach or wait a bit longer. I can almost guess what your responses e will be, but being a newbie, I could use the confirmation.
Having investment plan is helpful. Even if you are highly risk averse and decide say on 20% stocks and the rest in bonds or cash and stick to it, this will be very useful.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court

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cashboy
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Re: Timing the Market

Post by cashboy » Mon May 25, 2020 9:38 am

start this week. there, you have your answer. :happy

you can do it in 'stages' (like a certain amount each week/month) or all at one time.

search on 'lump sum dca' and do things in a way that makes you feel most comfortable.
Last edited by cashboy on Mon May 25, 2020 9:38 am, edited 1 time in total.
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)

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Stinky
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Re: Timing the Market

Post by Stinky » Mon May 25, 2020 9:38 am

Have you established your ultimate asset allocation yet? If not, that’s the first thing for you to do.

Let’s say that you decide that your ultimate asset allocation is 40% US equities, 20% international equities, and 40% fixed income. You could move immediately to that tomorrow. Alternatively, if it makes you feel more comfortable, you could do some type of dollar cost average approach - straight line over six months, half tomorrow and the remainder over six months, etc.

The most important thing for you to do is to have an asset allocation target. The second most important thing is to start moving your investments toward the target, and not stopping until you’re done.
It's a GREAT day to be alive - Travis Tritt

EdLaFave
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Re: Timing the Market

Post by EdLaFave » Mon May 25, 2020 12:46 pm

retired@50 wrote:
Mon May 25, 2020 9:03 am
As an example, I started buying the Vanguard S&P 500 fund back in the 90s. It was under $100 per share. As of 5/22/20 it's at $273.64.
If I’m using Morningstar correctly, a 10k investment in the S&P500 made on Jan 1st, 1995 is now worth just over 104k.

Since OP can’t go back to 95, the next best time to invest is right now.

I think the OP would benefit from an all-in-one fund with automatic contributions. The psychology described is an absolute disaster for investing.

Rosencrantz1
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Re: Timing the Market

Post by Rosencrantz1 » Mon May 25, 2020 1:05 pm

MarkAT wrote:
Mon May 25, 2020 8:58 am
Let me begin by saying that I understand the futility of trying to time the market. Nevertheless, it was fear of losing retirement funds that immobilized me and kept me from putting my Vanguard Roth 401(k) in anything but a money market fund And missing out on earning thousands of dollars over the past three years. At the suggestion of several of you on this forum, I have begun the process of reading the wiki and I’m convinced that the three fund approach is the way to go. However, given what is going on in the market right now I still need to ask if tomorrow is the day that I should initiate the three fund approach or wait a bit longer. I can almost guess what your responses e will be, but being a newbie, I could use the confirmation.
No time like the present. Statistically, it works out better to lump sum rather than DCA. Having said that, if it were me, I'd lump sum 1/2 into your 3 fund portfolio and DCA the rest over the next 6 months.

As much as anything, IMO, it's crucial you carefully evaluate your tolerance for risk - your asset allocation - before plunging into the market.

Best of luck to you.

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