Yeah, I Timed...UPDATE

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investingdad
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Yeah, I Timed...UPDATE

Post by investingdad » Mon Feb 01, 2016 6:13 pm

UPDATE for March 16
So in the spirit of revisiting this thread I decided to provide an update of my market timing.

Basically, I undid the trade yesterday and moved the 25k back into the bond funds. Net gain was about 1.9k.

So I'm good for 100 sushi lunches upon retirement.

Nice.




So last Monday I moved 25k in my 401k out of bonds and into the S&P. It's just a few percent of our portfolio but it was purely a move to leverage the drop in the markets.

Will move it all back when it goes up 10%.

Totally contrary to my weighting more to bonds as we turn 43...but there you go.
Last edited by investingdad on Thu Mar 17, 2016 8:34 am, edited 2 times in total.

livesoft
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Re: Yeah, I Timed...

Post by livesoft » Mon Feb 01, 2016 6:15 pm

We need a new subforum just for Market Timing. :)
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investor1
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Re: Yeah, I Timed...

Post by investor1 » Mon Feb 01, 2016 6:44 pm

Just tell people you rebalanced.

wolf359
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Re: Yeah, I Timed...

Post by wolf359 » Mon Feb 01, 2016 6:45 pm

No problem. Just write it down in notes at the end of your investor policy statement. Note how much you bought, when, and why. Also record your intentions on the selling side.

Then wait, and see how it turns out. You might get lucky, and the market moves in your favor. You might also get unlucky, and then you see whether or not your modified asset allocation is too risky or still lets you sleep at night.

When you deviate from plan, it's a good idea to record it, so it better convinces you to follow the plan, or to change your plan to better meet your personality.

IPer
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Re: Yeah, I Timed...

Post by IPer » Mon Feb 01, 2016 6:50 pm

Yeah you might be a bit quick to stamp the bottom of the S&P with that 25K, however,
please do update this thread in 10 or so years to let us know your feelings about it then!

PS I noticed you did NOT state you re balanced, I think that is remarkable.
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Nowizard
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Re: Yeah, I Timed...

Post by Nowizard » Mon Feb 01, 2016 7:10 pm

We have had an actively managed, large cap fund in addition to the Total Stock Market Index, Vanguard. The "reasoning" was that it gave us the potential benefit of greater than market return since the fund has done well over the years. Also, we figured we would follow the returns and make changes dependent on what occurred. Over a period of 10 years, the actively managed fund has done well in up markets, not as well as TSM in down markets. Net result is that the average returns are within .50% over the ten year period. For purposes of simplification we just moved the total amount to Vanguard TSM. The actively managed fund is performing about 1% below TSM YTD. Money in both funds is in retirement accounts. Is this market timing or just simplification? I consider it the latter since there are no tax consequences which would have been considerable for the gains in the actively managed fund over the ten year period.

Tim

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Re: Yeah, I Timed...

Post by letsgobobby » Mon Feb 01, 2016 8:43 pm

What does this gain you?

Say you have a $2 million portfolio. You gamble by moving $25k into stocks that you shouldn't have, get lucky and pick the precise bottom, and then sell after a ten percent run up. That's an extra 1% you squeezed out of a portfolio, if everything goes precisely right and you get your timing exactly right.

I used to do this, but no longer do. The only way to market time successfully is to overrebalance at the exact bottom and then NEVER rebalance out of that higher risk position. Livesoft not withstanding.

livesoft
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Re: Yeah, I Timed...

Post by livesoft » Mon Feb 01, 2016 8:48 pm

livesoft says that 10% of $25,000 is $2,500 and that the extra $2,500 out of the resulting $2,1xx,000 portfolio is probably less than a 0.12% excess gain.

OTOH, $2,500 is more than 250 sushi lunches for livesoft.
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randomizer
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Re: Yeah, I Timed...

Post by randomizer » Mon Feb 01, 2016 9:02 pm

livesoft wrote:livesoft says that 10% of $25,000 is $2,500 and that the extra $2,500 out of the resulting $2,1xx,000 portfolio is probably less than a 0.12% excess gain.

OTOH, $2,500 is more than 250 sushi lunches for livesoft.
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investingdad
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Re: Yeah, I Timed...

Post by investingdad » Mon Feb 01, 2016 9:03 pm

livesoft wrote:livesoft says that 10% of $25,000 is $2,500 and that the extra $2,500 out of the resulting $2,1xx,000 portfolio is probably less than a 0.12% excess gain.

OTOH, $2,500 is more than 250 sushi lunches for livesoft.
Your math is fundamentally flawed.


It's more like 100 sushi lunches at a decent sushi joint when you're out with Investingdad.

livesoft
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Re: Yeah, I Timed...

Post by livesoft » Mon Feb 01, 2016 9:08 pm

Thanks for buying!
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AKdream
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Re: Yeah, I Timed...

Post by AKdream » Tue Feb 02, 2016 2:22 am

wolf359 wrote:No problem. Just write it down in notes at the end of your investor policy statement. Note how much you bought, when, and why. Also record your intentions on the selling side.

Then wait, and see how it turns out. You might get lucky, and the market moves in your favor. You might also get unlucky, and then you see whether or not your modified asset allocation is too risky or still lets you sleep at night.

When you deviate from plan, it's a good idea to record it, so it better convinces you to follow the plan, or to change your plan to better meet your personality.
I really think this is a great post, thank you!

wolf359
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Re: Yeah, I Timed...

Post by wolf359 » Tue Feb 02, 2016 11:12 am

AKdream wrote:
wolf359 wrote:No problem. Just write it down in notes at the end of your investor policy statement. Note how much you bought, when, and why. Also record your intentions on the selling side.

Then wait, and see how it turns out. You might get lucky, and the market moves in your favor. You might also get unlucky, and then you see whether or not your modified asset allocation is too risky or still lets you sleep at night.

When you deviate from plan, it's a good idea to record it, so it better convinces you to follow the plan, or to change your plan to better meet your personality.
I really think this is a great post, thank you!
Thanks. It was the result of me looking back at past statements and wondering why I made a particular move and what the heck was I thinking (especially if it was years later).

I've been reading studies that describe actual investor returns vs. fund returns. Investor behavior is responsible for not getting the fund returns. Tracking and recording my behavior has been valuable in assessing whether or not my plan deviations are a good idea or a bad idea, and keeps me accountable. Without it, I only tend to remember the victories. It has also had the effect of reducing my plan deviations.

livesoft
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Re: Yeah, I Timed...

Post by livesoft » Tue Feb 02, 2016 11:17 am

wolf359 wrote:Tracking and recording my behavior has been valuable in assessing whether or not my plan deviations are a good idea or a bad idea, and keeps me accountable. Without it, I only tend to remember the victories. It has also had the effect of reducing my plan deviations.
I completely agree with this. I think that's a good reason to know the performance of one's portfolio and to compare that to suitable benchmarks. I also like those madsinger posts that give some benchmarks.
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Steadfast
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Re: Yeah, I Timed...

Post by Steadfast » Tue Feb 02, 2016 12:41 pm

investingdad wrote:So last Monday I moved 25k in my 401k out of bonds and into the S&P. It's just a few percent of our portfolio but it was purely a move to leverage the drop in the markets. Will move it all back when it goes up 10%.
If your strategy is to buy low, why not buy emerging markets instead of the S&P? On a valuations basis, international is where to be; EM is the tip of the spear. EM small value is the bleeding edge.

Anyway, good luck. I love these threads where Bogleheads confess their sins.
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Re: Yeah, I Timed...

Post by grap0013 » Tue Feb 02, 2016 1:31 pm

Steadfast wrote:
investingdad wrote:So last Monday I moved 25k in my 401k out of bonds and into the S&P. It's just a few percent of our portfolio but it was purely a move to leverage the drop in the markets. Will move it all back when it goes up 10%.
If your strategy is to buy low, why not buy emerging markets instead of the S&P? On a valuations basis, international is where to be; EM is the tip of the spear. EM small value is the bleeding edge.

Anyway, good luck. I love these threads where Bogleheads confess their sins.
^I concur. If you are going to try and time then do so with the asset class most likely to be undervalued. S&P trailing PEs are over double trailing PEs of EM.
There are no guarantees, only probabilities.

livesoft
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Re: Yeah, I Timed...

Post by livesoft » Tue Feb 02, 2016 1:35 pm

grap0013 wrote:^I concur. If you are going to try and time then do so with the asset class most likely to be undervalued. S&P trailing PEs are over double trailing PEs of EM.
No, no, no. Market time with any and all the investments you can. Even bond funds can be used. :twisted: :moneybag
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Re: Yeah, I Timed...

Post by joebh » Tue Feb 02, 2016 3:52 pm

investingdad wrote:So last Monday I moved 25k in my 401k out of bonds and into the S&P. It's just a few percent of our portfolio but it was purely a move to leverage the drop in the markets.
So is this now part of your investment plan - to leverage drops in the markets?

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Re: Yeah, I Timed...

Post by joebh » Tue Feb 02, 2016 3:54 pm

livesoft wrote:We need a new subforum just for Market Timing. :)
It should be titled "I know Bogleheads don't believe in Market Timing, but..."

(Seems to me a lot of Bogleheads do believe in market timing, but don't like to admit it.)

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DaftInvestor
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Re: Yeah, I Timed...

Post by DaftInvestor » Tue Feb 02, 2016 4:07 pm

Is this timing based upon gut feelings or have you a strategy in mind - for instance - will you move another $25K if the market drops by another x% over the next x days? If 1 year goes by and the market has only gone up by 8% instead of your "10% and I'll move it back" bar - will you still wait it out with an over-weight in stock? Are you holding off on any rebalancing method you follow (based upon bands or timeframe) until this market-timing-move is over?
Just curious if you have thought out a strategy....

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Re: Yeah, I Timed...

Post by acanthurus » Tue Feb 02, 2016 4:12 pm

Removed
Last edited by acanthurus on Tue Oct 31, 2017 3:50 pm, edited 1 time in total.

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DaftInvestor
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Re: Yeah, I Timed...

Post by DaftInvestor » Tue Feb 02, 2016 4:30 pm

acanthurus wrote: So far I've saved myself about sixty thousand in paper losses were I to buy back in today. I have no qualms with the stay-the-course folks, I just like to remind them that just because market timing doesn't work reliably, doesn't mean it doesn't work ever.

I also market timed in 2009 when I went 100% equities and that went fantastically well.
Good luck (you are going to need it :)) on timing your entry before your paper gain losses start!

It doesn't work reliably doesn't mean it doesn't work ever but one thing I know for certain - no one has consistently predicted anything when it comes to the market so good luck to both you and the OP on your gambles!

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Re: Yeah, I Timed...

Post by acanthurus » Tue Feb 02, 2016 4:45 pm

It doesn't work reliably doesn't mean it doesn't work ever but one thing I know for certain - no one has consistently predicted anything when it comes to the market so good luck to both you and the OP on your gambles!
Well if they have consistently predicted, perhaps they are smart enough to be quiet about it :D

My market timing also happened to be so I could sell out of some securities and move money to Vanguard. There were some recent index etf sales in there as well, some for TLH purposes but not all.

I'm mostly sitting on the cash now to determine what kind of asset allocation I'm comfortable with and which funds in particular to invest in (mostly on the bond side). [OT comments removed by admin LadyGeek]

investingdad
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Re: Yeah, I Timed...

Post by investingdad » Tue Feb 02, 2016 6:14 pm

DaftInvestor wrote:Is this timing based upon gut feelings or have you a strategy in mind - for instance - will you move another $25K if the market drops by another x% over the next x days? If 1 year goes by and the market has only gone up by 8% instead of your "10% and I'll move it back" bar - will you still wait it out with an over-weight in stock? Are you holding off on any rebalancing method you follow (based upon bands or timeframe) until this market-timing-move is over?
Just curious if you have thought out a strategy....
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Re: Yeah, I Timed...

Post by Fallible » Tue Feb 02, 2016 6:47 pm

DaftInvestor wrote:Is this timing based upon gut feelings or have you a strategy in mind - for instance - will you move another $25K if the market drops by another x% over the next x days? If 1 year goes by and the market has only gone up by 8% instead of your "10% and I'll move it back" bar - will you still wait it out with an over-weight in stock? Are you holding off on any rebalancing method you follow (based upon bands or timeframe) until this market-timing-move is over?
Just curious if you have thought out a strategy....
Since no one can know what the market will do, can it be anything but a gut feeling, or a hunch, or a guess?

Thing is, what we often see on the forum is that when someone market times and the market does whatever they guessed it would or might do, they're sometimes congratulated for making a little money, as if it resulted from skill, not luck. This may encourage some timers to then time again. Sounds suspiciously like gambling.
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Re: Yeah, I Timed...

Post by Toons » Tue Feb 02, 2016 6:52 pm

investingdad wrote:So last Monday I moved 25k in my 401k out of bonds and into the S&P. It's just a few percent of our portfolio but it was purely a move to leverage the drop in the markets.

Will move it all back when it goes up 10%.

Totally contrary to my weighting more to bonds as we turn 43...but there you go.
Way to go.
Whatever works :happy
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DaftInvestor
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Re: Yeah, I Timed...

Post by DaftInvestor » Tue Feb 02, 2016 7:05 pm

Fallible wrote:
DaftInvestor wrote:Is this timing based upon gut feelings or have you a strategy in mind - for instance - will you move another $25K if the market drops by another x% over the next x days? If 1 year goes by and the market has only gone up by 8% instead of your "10% and I'll move it back" bar - will you still wait it out with an over-weight in stock? Are you holding off on any rebalancing method you follow (based upon bands or timeframe) until this market-timing-move is over?
Just curious if you have thought out a strategy....
Since no one can know what the market will do, can it be anything but a gut feeling, or a hunch, or a guess?

Thing is, what we often see on the forum is that when someone market times and the market does whatever they guessed it would or might do, they're sometimes congratulated for making a little money, as if it resulted from skill, not luck. This may encourage some timers to then time again. Sounds suspiciously like gambling.
Agreed. I played my hand at it when I was young and hadn't done all the boglehead type research.... and like anyone can tell some success stories (and ignore times I missed). It works until it doesnt but some folks will do it for the thrill similar to thrill they might get gambling (I don't gamble either). Personally I've got other hobbies now :) and no longer to willing to jeopardize my plan.

investingdad
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Re: Yeah, I Timed...UPDATE

Post by investingdad » Thu Mar 17, 2016 8:00 am

Bumped for update.

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DaftInvestor
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Re: Yeah, I Timed...UPDATE

Post by DaftInvestor » Thu Mar 17, 2016 8:20 am

investingdad wrote:Bumped for update.
:confused Did you bump this to beat your chest a bit more without comment or did you have another update?

investingdad
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Re: Yeah, I Timed...UPDATE

Post by investingdad » Thu Mar 17, 2016 8:29 am

DaftInvestor wrote:
investingdad wrote:Bumped for update.
:confused Did you bump this to beat your chest a bit more without comment or did you have another update?
The update is in my first post.

The update was provided since several posters suggested I follow up.

The chest thumping comment I don't get...we're all here to discuss making money, right?

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