The bear market is over

[matt]

InvestingMom wrote:

I guess Matt will never live this one down.

Trust me, I'm not losing any sleep over it. The continued decline and volatility should actually improve my long-term performance. I continue to rotate positions, reinvest income, etc. to capitalize on some phenomenal values. I bought some securities this morning that I expect to gain at least 50% over the next year, although 100%+ seems more likely. There are some extreme mispricings out there and I'll take advantage of whatever I can.

[diasurfer]

I was wondering when matt was going to come along with a "laughing all the way to the bank" post. So many posters on this thread have had their fun taking shots at his bottom call. He certainly set himself up for it. He must enjoy the back and forth.

As I recall the main themes of his posts over the last year and a half are that valuations on equities are absurdly high, the banks are hiding a house-of-cards, and no more than a token allocation to stocks is warranted.

matt is just as bad a short-to-intermediate term market forecaster as all the others. So fire away - he missed badly on calling just how far that house of cards could fall. However as a long-term forecaster, I'd say he nailed it. I sure wish I had as much dry powder as he must have right now.

[donocash]

removed

[at]

Empirical studies show that some investors have security-selection abilities, but, almost no investor is able to time the market.

If you read Warren Buffett's letters to his shareholders, you can't find even one sentence that tries to time/predict the S&P500, which he uses as a benchmark for his company.

[diasurfer]

Empirical studies show that some investors have security-selection abilities, but, almost no investor is able to time the market.

If you read Warren Buffett's letters to his shareholders, you can't find even one sentence that tries to time/predict the S&P500, which he uses as a benchmark for his company.

Buffett didn't try to predict the S&P500, but I read this morning that he had a $30 billion cash war-chest before he recently started buying huge stakes in banks and conglomerates. He's been waiting to get greedy when others are fearful, and now that time has come.

[Judsen]

Well the fat lady may be singing but I betcha it is a very long song.
As the wise philosopher Yogi Berra said "It ain't over til its over"

[matt]

Empirical studies show that some investors have security-selection abilities, but, almost no investor is able to time the market.

What happens when an investor with security-selection skill cannot identify a sufficient number of undervalued securities? His options include concentrating the portfolio in those few top picks, holding cash, or shorting overvalued securities. Unless you have a mandate to be fully invested, holding cash/bonds is probably preferable to concentration in terms of risk and reward. That is the choice I began to make in early 2007. I do not sell short because I don't have any evidence that I would be succesful at it and the whims of the market can cause you to lose money even if you are right on valuation (for example, you could short an overvalued tech stock in 1999 only to see it bought at a premium by another overvalued tech stock).

My "market timing" journey began because risk premiums had disappeared from the markets by late 2006/early 2007. So that was driven only by valuations. As it become clear that there would be major credit problems in the economy that the markets were obviously not pricing in, I added a market timing perspective. If you can see that most everyone else is underestimating the downside, then it should pay to be patient and wait for prices to come down.

Despite the titling of my original post on this thread, I never actually believed that I could pick an exact bottom. You will find on my messages from January, March and other times that I was adding equity exposure on each big decline; "scaling in" to stocks on the way down, if you will. Given the extraordinary level of investor pessimism in the past two months, my guess is that the markets have finally priced in enough risk. It has clearly taken a turn for the worse in the past few weeks, but that doesn't bother me very much.

Assuming that we avoid a depression, the next year could turn out to be the best I'll ever have with my investments. If we do enter a depression, then I guess we'll be in the same sinking boat and I don't think I'll be any worse off than most others.

[retired at 48]

Matt wrote, partly:

You will find on my messages from January, March and other times that I was adding equity exposure on each big decline; "scaling in" to stocks on the way down, if you will.

If forum readers want to review an approach that is the exact opposite of buying downward (averaging down), it can be found here in a technique called Pyramiding Up. To date , followers have been well rewarded, as NO BUYING has been done this year. Pyr Up is an insurance policy against taking large losses. Here's the link:

http://www.bogleheads.org/forum/viewtop ... sc&start=0

Furthermore, per Pyr Up, only one asset class/sector has changed trends and moved upward. That is the Regional Banking exchange traded fund, KRE. Most would be very surprised to know that since 15 July it is up about 40%. Chart is here:

http://finance.yahoo.com/q/ta?s=KRE&t=1 ... m200&a=&c=

Can one be sure regional banks won't go lower? Of course not. But I am well positioned in a positive gain position that I feel I can think clearly, and act, if a compelling reason unfolds to considering taking some, or all, off the table.

retired at 48

[tan]

matt wrote:

Trust me, I'm not losing any sleep over it. The continued decline and volatility should actually improve my long-term performance. I continue to rotate positions, reinvest income, etc. to capitalize on some phenomenal values. I bought some securities this morning that I expect to gain at least 50% over the next year, although 100%+ seems more likely. There are some extreme mispricings out there and I'll take advantage of whatever I can.

well, with the additional declines since this post, you've got to be looking at 125%+ returns from where you're at today. kudos to your foresight, matt!

i hope it stops, but we should all be careful when people tell us what great market timers they are.

[tan]

I'm going on the record. I think the July 15 lows will hold.

If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy.

and lest matt change the subject again, above was his first statement.

[bookshot]

Yep, it's over: The sharks just ate the bear.

[Jethro2007]

Hey all,

Bear meat is good fer ya...jist make sure its well done...

WE got any Daniel Boones out thar???
Not age specific, either...

Sharky went a courtin' he did so... uh huh, uh huh...

[LH]

Matt wrote, partly:

You will find on my messages from January, March and other times that I was adding equity exposure on each big decline; "scaling in" to stocks on the way down, if you will.

If forum readers want to review an approach that is the exact opposite of buying downward (averaging down), it can be found here in a technique called Pyramiding Up. To date , followers have been well rewarded, as NO BUYING has been done this year. Pyr Up is an insurance policy against taking large losses. Here's the link:

http://www.bogleheads.org/forum/viewtop ... sc&start=0

Furthermore, per Pyr Up, only one asset class/sector has changed trends and moved upward. That is the Regional Banking exchange traded fund, KRE. Most would be very surprised to know that since 15 July it is up about 40%. Chart is here:

http://finance.yahoo.com/q/ta?s=KRE&t=1 ... m200&a=&c=

Can one be sure regional banks won't go lower? Of course not. But I am well positioned in a positive gain position that I feel I can think clearly, and act, if a compelling reason unfolds to considering taking some, or all, off the table.

retired at 48

Let us know what concrete actions you would take, on the day you would take them.

Out of "pyramiding up" I have seen zero so far that shows it has any utility whatsoever. No proof of performance. No forward calls. Not a single shred of concrete evidence.

So, if you can time the market, then start posting your calls here going forward, then we can all objectively judge your performance.

Timing is a way to lose relative to indexing, and unless there is some sort of evidence to the contrary, pyramiding up, whatever it is, must simply be regarded as a path to expected failure relative to the market. Stay the course.

Kudos to matt, who did have the guts to make a forward call.

I will make a forward call here: The chance that you will see r@48 make any series of forward calls, picking specific funds, showing his timing technigue in action, is very low. He will be vague instead. He will post after the fact about his "success" of course. I can call the winner of the 2000 superbowl, but it means nothing. If he does make forward trackable calls, his expected performance over will be that of any attempted timer, just like mutual funds, just like cramer, just like near everyone: Dismal relative to the market.

That is reality. Do not be fooled by this pyramiding up talk.

LH

[Random Musings]

LH,

Amen to that..... If you are going to talk the talk, walk the walk. Otherwise, it is that great leap of faith.

RM

[matt]

Looking back on this, I will probably be able to say I was off by one month. You will say I was off by 20%. We'll both be right.

Every investor should anticipate at least a 50% decline in equities at some point in their lives. This is probably not going to be on of them.

If not for my cat bothering me starting at 3:00 am, I sleep pretty well at night.

[tan]

Every investor should anticipate at least a 50% decline in equities at some point in their lives.

now THAT i completely agree with. and thanks again for continuing to engage in this discussion. i think it's useful for all of us.

[meco1999]

Oh boy, "matt," I don't think anyone will ever care about your predictions again. :roll: You've pretty much lost any credibility here with your terrible predictions.

[Rodc]

Looking back on this, I will probably be able to say I was off by one month. You will say I was off by 20%. We'll both be right.

I'm going on the record. I think the July 15 lows will hold.

If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy.

and lest matt change the subject again, above was his first statement.

Matt, nice attempt at redefinition!

But you didn't make a timing prediction, you predicted the markets would not go below the July 15th level. And you missed by a mile and counting.

Better luck next time.

[retired at 48]

LH wrote (partly)

Let us know what concrete actions you would take, on the day you would take them.

Out of "pyramiding up" I have seen zero so far that shows it has any utility whatsoever. No proof of performance. No forward calls. Not a single shred of concrete evidence.

So, if you can time the market, then start posting your calls here going forward, then we can all objectively judge your performance.

LH, you seem to be hounding me on various postings with the same charges, and I make numerous factual replies, but no headway is made. Perhaps we must simply agree to disagree. For example, your charge is a repeat of the same, as follows, with my reply.

What would happen if, retired at 48 actually posted his portfolio, and all his moves he makes online here, as he does them, going forward.

Repeat reply: Perhaps LH hasn’t seen some of my posts, but in my early January first posting, I stated I recently moved from a large junk bond fund position to zero, all funds going into short term bond funds. I posted that I was way overweight Energy Funds at 43% of equity and was reducing that position near end of first quarter, and posted new percentage levels, as achieved. Lastly, I very specifically posted intentions to buy the bank exchange traded funds, and posted such on the dates of such purchases. I don’t know of too many other Bogleheads who have done this. And while LH and others may not appreciate this candor, others, such as boglehead G12 do. Here’s what he posted regarding this charge:

G12 Quote:
I can confirm that R48 did PM me; I had purchased KBE before receipt and bought additionally in the following days, plus added to a position in BBT. We had discussed KBE off and on going back to Feb 2008…

I don't take R48's posts as market timing nor fabrication, he simply is financially capable and willing to take risks at this time due to having been underweight financials due to high exposure to energy companies for years, he has written about this numerous times. My willingness to overweight financials via an index longer term is very limited and believe this could be a scenario where researching and buying individual stocks may return much better results than buying an index due to the potential landmines contained therein. I am not a trader, nor do I advocate trading, but if people are willing to buy on their convictions and weather the storm more power to them.

Lastly, I also posted to you that my market actions can be obtained by visiting the Morningstar Diehard forum under a thread entitled R48, Norbert & Chin's Investment Challenge by retired at 48. Here, a number of live portfolios are maintained, with documented buys/sells logged for traceability.

BTW, I guess luck again prevails as the R48 portfolios, one for a young investor, and one for an early retiree, leads the pack in performance to date. But no one is gloating, as this thread is a learning experience for both participants and forum readers. We welcome all questions/comments. Readers, click on M* Original Forum (lower left of Boglehead forum cover page) to visit the thread.

R48

[G12]

LH wrote:

I will make a forward call here: The chance that you will see r@48 make any series of forward calls, picking specific funds, showing his timing technigue in action, is very low. He will be vague instead. He will post after the fact about his "success" of course. I can call the winner of the 2000 superbowl, but it means nothing. If he does make forward trackable calls, his expected performance over will be that of any attempted timer, just like mutual funds, just like cramer, just like near everyone: Dismal relative to the market.

That is reality. Do not be fooled by this pyramiding up talk.

He is still up on KBE, I have not tracked KRE. What is with all the sourness?? I could point out that KBE had not positively breached its 200 DMA when the buy occurred, but that is the only point I can argue.

Why continue to buy into a declining market? Other than 401k plans or similar periodic investments, why choose to continue to invest lump sums of cash when you can wait for a bottom or upturn? Why buy at a perceived discount when a lower price becomes available the next day or month, especially given the fact that most on here already have significant market exposure? The blinders and narrow mindedness exhibited on this forum sometimes makes me cringe.

[scubadiver]

Looking back on this, I will probably be able to say I was off by one month. You will say I was off by 20%. We'll both be right.

IMHO there is no shame in not being able to time the market. I certainly cannot. Denying it despite all evidence to the contrary is another thing.

Every investor should anticipate at least a 50% decline in equities at some point in their lives. This is probably not going to be on of them.

This much is cetain--If you keep trying to call the market bottom, eventually you will get it right.

Ever see the movie Rudy?

[DP]

Hi,
Wow, what a move. Looks like about 24% down from the point this bear was declared over

I'll take a shot at a prediction and say that I think the lows of the last bear market will hold, at least for this move down. Who would have thought this move would have gone so far; that this would even be a consideration?

Don

[InvestingMom]

Hi,
Wow, what a move. Looks like about 24% down from the point this bear was declared over

I'll take a shot at a prediction and say that I think the lows of the last bear market will hold, at least for this move down. Who would have thought this move would have gone so far; that this would even be a consideration?

Don

I am officially blaming Matt. I think he jinxed the markets. Maybe if he comes back and admits the error of his ways, the market will turn around. Seriously, I am so glad that he posted his predicition...as others have said, at least he had the guts to do it....and so now it is on record and a good reminder to me to ignore such silly predictions. I still wish the thread would disappear.

[grayfox]

I am officially blaming Matt.

:lol: I was thinking the same thing. Blame matt.

It is interesting that despite thousands (millions?) of people making market forecasts or coming up with a "fool-proof" investing plan, the markets makes fools of everyone: bull or bear, fundamental or technical analyst, market timer or buy-and-holder, active manager or indexer-and-balancer. Everyone.

What I find particularly strange about the stock market is that it seems to have an eerie sentience. As if the market resents anyone thinking it's workings are within their ken. And the more certainty and hubris someone shows in their forecasting ability (or their "investing system") the more the market wants to publicly embarrass and humiliate them. It is a vengeful organism.

[zeugmite]

What I find particularly strange about the stock market is that it seems to have an eerie sentience. As if the market resents anyone thinking it's workings are within their ken. And the more certainty and hubris someone shows in their forecasting ability (or their "investing system") the more the market wants to publicly embarrass and humiliate them. It is a vengeful organism.

That's not that strange. All the things that people can predict (and act on) are priced in, so what's left cannot be predicted by anybody.

[bobcat2]

On October 7 matt wrote:

Looking back on this, I will probably be able to say I was off by one month. You will say I was off by 20%. We'll both be right.

Every investor should anticipate at least a 50% decline in equities at some point in their lives. This is probably not going to be on (sic) of them.

As of today the US stock market is down roughly 50% in real terms over the last 12 months.

Bob K

[cks]

bobcat2-you are cruel, but point well taken (hopefully) :lol:

[matt]

As of today the US stock market is down roughly 50% in real terms over the last 12 months.

I, of course, was speaking of nominal returns. And my portfolio is probably only down about 10% over that period. The Lehman bankruptcy has set all of the dominoes tumbling and is much worse than I anticipated, but the fact remains that I was one of few here who recognized the risks last year and am way ahead of most investors despite an early move back to bullishness. One decent market rally and I'll be back in the black this year. Gloat all you want, but I'm not suffering much for my actions.

Buy gold. Buy TIPS. And have a good night.

[gassert]

[rude remarks deleted by admin alex]

[steersman]

I'm going on the record. I think the July 15 lows will hold.

If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy.

Matt is right in a way. The July 15 lows have held, from July 1997...

[cflannagan]

I'm going on record - this thread will continue to be bumped up until we stop hitting new lows.

[dmcmahon]

I'm going on the record. I think the July 15 lows will hold.

If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy.

Matt is right in a way. The July 15 lows have held, from July 1997...

I'll go on record now - the October 20th low will hold. That's October 20, 1987.

[mephistophles]

I'm going on the record. I think the July 15 lows will hold.

If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy.

I'm going on the record. I do not think the July 15th low will hold. So, rebalance when you normally do so.

Self. Guess I am still right. Self.

[Bharat]

I'm going on record - this thread will continue to be bumped up until we stop hitting new lows.

Second that. And i am hoping that we will at least bump this thread a few more times till 2012.

[Rose21]

For a group of people claiming to be not the least bit concerned about the economic downturn and the correctness of their investing philosophy, the increasingly petulant--indeed, pissy--tone of this forum, and the "witch hunt"-like tone of this thread, is a tad out of character.

[Gregory]

I'm going on the record. I think the July 15 lows will hold.

If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy.

I'm going on the record. I do not think the July 15th low will hold. So, rebalance when you normally do so.

Meph, you're much better at this than is Matt. http://tinyurl.com/5rmy7v

[Gregory]

Let's take all predictions with a grain of salt.


"Stocks have reached what looks like a permanently high plateau." -- Irving Fisher, Professor of Economics, Yale University, 1929.

"There is no reason anyone would want a computer in their home." -- Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977

"Everything that can be invented has been invented." -- Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.

[james22]

I will make a forward call here: The chance that you will see r@48 make any series of forward calls, picking specific funds, showing his timing technigue in action, is very low.

Nice of you to make matt feel better.

[White Coat Investor]

As long as we're on the subject, that Nov 20th low has held for nearly a month now.

[LH]

LH wrote (partly)

Let us know what concrete actions you would take, on the day you would take them.

Out of "pyramiding up" I have seen zero so far that shows it has any utility whatsoever. No proof of performance. No forward calls. Not a single shred of concrete evidence.

So, if you can time the market, then start posting your calls here going forward, then we can all objectively judge your performance.

LH, you seem to be hounding me on various postings with the same charges, and I make numerous factual replies, but no headway is made. Perhaps we must simply agree to disagree. For example, your charge is a repeat of the same, as follows, with my reply.

What would happen if, retired at 48 actually posted his portfolio, and all his moves he makes online here, as he does them, going forward.

Repeat reply: Perhaps LH hasn’t seen some of my posts, but in my early January first posting, I stated I recently moved from a large junk bond fund position to zero, all funds going into short term bond funds. I posted that I was way overweight Energy Funds at 43% of equity and was reducing that position near end of first quarter, and posted new percentage levels, as achieved. Lastly, I very specifically posted intentions to buy the bank exchange traded funds, and posted such on the dates of such purchases. I don’t know of too many other Bogleheads who have done this. And while LH and others may not appreciate this candor, others, such as boglehead G12 do. Here’s what he posted regarding this charge:

G12 Quote:
I can confirm that R48 did PM me; I had purchased KBE before receipt and bought additionally in the following days, plus added to a position in BBT. We had discussed KBE off and on going back to Feb 2008…

I don't take R48's posts as market timing nor fabrication, he simply is financially capable and willing to take risks at this time due to having been underweight financials due to high exposure to energy companies for years, he has written about this numerous times. My willingness to overweight financials via an index longer term is very limited and believe this could be a scenario where researching and buying individual stocks may return much better results than buying an index due to the potential landmines contained therein. I am not a trader, nor do I advocate trading, but if people are willing to buy on their convictions and weather the storm more power to them.

Lastly, I also posted to you that my market actions can be obtained by visiting the Morningstar Diehard forum under a thread entitled R48, Norbert & Chin's Investment Challenge by retired at 48. Here, a number of live portfolios are maintained, with documented buys/sells logged for traceability.

BTW, I guess luck again prevails as the R48 portfolios, one for a young investor, and one for an early retiree, leads the pack in performance to date. But no one is gloating, as this thread is a learning experience for both participants and forum readers. We welcome all questions/comments. Readers, click on M* Original Forum (lower left of Boglehead forum cover page) to visit the thread.

R48

there is not a shred of evidence that I can see that r@48 is "financially capable" anymore so than any other random poster on the board. I do not even see what most of that has to do with the topic at hand.

I also note there are no links to any of these posts at all. Which is again, vague. Its kinda a mishmash of randomness. Its untrackable. I did try to find "R48, Norbert & Chin's Investment Challenge " but could not. Could someone post or pm me a link?

I mean, I could post my records that I bought nvidia at $4.52
and sold it at 45.93.

Feb-11-03 MCD 13.82
02/07/07 MCD $44.78 sold.

Likewise mcdonalds above. Gee, I am a genius arent I? financially capable of picking stocks. I did that by my "LHing up".

Except thats not the whole story. In fact, although the above is true, its completely, utterly meaningless in terms of whether I am truly financially capable.

Now, if I want to say buy mcdonalds now, and buy nvidia now, and make the friggin forward call HERE AND NOW, then if they do great again going forward, that has some meaning........ Especially if its reproducible, and I do it over and over again.

Cept that wont happen. The expected value going forward of trying timing going forward is achieving lower than market return. Its well documented. Timers usually dont make forward calls, they only talk about past ones. They are also very vague.

So tell us retired@48, what are the good active mutual funds to pick going forward? Whats going to outperform the market. Maybe I will take 100 percent of my portfolio, and pyramid it up and such, and go into what you suggest here. So lay it out for us. Say I have 100K to invest now, what active mutual funds do I pick?

You call this hounding, heck I just wanna learn. Maybe I am wrong here, and you are a peter lynch, or a warren buffet, its possible. You may have a better approach than the boglehead approach. To me, it all just seems real confusing and vague, the feeling I get when I talk to a broker and ask specifics.

But just make it real simple for me, tell me what active funds to pick, and how to pyramid up into them. Assume my entire portfolio is 100K, and have at it going forward.

Thats the real deal. Just like matts call of a bottom was the real deal. I would suggest making it a separate thread, heres what to do now with 100K with active mutual fund selection and pyramiding up.

Thanks for your help, I am looking forward to seeing your technigue applied going forward.

LH

[james22]

http://socialize.morningstar.com/NewSoc ... 61333.aspx

[Fear and Loathing]

You can see the portfolios on the Morningstar site. I found it without a link.

That said, several of us have also posted portfolios there. I did, and based on established simple principles like Buy and Hope, I am getting performance that is absolutely less than stellar.

We come here to learn - if they have a new approach, it is up to each of us to determine the merits - no one else.

[DP]

Hi,

Cept that wont happen. The expected value going forward of trying timing going forward is achieving lower than market return. Its well documented. Timers usually dont make forward calls, they only talk about past ones. They are also very vague.

The risk reduction of market timing is also well documented. It's been discussed here:
http://www.bogleheads.org/forum/viewtopic.php?t=27460

And there is a paper on it here:
http://papers.ssrn.com/sol3/papers.cfm? ... _id=962461

... and the author has been tracking his real time, out of sample returns. The latest update is here:
http://seekingalpha.com/article/99162-1 ... le-returns

The strategy is documented in detail, easy to follow, and it crushed buy and hold out of sample over the last couple years.

heck I just wanna learn

If that is true, read this forum and the links provided. This information has been posted many times before and it directly contradicts your statements.

Don

[grumel]

And there is a paper on it here:
http://papers.ssrn.com/sol3/pa...._id=962461

... and the author has been tracking his real time, out of sample returns. The latest update is here:
http://seekingalpha.com/articl....le-returns

The strategy is documented in detail, easy to follow, and it crushed buy and hold out of sample over the last couple years.

Great, 2007.

Would be better to collect all market timing strategies published in 1997 and see if above 50% of them outperformed the market.

[Fear and Loathing]

They did - there have been numerous threads on this... One of the best was the 200 day moving average thread. It shows numerous results - and they ALL did much better to date

[DP]

Hi,

Would be better to collect all market timing strategies published in 1997 and see if above 50% of them outperformed the market

Well first I don't know that most market timing strategies outperform the market, I would say that probably most do not, out of sample. However, most moving average market timing strategies provide superior risk adjusted returns over most time frames. Second, offhand I don't know of any references published in 1997 and I'm not going to go digging, but moving average strategies have certainly been around longer then that.

Here's a paper published in 2002:
http://www.fundadvice.com/fehtml/mtstra ... /0204.html

It's based on the 100 day simple moving average and diversification. I have a spreadsheet set up to test exponential moving averages on a diversified set of funds. Using the 100 ema over the past 10.5 years (thru early Nov):

Code: Select all

              VTSMX	VGTSX	^DJC	VGSIX	 VISVX	VEIEX    ALL
Buy&Hold AR	0.89%	2.04%	2.81%	6.27%	4.51%	7.48%    4.88%
100ema AR     0.97%	7.17%	4.89%	8.33%	5.40%	15.36%   7.02%

And from the date of the paper, March 27, 2002, thru Nov 3, 2008, the diversified set of funds returned 41%, while using market timing the return was 78%.

And while market timing has only a very slim advantage over buy and hold for VTSMX over the past 10 years, the Std Deviation of returns for buy and hold was 20.3%, while for market timing it was only 11.2%, and this is the advantage of market timing, reduced risk.

Don

[cflannagan]

It shows numerous results - and they ALL did much better to date

Saying stuff like that is a dangerous thing - you do not want to mislead novice investors into using a system that works only for certain time periods. Please add a bit more "disclaimer" to your posts when you make bold claims like that.

[retired at 48]

LH wrote (partly)

Let us know what concrete actions you would take, on the day you would take them.

Out of "pyramiding up" I have seen zero so far that shows it has any utility whatsoever. No proof of performance. No forward calls. Not a single shred of concrete evidence.

So, if you can time the market, then start posting your calls here going forward, then we can all objectively judge your performance.

LH, you seem to be hounding me on various postings with the same charges, and I make numerous factual replies, but no headway is made. Perhaps we must simply agree to disagree. For example, your charge is a repeat of the same, as follows, with my reply.

What would happen if, retired at 48 actually posted his portfolio, and all his moves he makes online here, as he does them, going forward.

Repeat reply: Perhaps LH hasn’t seen some of my posts, but in my early January first posting, I stated I recently moved from a large junk bond fund position to zero, all funds going into short term bond funds. I posted that I was way overweight Energy Funds at 43% of equity and was reducing that position near end of first quarter, and posted new percentage levels, as achieved. Lastly, I very specifically posted intentions to buy the bank exchange traded funds, and posted such on the dates of such purchases. I don’t know of too many other Bogleheads who have done this. And while LH and others may not appreciate this candor, others, such as boglehead G12 do. Here’s what he posted regarding this charge:

G12 Quote:
I can confirm that R48 did PM me; I had purchased KBE before receipt and bought additionally in the following days, plus added to a position in BBT. We had discussed KBE off and on going back to Feb 2008…

I don't take R48's posts as market timing nor fabrication, he simply is financially capable and willing to take risks at this time due to having been underweight financials due to high exposure to energy companies for years, he has written about this numerous times. My willingness to overweight financials via an index longer term is very limited and believe this could be a scenario where researching and buying individual stocks may return much better results than buying an index due to the potential landmines contained therein. I am not a trader, nor do I advocate trading, but if people are willing to buy on their convictions and weather the storm more power to them.

Lastly, I also posted to you that my market actions can be obtained by visiting the Morningstar Diehard forum under a thread entitled R48, Norbert & Chin's Investment Challenge by retired at 48. Here, a number of live portfolios are maintained, with documented buys/sells logged for traceability.

BTW, I guess luck again prevails as the R48 portfolios, one for a young investor, and one for an early retiree, leads the pack in performance to date. But no one is gloating, as this thread is a learning experience for both participants and forum readers. We welcome all questions/comments. Readers, click on M* Original Forum (lower left of Boglehead forum cover page) to visit the thread.

R48

there is not a shred of evidence that I can see that r@48 is "financially capable" anymore so than any other random poster on the board. I do not even see what most of that has to do with the topic at hand.

I also note there are no links to any of these posts at all. Which is again, vague. Its kinda a mishmash of randomness. Its untrackable. I did try to find "R48, Norbert & Chin's Investment Challenge " but could not. Could someone post or pm me a link?

I mean, I could post my records that I bought nvidia at $4.52
and sold it at 45.93.

Feb-11-03 MCD 13.82
02/07/07 MCD $44.78 sold.

Likewise mcdonalds above. Gee, I am a genius arent I? financially capable of picking stocks. I did that by my "LHing up".

Except thats not the whole story. In fact, although the above is true, its completely, utterly meaningless in terms of whether I am truly financially capable.

Now, if I want to say buy mcdonalds now, and buy nvidia now, and make the friggin forward call HERE AND NOW, then if they do great again going forward, that has some meaning........ Especially if its reproducible, and I do it over and over again.

Cept that wont happen. The expected value going forward of trying timing going forward is achieving lower than market return. Its well documented. Timers usually dont make forward calls, they only talk about past ones. They are also very vague.

So tell us retired@48, what are the good active mutual funds to pick going forward? Whats going to outperform the market. Maybe I will take 100 percent of my portfolio, and pyramid it up and such, and go into what you suggest here. So lay it out for us. Say I have 100K to invest now, what active mutual funds do I pick?

You call this hounding, heck I just wanna learn. Maybe I am wrong here, and you are a peter lynch, or a warren buffet, its possible. You may have a better approach than the boglehead approach. To me, it all just seems real confusing and vague, the feeling I get when I talk to a broker and ask specifics.

But just make it real simple for me, tell me what active funds to pick, and how to pyramid up into them. Assume my entire portfolio is 100K, and have at it going forward.

Thats the real deal. Just like matts call of a bottom was the real deal. I would suggest making it a separate thread, heres what to do now with 100K with active mutual fund selection and pyramiding up.

Thanks for your help, I am looking forward to seeing your technigue applied going forward.

LH

Why do you have to personalize these threads in terms of "what R48 will or won't do?"

I will reiterate that I post, real time, my actions on the M* Forum cited above. Sometimes it moves to page 2. Others seem to have found it (see kbofhp above).

That said, I choose not to respond in describing any of what I do here, first because the topic of this thread is "The bear market is over." . I don't make such predictions and would not be a good place to locate my input.

More importantly, though, I'm not responding to threads which I view as not fully civil, as pointed out above by Rose21, who wrote:

For a group of people claiming to be not the least bit concerned about the economic downturn and the correctness of their investing philosophy, the increasingly petulant--indeed, pissy--tone of this forum, and the "witch hunt"-like tone of this thread, is a tad out of character.

DP above has identified other postings which have provided the backtesting and other items you refer to. That post (200 day Moving Average Market Timing)was very civil, as evidenced by a first time poster kencc, who wrote:

I occasionally lurk here to see if I can convince myself to follow B&H but always decide I don't have the temperament for it. However, with this thread being discussed in a pleasant manner, I thought I'd register so I could make a comment.

Perhaps you should read that info, LH. Here is a brief description of backtesting results:

First, JW Nearly Retired started the posting, noting that I (R48) had discussed my use of the 200 day moving average in investing, in other threads. JW stated, while skeptical, he ran some back testing with Vanguards EMkt fund, VEIEX, and got "Quote:
startling good results
, requesting what others thought of this.

Then we had a series of references to other work/data provided by Avo, James22, rwwoods, scb175 and mpt follower. For example, mpt provided reference to Mebane Faber's work. Good contributions, all.

Simultaneously, DP, Speedie, kb0fhp and gummy ran additional back testing, using various time frames, moving averages and buy/sell triggers. The work results were surprising to many, showing indeed that both performance and standard deviation improved with the use of moving averages. Furthermore the results were robust around various parametric changes. Gummy summed it up best with words like: Fascinating, huh; and The Plot Thickens...Mamma Mia!

What I really don't understand though, LH, is how any buy and holder can be so vociferous against any review of market timing, when, today, buy and hold investors stand at the lowest of performance compared to any other timing methods. The back testing showed this.

So, start a thread, and bring forth your data supporting buy and hold, for review.

I have posted elsewhere I will be bringing forth a posting, of my own, summarizing the Pyramid Up technique, soon. But as posted elsewhere, anyone using this technique, this year 2008, for any traditional asset class, has done no buying so far. Seems they saved a lot of money, following this path.

And all are welcome to follow my two portfolios on the Morningstar Diehard Forum.

R48

[YDNAL]

I'm going on the record. I think the July 15 lows will hold.

Trust me, I'm not losing any sleep over it. The continued decline and volatility should actually improve my long-term performance. I continue to rotate positions, reinvest income, etc. to capitalize on some phenomenal values. I bought some securities this morning that I expect to gain at least 50% over the next year, although 100%+ seems more likely.

Looking back on this, I will probably be able to say I was off by one month. You will say I was off by 20%. We'll both be right.

Glad to see that you put away the crystal ball for a while.

--------------------------------------------

Thanks for your help, I am looking forward to seeing your technigue applied going forward.

We know that you are skeptical of prior performance claims; and repeatedly urge forum participants to make forward calls. We all make our best forward call by:

1) Relying on historical data that suggests you *should* be duly compensated when you buy the market(s) to hold. (no guarantees, though, as shown in the past decade).

2) Relying on the same historical data in search of mechanisms (timing) to smooth-out the bumps in the ride, since the data may suggest that you *could* be duly compensated in both volatility and return.

Some may use a hybrid #1 and #2. Different strokes for different folks.
-------------------------------------------

First, JW Nearly Retired started the posting, noting that I (R48) had discussed my use of the 200 day moving average in investing, in other threads. JW stated, while skeptical, he ran some back testing with Vanguards EMkt fund, VEIEX, and got "Quote:
startling good results, requesting what others thought of this."

Then we had a series of references to other work/data provided by Avo, James22, rwwoods, scb175 and mpt follower. For example, mpt provided reference to Mebane Faber's work. Good contributions, all.

Simultaneously, DP, Speedie, kb0fhp and gummy ran additional back testing, using various time frames, moving averages and buy/sell triggers. The work results were surprising to many, showing indeed that both performance and standard deviation improved with the use of moving averages. Furthermore the results were robust around various parametric changes. Gummy summed it up best with words like: Fascinating, huh; and The Plot Thickens...Mamma Mia!

Since no one using 200dma should have bought Equities in 2008*, the buy signal shall come at some point and we can test the hypothesis in the future.

* well, except maybe regional banks (just a gut feeling).

Going back in the cave with my bear friend to hibernate some more.

[retired at 48]

Regarding accessing portfolios on the Morningstar Diehard Forum, I received this Email:

We are moving our corporate headquarters, and the portfolio servers moved this weekend. That move is causing the shared portfolios to break. We just discovered this a few minutes ago, and are working on a fix. Sorry about that – but we should have things fixed again shortly.

I got an Email today saying it is now up and running.

R48