Buy on Really Bad Days, Sell on Really Good Days?

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by abuss368 » Wed Oct 04, 2017 9:22 pm

The best best is to develop an investment plan and then stay the course. Do not let market swings or emotions drive you.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by GoldenFinch » Wed Oct 04, 2017 9:30 pm

abuss368 wrote:
Wed Oct 04, 2017 9:14 pm
We invest on a consistent basis and do not let the individual daily results impact the timing of any purchases of additional shares. Over the long term it will not make any difference.

Best.
Thank you. This thread has been making my head spin. I actually considered selling all of my emerging markets that I bought in 2003. (Maybe I should.) I need to stop reading.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by Dandy » Wed Oct 04, 2017 9:36 pm

I like this to a point. I have usually done it when there were a few really bad days vs just one and only do it within my rebalancing "band" for overall allocation. So it is rarely done and I'm not making a big dollar bet on it. I think the last time I did it when the UK brexit vote was a surprise. I thought the market was overreacting.

The danger is that you start thinking you can make "easy" money and become a bit of a trader vs a buy and hold investor. I rarely sell on really good days or bother with the fixed income side. I should note that my allocation is about 43/57 so buying on an equity dip isn't really putting my assets at much greater risk.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Wed Oct 04, 2017 9:49 pm

livesoft wrote:
Wed Oct 04, 2017 9:15 pm
avalpert wrote:
Wed Oct 04, 2017 8:36 pm
I don't care about buying low relative to yesterday - I care about buying low relative to tomorrow (well, maybe not the literal tomorrow but you know what I'm saying).
Interesting because I don't care about buying low relative to the future because I assume that will always happen. If I didn't assume that, then I wouldn't be investing in the first place.
Still uninteresting unless you also have the ability to backwards and make the transactions yesterday if things happened differently today. The lack of evidence in the data to support the notion that waiting for bad days to buy (or selling on good days) should be enough for most people to not bother.
That doesn't mean that my assumption is always true, but it is true enough for my purposes.
I'm sure this is true for your purposes. But at this point aren't your purposes mostly keeping yourself entertained?

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Wed Oct 04, 2017 9:50 pm

staythecourse wrote:
Wed Oct 04, 2017 7:37 pm
nedsaid wrote:
Wed Oct 04, 2017 7:14 pm
Sandtrap wrote:
Wed Oct 04, 2017 7:00 pm
nedsaid wrote:
Wed Oct 04, 2017 6:55 pm
I saw that today was going to end higher, so about 1/2 hour before the close I submitted trades to exchange small amounts of stock funds into bond funds. Another round of the mild rebalancing I have been executing since July 2013. If the markets are up tomorrow, I might do some more in another account. It seems like all I am doing is hitting the "sell" button for stocks.
Thanks "Nedsaid".
I was just thinking the same thing. Pondering whether to add to my bond fund allocation.
Though I'm not sure about selling equities. Tough for me to sell things.
Bonds it is.
Well, I don't like selling either. The thing is, I am 58 years old now and I can't let my stock allocations keep creeping up. When I started my mild rebalancing program in July 2013, I was probably at 69% stocks. I have whittled that down to 67%. Had I done nothing, my guess is that I would be at 75% stocks by now. I am a stock guy and I hate to sell, even to rebalance as I know this will reduce my returns. The thing is, rebalancing is also about controlling risk, something to think more and more about as one gets older and older. I have a fiduciary responsibility to myself as there is no one else to do it for me, so I have to do things that I don't particularly like.

Stocks are certainly not cheap but bonds are expensive with stubbornly low interest rates. Yet another reason I don't like to rebalance. The yields from bonds probably barely beat inflation.

The percentages are pretty low but the dollar amounts of stocks sold to buy bonds are getting to be pretty significant. I keep hitting the "sell" button and about all I am doing is running in place. It shows what a powerful bull market can do.
I'm not trying to be difficult, but do you have any data to support rebalancing a whole 2% (69% down to 67%) is somehow meaningful in reducing risk AND/ OR improving risk/ return ration over the cost of doing such transactions? As far as every/ nearly every study I know suggest rebalancing more often then 5% is pretty useless and maybe harmful (due to cost).

My opinion, you are using some rationalization and/ or intellectualization to justify some fears of losing money getting so close to ?retirement on your part. I am not a psychologist, but have considered a Holiday Inn. :D

Good luck.

p.s. As I have said numerous times before intelligent, well read investors don't make behavioral mistakes due to lack of knowledge they make them based on rationalizing or intelletualizing why there situation is different.
It's not a matter of going from 69% stocks to 67% stocks, it was a matter of not allowing my stocks to drift to maybe 75%. I have been doing this over a four plus year period. Is it written somewhere that I have to wait for a 5% change in assets before I rebalance? Do I have to provide reams of evidence every time I make an investment move? Is it a sin to make moves in small increments?

Pretty much, I am doing what Target Date Retirement funds do. They don't have 5% rebalance bands, they have gradual glide paths.

If anything, I have been in my eyes, stock heavy. Vanguard, T Rowe Price, and Fidelity last I looked had 65% to 66% in stocks for their 2025 funds. I keep an eye on what they are doing to see if I am in the ballpark of what the experts are recommending.

Also, should I wait for a really bad day in the stock market to rebalance from stocks to bonds? It just seems to make sense to rebalance on an up day and when the stock market is at all time highs. So I don't know.
Last edited by nedsaid on Wed Oct 04, 2017 9:59 pm, edited 1 time in total.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Wed Oct 04, 2017 9:57 pm

avalpert wrote:
Wed Oct 04, 2017 7:15 pm
nedsaid wrote:
Wed Oct 04, 2017 6:52 pm
avalpert wrote:
Wed Oct 04, 2017 12:17 pm
nedsaid wrote:
Wed Oct 04, 2017 11:57 am
The Wizard wrote:
Tue Oct 03, 2017 2:16 pm


Buy low, sell high.
That's all there is to it...
This made me laugh. I always thought buy low, sell high was pretty fundamental to success as an investor. It is amazing all the remarks how this is somehow market timing. I don't know, buy high and sell low? Is that supposed to work better. I like my buy low, sell high formula better.
'Buy low, sell high' is a trite throwaway line. Of course everyone wants to pay the least and sell for the most - the problem is it is only known in retrospect whether that is indeed what happens and you shouldn't conflate 'higher today than yesterday' with selling high.

Whether or not the market inherently 'cannot' be time, every attempt I have seen to specify 'buying on Really Bad Days' enough to actually test it has shown it isn't a means of more consistently buying high and selling low than vanilla rebalancing methods.
I don't know, you can say about anything is a trite throwaway line. "Stay the course." "Don't do something, just stand there." "Age in bonds."
Here's the difference between those (which have their own problems) and 'buy low, sell high'. Each of those is actionable, it directly implies a set of actions (or non-action I suppose) one can take whether it be telling you how much to hold in bonds or not, don't deviate from your plan or don't do anything at all.

'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors.
Buy low, sell high is a pretty fundamental concept or at least I thought so. It implies looking for value, patience, and longer holding periods.
I think that is pretty laughable when you see it arose in the context of a 'strategy' to sell on a reactionary basis to daily movements with no reference to valuation at all.
So my advice for you is to buy high and sell low and see if that works better. No one advises that strategy though many investors do this in practice when they let emotions rather than reason drive their investments.
Yep, and trite lines like 'buy low, sell high' and 'never lose money' make it easier to tug on ones emotions and trip them up.
One could say that Bogleheadism is a collection of trite phrases. You just can't make everyone happy.
I highly disagree with this notion. The trite phrases are used to blur distinctions between 'boglehead' approach and various forms of market timing - not to clarify. When you resort to empty rhetoric you don't aid people in overcoming their emotions you provide marketers and salesmen the tools to hide the actual mechanisms underlying actions.

What makes the approach powerful is that it can be described simply and elegantly with resorting to tautologies, truisms and tag lines.
This is pretty much an argument over not much. I know you think this is all clever but it is annoying. Pretty much you are pumping yourself up and trying to put down somebody else. This really does not put you in a good light. It just looks petty.

"Trite phrases", "empty rhetoric", "tautologies". Petty, just petty.
Last edited by nedsaid on Wed Oct 04, 2017 10:04 pm, edited 1 time in total.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Wed Oct 04, 2017 10:02 pm

This might be an appropriate video for readers of this thread:
https://www.youtube.com/watch?v=dAcHfymgh4Y

And to make it not a naked link, it is Firesign Theatre "Everything You Know is Wrong". Enjoy.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Wed Oct 04, 2017 10:12 pm

tesuzuki2002 wrote:
Wed Oct 04, 2017 9:04 pm
If the market went up 25% in 1 Day... I'd probably sell some stuff.
I probably would too as it would distort my asset allocation. It is an extreme example of
selling on a really good day but it does illustrate the point.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by The Wizard » Thu Oct 05, 2017 8:33 am

avalpert wrote:
Wed Oct 04, 2017 7:15 pm
'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors...
You're right, of course.
That phrase is just an underlying principal, not an algorithmic action plan.
And for an individual stock investor (not I), it could be difficult to implement.
But for a index fund investor with a target AA, it's easy to devise a method to do this...
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by The Wizard » Thu Oct 05, 2017 8:56 am

nedsaid wrote:
Wed Oct 04, 2017 9:50 pm

It's not a matter of going from 69% stocks to 67% stocks, it was a matter of not allowing my stocks to drift to maybe 75%. I have been doing this over a four plus year period. Is it written somewhere that I have to wait for a 5% change in assets before I rebalance? Do I have to provide reams of evidence every time I make an investment move? Is it a sin to make moves in small increments?

Pretty much, I am doing what Target Date Retirement funds do. They don't have 5% rebalance bands, they have gradual glide paths.

If anything, I have been in my eyes, stock heavy. Vanguard, T Rowe Price, and Fidelity last I looked had 65% to 66% in stocks for their 2025 funds. I keep an eye on what they are doing to see if I am in the ballpark of what the experts are recommending.

Also, should I wait for a really bad day in the stock market to rebalance from stocks to bonds? It just seems to make sense to rebalance on an up day and when the stock market is at all time highs. So I don't know.
I also do incremental rebalancing, on the order of 1% of total portfolio. It's easy to do, develops discipline, and you're not selling a significant percentage of winners at one time.

Contrary to the title of this thread, I don't attach extra significance to RBDs or RGDs. Ten days of 0.30% market increases (the last week or so) get one slightly ahead of a single day 3.0% increase.

And finally, I'm getting to the point in retirement where I seem to have survived the first five Sequence of Returns years in good shape.
I should be getting around $3500/month SS at age 70 in 29 months, at which point portfolio withdrawals for routine spending may be over.
I may stop rebalancing at that point and let my stock allocation drift upwards.
I'm still kicking this around...
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Thu Oct 05, 2017 9:16 am

The Wizard wrote:
Thu Oct 05, 2017 8:33 am
avalpert wrote:
Wed Oct 04, 2017 7:15 pm
'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors...
You're right, of course.
That phrase is just an underlying principal, not an algorithmic action plan.
And for an individual stock investor (not I), it could be difficult to implement.
But for a index fund investor with a target AA, it's easy to devise a method to do this...
The problem is, when someone comes across this term and starts to look at how to 'buy low sell high' what they find isn't recommendation to set a target asset allocation and manage to it - instead they will see that they should be using moving averages or other technical indicators to implement a market timing scheme (really, do a google search and ignore the results having to do with fantasy football).

And then of course you do have the few times when someone suggests a rebalancing scheme as a way to 'buy low, sell high' but conveniently forgetting to mention that rebalancing typically means selling and buying assets that recently appreciated and will continue to both appreciate and occasionally means selling and buying assets that both recently declined and will both continue to do so - in other words, if you are doing it to sell high and buy low you are likely to be disappointed.

So I ask again, other than buy now and sell later - what other strategy are we recommending when we say 'buy low, sell high' that isn't likely to nudge someone towards market timing or emotional selling (as in the OP of this thread).

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by Slothmeister » Thu Oct 05, 2017 9:18 am

Isn't the whole Buy on Really Bad Days, Sell on Really Good Days? philosophy at odds with Bogleheads mentality of buy and hold?

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Thu Oct 05, 2017 9:19 am

nedsaid wrote:
Wed Oct 04, 2017 9:57 pm
avalpert wrote:
Wed Oct 04, 2017 7:15 pm
nedsaid wrote:
Wed Oct 04, 2017 6:52 pm
avalpert wrote:
Wed Oct 04, 2017 12:17 pm
nedsaid wrote:
Wed Oct 04, 2017 11:57 am


This made me laugh. I always thought buy low, sell high was pretty fundamental to success as an investor. It is amazing all the remarks how this is somehow market timing. I don't know, buy high and sell low? Is that supposed to work better. I like my buy low, sell high formula better.
'Buy low, sell high' is a trite throwaway line. Of course everyone wants to pay the least and sell for the most - the problem is it is only known in retrospect whether that is indeed what happens and you shouldn't conflate 'higher today than yesterday' with selling high.

Whether or not the market inherently 'cannot' be time, every attempt I have seen to specify 'buying on Really Bad Days' enough to actually test it has shown it isn't a means of more consistently buying high and selling low than vanilla rebalancing methods.
I don't know, you can say about anything is a trite throwaway line. "Stay the course." "Don't do something, just stand there." "Age in bonds."
Here's the difference between those (which have their own problems) and 'buy low, sell high'. Each of those is actionable, it directly implies a set of actions (or non-action I suppose) one can take whether it be telling you how much to hold in bonds or not, don't deviate from your plan or don't do anything at all.

'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors.
Buy low, sell high is a pretty fundamental concept or at least I thought so. It implies looking for value, patience, and longer holding periods.
I think that is pretty laughable when you see it arose in the context of a 'strategy' to sell on a reactionary basis to daily movements with no reference to valuation at all.
So my advice for you is to buy high and sell low and see if that works better. No one advises that strategy though many investors do this in practice when they let emotions rather than reason drive their investments.
Yep, and trite lines like 'buy low, sell high' and 'never lose money' make it easier to tug on ones emotions and trip them up.
One could say that Bogleheadism is a collection of trite phrases. You just can't make everyone happy.
I highly disagree with this notion. The trite phrases are used to blur distinctions between 'boglehead' approach and various forms of market timing - not to clarify. When you resort to empty rhetoric you don't aid people in overcoming their emotions you provide marketers and salesmen the tools to hide the actual mechanisms underlying actions.

What makes the approach powerful is that it can be described simply and elegantly with resorting to tautologies, truisms and tag lines.
This is pretty much an argument over not much. I know you think this is all clever but it is annoying. Pretty much you are pumping yourself up and trying to put down somebody else. This really does not put you in a good light. It just looks petty.

"Trite phrases", "empty rhetoric", "tautologies". Petty, just petty.
I'm sorry you see it that way - it is not my intention at all to pump myself up or put others down. My only intention is to move people away from trite phrases that, for those who don't yet fully understand the intended meaning behind them, are easily used to nudge people to poor strategies.

I don't think these phrases add anything to the conversation and do think they detract from it.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by Wakefield1 » Thu Oct 05, 2017 9:24 am

Send in the "invest by mail" slip with a check and hope the market drops?
(It didn't this time)

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by TheTimeLord » Thu Oct 05, 2017 9:30 am

The Wizard wrote:
Thu Oct 05, 2017 8:33 am
avalpert wrote:
Wed Oct 04, 2017 7:15 pm
'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors...
You're right, of course.
That phrase is just an underlying principal, not an algorithmic action plan.
And for an individual stock investor (not I), it could be difficult to implement.
But for a index fund investor with a target AA, it's easy to devise a method to do this...
What I am coming to realize people are really very entrenched in the percentages of their AA and more focused on them as opposed to achieving a target amount of wealth that would sustain them. I find this useful during the early and middle stages of accumulation but a somewhat dangerous abstraction near or in retirement, but this is likely why so many people feel they will need a variable WR. Personally now that I am in my 50s it is far more meaningful to me and imho my management of risk to have 10 years worth of expenses in safe FI investments and a total portfolio value of X than maintaining an exact AA of 40/60, 50/50 or 60/40. Of course if you are lucky enough to retire at the beginning of a bull market this doesn't matter but if you had retired in 2007 it might have. Bernstein's advice is probably the safest path but probably not the most profitable in most cases.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by The Wizard » Thu Oct 05, 2017 9:57 am

Slothmeister wrote:
Thu Oct 05, 2017 9:18 am
Isn't the whole Buy on Really Bad Days, Sell on Really Good Days? philosophy at odds with Bogleheads mentality of buy and hold?
No it's not, especially if the buy and sell amounts are less than 5% of your portfolio, as some anecdotes seem to show.
There's some market timing involved, but not a huge amount...
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 10:04 am

Slothmeister wrote:
Thu Oct 05, 2017 9:18 am
Isn't the whole Buy on Really Bad Days, Sell on Really Good Days? philosophy at odds with Bogleheads mentality of buy and hold?
There is no "buy and hold" mentality. There is the Bogleheads mentality of "Buy, Hold, and Rebalance" and this is perfectly in line with that philosophy. It is right there in the Bogleheads Wiki:
https://www.bogleheads.org/wiki/Boglehe ... philosophy
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 10:06 am

avalpert wrote:
Thu Oct 05, 2017 9:16 am
So I ask again, other than buy now and sell later - what other strategy are we recommending when we say 'buy low, sell high' that isn't likely to nudge someone towards market timing or emotional selling (as in the OP of this thread).
I would think that more emotional selling occurs on a really bad day. That's not what this thread is about.

This thread is about an unemotional numbers-driven strategy that can be written into an Investment Policy Statement and followed by even a robot.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by rgs92 » Thu Oct 05, 2017 10:26 am

If you think about it, when the stock market is at a new all-time high, every trading day of your whole life was a good day to buy.
So every day you were alive and the market was open was an opportunity for buying low.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by TheTimeLord » Thu Oct 05, 2017 10:49 am

rgs92 wrote:
Thu Oct 05, 2017 10:26 am
If you think about it, when the stock market is at a new all-time high, every trading day of your whole life was a good day to buy.
So every day you were alive and the market was open was an opportunity for buying low.
As long as you bought the right indexes and don't compare it to the results of other investments, sure. Not long ago we exited the first 30 year period where Bonds outperformed stocks as measured by the S&P 500 (probably should Google it). And people worry about how old the bull market in stocks is.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Thu Oct 05, 2017 11:11 am

livesoft wrote:
Thu Oct 05, 2017 10:06 am
avalpert wrote:
Thu Oct 05, 2017 9:16 am
So I ask again, other than buy now and sell later - what other strategy are we recommending when we say 'buy low, sell high' that isn't likely to nudge someone towards market timing or emotional selling (as in the OP of this thread).
I would think that more emotional selling occurs on a really bad day. That's not what this thread is about.

This thread is about an unemotional numbers-driven strategy that can be written into an Investment Policy Statement and followed by even a robot.
I don't think it is as it ignores any reference to actual data. Sure, it nominally has numbers - but those numbers are anchors, not numbers that drive future outcomes.

In fact, the only times I have seen this emotional practice codified enough to be tested as an actual strategy has not shown it to drive on to 'buy low and sell high'. So, if this thread is really about an unemotional numbers-driven strategy, let's have it - define that strategy so we can test whether it should be expected to help or hurt risk/returns.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Thu Oct 05, 2017 11:22 am

TheTimeLord wrote:
Thu Oct 05, 2017 9:30 am
The Wizard wrote:
Thu Oct 05, 2017 8:33 am
avalpert wrote:
Wed Oct 04, 2017 7:15 pm
'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors...
You're right, of course.
That phrase is just an underlying principal, not an algorithmic action plan.
And for an individual stock investor (not I), it could be difficult to implement.
But for a index fund investor with a target AA, it's easy to devise a method to do this...
What I am coming to realize people are really very entrenched in the percentages of their AA and more focused on them as opposed to achieving a target amount of wealth that would sustain them.
I recommend you do some research on 'value averaging' and the 'value path' as developed by Michael Edleson. While there are different angles to approach it, what it really boils down to is managing your exposure to risky assets (in this context he means as opposed to fixed income) towards a targeted dollar outcome - your percentage of bonds/equity changes over time as a result but you remain focused on target wealth.

I don't use it exactly as he suggests, but essentially I use it to accomplish what you are proposing here - it puts a dollar ceiling on my equity/real estate exposure based on target terminal wealth (well terminal by my desired retirement date at least).

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 11:25 am

avalpert wrote:
Thu Oct 05, 2017 11:11 am
In fact, the only times I have seen ...
You must've missed some other threads then. I have mentioned this one a few times and the purple line:
viewtopic.php?p=2962157#p2962157

Knock yourself out with the testing. Somehow I don't think you will do any testing whatsoever because your mind is already made up.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by TheTimeLord » Thu Oct 05, 2017 11:54 am

avalpert wrote:
Thu Oct 05, 2017 11:22 am
TheTimeLord wrote:
Thu Oct 05, 2017 9:30 am
The Wizard wrote:
Thu Oct 05, 2017 8:33 am
avalpert wrote:
Wed Oct 04, 2017 7:15 pm
'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors...
You're right, of course.
That phrase is just an underlying principal, not an algorithmic action plan.
And for an individual stock investor (not I), it could be difficult to implement.
But for a index fund investor with a target AA, it's easy to devise a method to do this...
What I am coming to realize people are really very entrenched in the percentages of their AA and more focused on them as opposed to achieving a target amount of wealth that would sustain them.
I recommend you do some research on 'value averaging' and the 'value path' as developed by Michael Edleson. While there are different angles to approach it, what it really boils down to is managing your exposure to risky assets (in this context he means as opposed to fixed income) towards a targeted dollar outcome - your percentage of bonds/equity changes over time as a result but you remain focused on target wealth.

I don't use it exactly as he suggests, but essentially I use it to accomplish what you are proposing here - it puts a dollar ceiling on my equity/real estate exposure based on target terminal wealth (well terminal by my desired retirement date at least).
Not sure if this fits into what you are proposing but I have a Fixed Income floor (in absolute dollar terms) I worked towards and achieved. That amount will will get me from here to FRA reasonably comfortably without assistance from my equity investments. I have now been working on the floor in absolute dollar terms for equities. Once I get there (I think I have just crossed the threshold) I will be using additional contributions to first make sure I am maintaining my equity floor and whatever is left over will be divided using a mildly aggressive AA between FI and Equities. Luckily the whole thing can be calculated using simple spreadsheet and as long as out of balance less than $10,000 (arbitrary round number, no statistical significance) I don't feel compelled to take any actions, although I sometimes do.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Thu Oct 05, 2017 12:02 pm

livesoft wrote:
Thu Oct 05, 2017 11:25 am
avalpert wrote:
Thu Oct 05, 2017 11:11 am
In fact, the only times I have seen ...
You must've missed some other threads then. I have mentioned this one a few times and the purple line:
viewtopic.php?p=2962157#p2962157

Knock yourself out with the testing. Somehow I don't think you will do any testing whatsoever because your mind is already made up.
I'm more than open to new information and changing my strategy as a result (it happens often and I have explicit guidelines in my IPS to force me to revisit my assumptions on a regular basis). But I'm not sure why you think the link you provided has any new information - the conclusions from it are nicely summarized by RodC in the last post:
RodC wrote:That is to say, they all are so close that the winner is determined by the random noise in the particular dataset - noise that is not repeatable.
And I think his last paragraph is particularly apt.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by avalpert » Thu Oct 05, 2017 12:12 pm

TheTimeLord wrote:
Thu Oct 05, 2017 11:54 am
avalpert wrote:
Thu Oct 05, 2017 11:22 am
TheTimeLord wrote:
Thu Oct 05, 2017 9:30 am
The Wizard wrote:
Thu Oct 05, 2017 8:33 am
avalpert wrote:
Wed Oct 04, 2017 7:15 pm
'Buy low, sell high' provides no such actionable advice - unless you can tell me how you know when it is low or high. It is a mental shortcut to avoid having to specify and evaluate the proposed actions - and that is how it is often used. It's right up there with 'don't lose money' in terms of empty, useless 'advice' provided to investors...
You're right, of course.
That phrase is just an underlying principal, not an algorithmic action plan.
And for an individual stock investor (not I), it could be difficult to implement.
But for a index fund investor with a target AA, it's easy to devise a method to do this...
What I am coming to realize people are really very entrenched in the percentages of their AA and more focused on them as opposed to achieving a target amount of wealth that would sustain them.
I recommend you do some research on 'value averaging' and the 'value path' as developed by Michael Edleson. While there are different angles to approach it, what it really boils down to is managing your exposure to risky assets (in this context he means as opposed to fixed income) towards a targeted dollar outcome - your percentage of bonds/equity changes over time as a result but you remain focused on target wealth.

I don't use it exactly as he suggests, but essentially I use it to accomplish what you are proposing here - it puts a dollar ceiling on my equity/real estate exposure based on target terminal wealth (well terminal by my desired retirement date at least).
Not sure if this fits into what you are proposing but I have a Fixed Income floor (in absolute dollar terms) I worked towards and achieved. That amount will will get me from here to FRA reasonably comfortably without assistance from my equity investments.
It's related though not identical to what I'm doing. I would look at this as setting the lower band on your 'ability' to take risk - you are defining your maximum ability cannot reduce your assets below this fixed income floor. I am setting the ceiling on 'need' to take risk. Both are reasonable approaches (and not mutually exclusive, they can be used together as you may be heading towards). I do intend to establish a safe floor as I head into retirement (being a bit behind you in the timeline of life means I'm not there yet), I haven't came to any conclusions on exactly how and I'm sure my thoughts will evolve along with the available tools to do it but expect to use some combination of annuities, TIPS/bonds ladders and social security to do so (I'd use a pension if I expected to have one).

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by TheTimeLord » Thu Oct 05, 2017 12:34 pm

avalpert wrote:
Thu Oct 05, 2017 12:12 pm
TheTimeLord wrote:
Thu Oct 05, 2017 11:54 am
avalpert wrote:
Thu Oct 05, 2017 11:22 am

I recommend you do some research on 'value averaging' and the 'value path' as developed by Michael Edleson. While there are different angles to approach it, what it really boils down to is managing your exposure to risky assets (in this context he means as opposed to fixed income) towards a targeted dollar outcome - your percentage of bonds/equity changes over time as a result but you remain focused on target wealth.

I don't use it exactly as he suggests, but essentially I use it to accomplish what you are proposing here - it puts a dollar ceiling on my equity/real estate exposure based on target terminal wealth (well terminal by my desired retirement date at least).
Not sure if this fits into what you are proposing but I have a Fixed Income floor (in absolute dollar terms) I worked towards and achieved. That amount will will get me from here to FRA reasonably comfortably without assistance from my equity investments.
It's related though not identical to what I'm doing. I would look at this as setting the lower band on your 'ability' to take risk - you are defining your maximum ability cannot reduce your assets below this fixed income floor. I am setting the ceiling on 'need' to take risk. Both are reasonable approaches (and not mutually exclusive, they can be used together as you may be heading towards). I do intend to establish a safe floor as I head into retirement (being a bit behind you in the timeline of life means I'm not there yet), I haven't came to any conclusions on exactly how and I'm sure my thoughts will evolve along with the available tools to do it but expect to use some combination of annuities, TIPS/bonds ladders and social security to do so (I'd use a pension if I expected to have one).
It is interesting and somewhat counterintuitive how aging has become my ally since I established my fixed income floor to reach FRA. Normally we think of aging as giving us less time to compound but now each month (while I continue to work) is one less month to divide the fixed income floor across. One less month until SS which will meaningfully reduce the expenses we have to cover from our portfolio. And a little depressingly, one less month of longevity I have worry about robbing my portfolio of its potency. So I guess that is why for me if today I ended up with 2% more money than I had yesterday just because of a market move I would be happy to capture it and invest it at a rate equal to inflation (probably feel different if we were in a Bear market instead of a Bull). But I am in sort of a financial sweet spot. I reached financial independence, have enough in safe FI assets to get to FRA without selling equities and I am still in my peak earning years where I can maximize the return on my human capital. It is an exceeding fortunate position to be in.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 1:13 pm

The Wizard wrote:
Thu Oct 05, 2017 8:56 am
nedsaid wrote:
Wed Oct 04, 2017 9:50 pm

It's not a matter of going from 69% stocks to 67% stocks, it was a matter of not allowing my stocks to drift to maybe 75%. I have been doing this over a four plus year period. Is it written somewhere that I have to wait for a 5% change in assets before I rebalance? Do I have to provide reams of evidence every time I make an investment move? Is it a sin to make moves in small increments?

Pretty much, I am doing what Target Date Retirement funds do. They don't have 5% rebalance bands, they have gradual glide paths.

If anything, I have been in my eyes, stock heavy. Vanguard, T Rowe Price, and Fidelity last I looked had 65% to 66% in stocks for their 2025 funds. I keep an eye on what they are doing to see if I am in the ballpark of what the experts are recommending.

Also, should I wait for a really bad day in the stock market to rebalance from stocks to bonds? It just seems to make sense to rebalance on an up day and when the stock market is at all time highs. So I don't know.
I also do incremental rebalancing, on the order of 1% of total portfolio. It's easy to do, develops discipline, and you're not selling a significant percentage of winners at one time.

Contrary to the title of this thread, I don't attach extra significance to RBDs or RGDs. Ten days of 0.30% market increases (the last week or so) get one slightly ahead of a single day 3.0% increase.

And finally, I'm getting to the point in retirement where I seem to have survived the first five Sequence of Returns years in good shape.
I should be getting around $3500/month SS at age 70 in 29 months, at which point portfolio withdrawals for routine spending may be over.
I may stop rebalancing at that point and let my stock allocation drift upwards.
I'm still kicking this around...
What I am doing is telling people what I do personally. If you are managing your own portfolio, rebalance when you need to. I am not advocating that people not do anything until markets reach new highs on a really good day. The intent is not to lock people into rigid rules that hamper managing a portfolio.

Pretty much I look ahead and think of moves that I might make in my portfolio. Sometimes the move that I am thinking of is never made for various reasons. Might have to do with current asset allocation, valuations in the market, personal circumstance. Sometimes, a rare opportunity will come up and I will pounce. What I am trying to do is think ahead maybe one, three, or even five years.

I sold 15% of my stocks (all in mutual funds) before the 2000 crash. Did this for several reasons. First, I was an avid listener to Bob Brinker and he was getting very concerned about market valuations. Second, I was alarmed by what I was seeing in my own little circle of people. People who knew nothing about markets or investing becoming interested in day trading. It seemed like something was seriously wrong. Third, I was learning about portfolio theory and asset allocation. At age 40, I was at 94% stocks in my retirement portfolio. I thought that was too much and reduced to 80% stocks. I did not know a crash was coming. I had been thinking about this for some time, but the trigger was Brinker's sell recommendation. He sold 60% of his stocks, as I recall, I sold 15%. Even back then, I knew that market timing was a very iffy proposition. What I did know was that stocks were very expensive and interest rates were attractive. It just seemed like a good opportunity to go to a more conservative asset allocation.

As time went along, I had a fair amount of cash sloshing around in my portfolio. I remembered reading John Bogle and where he said that cash was for savings and bonds were for investment. That got me thinking. I also knew that bonds appreciated in a period of declining interest rates. The thought crossed my mind to commit a lot of that cash to bonds when the Fed made its first interest rate cut, which would reduce my yield on my money market account. I wanted my fixed income to be in a longer range investment than cash. I also knew that typically the Fed will do interest rate moves in a series. One and done is pretty rare. I figured the odds were pretty good that the Fed would cut rates more. I figured that I would get higher yield than from money markets plus price appreciation from falling interest rates. When the Fed cut rates by 0.25%, I made my move and committed most of my cash to bonds. It was something I was thinking about for some time but I saw that rate cut as an opportunity to make a shift in my portfolio.

I made a third shift about 2007-2008. I learned about small/value tilting from the nice folks at Merriman. I trimmed my individual stocks and further diversified my portfolio with Micro-Caps, Small Value, and International Mid-Small Cap. This move probably increased my downside a bit during the 2008-2009 bear market. From there, Micro-Caps and Small Value did fairly well but International Mid-Small Cap lagged for a long time, finally perking up just recently.

So what I am trying to illustrate is that I look ahead and don't make changes to my portfolio without a lot of thought beforehand. I also try to take advantage of market opportunities when available. Not market timing as such but looking for Value opportunities.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 1:31 pm

avalpert wrote:
Thu Oct 05, 2017 9:19 am
nedsaid wrote:
Wed Oct 04, 2017 9:57 pm

This is pretty much an argument over not much. I know you think this is all clever but it is annoying. Pretty much you are pumping yourself up and trying to put down somebody else. This really does not put you in a good light. It just looks petty.

"Trite phrases", "empty rhetoric", "tautologies". Petty, just petty.
I'm sorry you see it that way - it is not my intention at all to pump myself up or put others down. My only intention is to move people away from trite phrases that, for those who don't yet fully understand the intended meaning behind them, are easily used to nudge people to poor strategies.

I don't think these phrases add anything to the conversation and do think they detract from it.
I suppose that phrases mean different things to different people. When I talk about buying low and selling high, I am not talking about day trading. I am not even talking about using trading systems involving moving averages and "buy" signals. I am not advising people mechanically sell stocks on really good days, what I am saying is that a really good day might be a good rebalancing opportunity. What "buy low, sell high" is about is price appreciation over long periods of time and keeping an eye on value. Valuations are not a predictor of future price movements but give you a pretty good idea of future expected returns going forward. The whole point is that you want to make money on your investments and to tilt the odds in your favor as much as you can. It certainly is a very imperfect process but a lot better than nothing. In the very big picture, buying low and selling high is what we all want to do.

Again, this is a forum and I sometimes talk in a bit of shorthand. I am commenting on a forum and not writing a college textbook on investing. I write in (hopefully) a fun way so that people will actually read what I say. I also don't want my posts to run chapters and chapters.

The thing is, nearly all of us invest money as it becomes available to us. Pretty much, that is putting aside amounts on a systematic basis in a workplace savings plan with each paycheck. As a practical matter, you are buying in with each paycheck. If you have a long investment horizon, "buy low, sell high" doesn't seem practical as you are buying systematically whether the market seems cheap, fairly valued, or expensive. You figure that over a 40 plus year career that it will all come out in the wash.

But as your portfolio gets larger and larger and your remaining work career gets shorter and shorter, things like balancing return vs. risk and valuation gets to be more important. There might be times when you have opportunity to switch some of your investment in an expensive asset class into a cheaper asset class that has more opportunity. So in this context, "buy low, sell high" makes a little more sense.

Pretty much, I am talking about a high level philosophy and not buying something at $1.00 and selling it the next day for $1.05.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 2:25 pm

I noticed today looked like another really good day. Did more rebalancing today in another account. The total of yesterday and today's rebalancing is not quite 1% of the investment portfolio. Another wave of mild rebalancing. Sold US Stocks yesterday and today and bought Investment Grade Intermediate Term Bonds and into TIPS.

Hate to do this, but I have to if I don't want my stock allocation to keep creeping up. So yes, I am selling on really good days as rebalancing opportunities.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 2:34 pm

nedsaid wrote:
Thu Oct 05, 2017 2:25 pm
I noticed today looked like another really good day. Did more rebalancing today in another account.
Watch out because the "definition" police will be along shortly to jump on you. After all, there is no way today was a "really good day" number-wise. It has been an up day for sure, but really good?

Also, it is highly unlikely that if one had not exceeded their asset allocation to equities that they would also not have exceeded their asset allocation to equities the next day if the equity market went down. That is, it is practically by definition that one will rebalance out of equities on a good day if one is actually paying attention to such things, right?

Or to put it another way, if one didn't need to rebalance OUT of equities yesterday, then if today is a Really Bad Day one should not need to rebalance OUT of equities today either.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 4:56 pm

livesoft wrote:
Thu Oct 05, 2017 2:34 pm
nedsaid wrote:
Thu Oct 05, 2017 2:25 pm
I noticed today looked like another really good day. Did more rebalancing today in another account.
Watch out because the "definition" police will be along shortly to jump on you. After all, there is no way today was a "really good day" number-wise. It has been an up day for sure, but really good?

Nedsaid: Yes, I am getting tired of the "definition police" myself. I feel like my posts are being marked up with red pencils by frustrated English teachers, or maybe retired English teachers with little else to do. So okay, the S&P 500 was up 0.56% today. How do I rank that on a scale of 1 to 10? So maybe it was not a mediocre but not quite a really good day. Maybe a sort of a good day. I suppose with a 0.75% increase, I could take out "sort of" and call it a good day. If it was a 1.00% increase, I could call it a really good day. Over 1.5%, I could call it a really, really good day.

I mean, what the heck. The averages were all up today, so I rebalanced a second account. The averages were all up yesterday and I rebalanced an account then too. But I didn't met the threshold of a 1% slice of my portfolio between the two days, so according to "experts" I should not have rebalanced at all. So I guess, I sort of rebalanced over two sort of good days while sort of selling high after sort of buying low.


Also, it is highly unlikely that if one had not exceeded their asset allocation to equities that they would also not have exceeded their asset allocation to equities the next day if the equity market went down. That is, it is practically by definition that one will rebalance out of equities on a good day if one is actually paying attention to such things, right?

Nedsaid: It is like my old joke, either you rebalance your portfolio yourself or the market will do it for you. I choose to rebalance it myself.


Or to put it another way, if one didn't need to rebalance OUT of equities yesterday, then if today is a Really Bad Day one should not need to rebalance OUT of equities today either.

Nedsaid: Well, I don't "need" to do anything. I could have whooped it up all these years and not saved a dime for retirement and looked to live on the dole in retirement. But saved for retirement I did, and I am glad that I did. I am 58 years old, I didn't "need" to rebalance but did so anyway to incrementally reduce the risk in my portfolio as I get older. So I sort of needed to sort of rebalance my portfolio in increments over four plus years to sort of control my portfolio risks. I sort of thought that maybe a sort of good day in the stock market would be better day to sort of rebalance than a sort of bad day. I think maybe, kind of, you know, that I sort of made my point.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by Toons » Thu Oct 05, 2017 5:00 pm

nedsaid wrote:
Thu Oct 05, 2017 4:56 pm
livesoft wrote:
Thu Oct 05, 2017 2:34 pm
nedsaid wrote:
Thu Oct 05, 2017 2:25 pm
I noticed today looked like another really good day. Did more rebalancing today in another account.
Watch out because the "definition" police will be along shortly to jump on you. After all, there is no way today was a "really good day" number-wise. It has been an up day for sure, but really good?

Nedsaid: Yes, I am getting tired of the "definition police" myself. I feel like my posts are being marked up with red pencils by frustrated English teachers, or maybe retired English teachers with little else to do. So okay, the S&P 500 was up 0.56% today. How do I rank that on a scale of 1 to 10? So maybe it was not a mediocre but not quite a really good day. Maybe a sort of a good day. I suppose with a 0.75% increase, I could take out "sort of" and call it a good day. If it was a 1.00% increase, I could call it a really good day. Over 1.5%, I could call it a really, really good day.

I mean, what the heck. The averages were all up today, so I rebalanced a second account. The averages were all up yesterday and I rebalanced an account then too. But I didn't met the threshold of a 1% slice of my portfolio between the two days, so according to "experts" I should not have rebalanced at all. So I guess, I sort of rebalanced over two sort of good days while sort of selling high after sort of buying low.


Also, it is highly unlikely that if one had not exceeded their asset allocation to equities that they would also not have exceeded their asset allocation to equities the next day if the equity market went down. That is, it is practically by definition that one will rebalance out of equities on a good day if one is actually paying attention to such things, right?

Nedsaid: It is like my old joke, either you rebalance your portfolio yourself or the market will do it for you. I choose to rebalance it myself.


Or to put it another way, if one didn't need to rebalance OUT of equities yesterday, then if today is a Really Bad Day one should not need to rebalance OUT of equities today either.

Nedsaid: Well, I don't "need" to do anything. I could have whooped it up all these years and not saved a dime for retirement and looked to live on the dole in retirement. But saved for retirement I did, and I am glad that I did. I am 58 years old, I didn't "need" to rebalance but did so anyway to incrementally reduce the risk in my portfolio as I get older. So I sort of needed to sort of rebalance my portfolio in increments over four plus years to sort of control my portfolio risks. I sort of thought that maybe a sort of good day in the stock market would be better day to sort of rebalance than a sort of bad day. I think maybe, kind of, you know, that I sort of made my point.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 5:09 pm

I rebalanced my portfolio over the last two days. I practice excellent personal hygiene. I even ran the dishes in the dishwasher yesterday. And on Mother's Day, I called my mother. Better than that, on Father's Day, I called my father. So I want to crow about my personal virtue. For a guy who had a rather relaxed view of rebalancing back in 2012 and early 2013 got religion after being scolded by fellow Bogleheads, I am not doing too bad. I guess I got that rebalancing religion but not enough of it. Didn't rebalance enough and I should have picked gooder days to do it. :wink:
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 5:12 pm

I confess I sold something in an act of rebalancing and it went up another 1% the next day! Did I lose money?
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 5:23 pm

livesoft wrote:
Thu Oct 05, 2017 5:12 pm
I confess I sold something in an act of rebalancing and it went up another 1% the next day! Did I lose money?
Well, unfortunately that is the dreaded "Nedsaid effect." The thing you sell does better than what you bought to replace it. This is what I call a sacrifice to the trading Gods. You hit the nail right on the head why I do not enjoy rebalancing. Great point!

I am rebalancing for risk control and not to enhance returns. Unfortunately, I have an expiration date and thus no immortality. My human capital or future earnings potential is decreasing so I need to start protecting my investment capital. As I get older, I desire a less volatile portfolio. I haven't de-risked very much at all but at least I have not allowed my stock allocation to creep up.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by TheTimeLord » Thu Oct 05, 2017 9:43 pm

nedsaid wrote:
Thu Oct 05, 2017 5:09 pm
I rebalanced my portfolio over the last two days. I practice excellent personal hygiene. I even ran the dishes in the dishwasher yesterday. And on Mother's Day, I called my mother. Better than that, on Father's Day, I called my father. So I want to crow about my personal virtue. For a guy who had a rather relaxed view of rebalancing back in 2012 and early 2013 got religion after being scolded by fellow Bogleheads, I am not doing too bad. I guess I got that rebalancing religion but not enough of it. Didn't rebalance enough and I should have picked gooder days to do it. :wink:
I am finding it ironic that i haven't sold anything this week. Intended to sell some Fidelity Select Software & IT Svcs Port (FSCSX) (an insignificant guilty pleasure holding I picked up this year) today but never got around entering the order. It ended up 1.30%.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 9:50 pm

Before the end of the year, I will start a thread titled
"Sell on Really Bad Days, Buy on Really Good Days?"
This could happen for folks who rebalance based on a calendar date. Or maybe one noticed over the weekend that they hit a trigger for too much equities, so they submit an order Sunday night to sell equities, but then on Monday the market goes down 5%.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by triceratop » Thu Oct 05, 2017 9:55 pm

^^This also breaks the popular narrative that the once per day pricing of mutual funds is an advantage over ETFs, which I'm all for, so sounds good.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by evancox10 » Thu Oct 05, 2017 10:14 pm

nedsaid wrote:
Wed Oct 04, 2017 6:52 pm
avalpert wrote:
Wed Oct 04, 2017 12:17 pm
nedsaid wrote:
Wed Oct 04, 2017 11:57 am
The Wizard wrote:
Tue Oct 03, 2017 2:16 pm
staythecourse wrote:
Tue Oct 03, 2017 11:14 am
I am not sure why it seems to be SO HARD for folks to understand... YOU CAN NOT TIME THE MARKET!!...
Buy low, sell high.
That's all there is to it...
This made me laugh. I always thought buy low, sell high was pretty fundamental to success as an investor. It is amazing all the remarks how this is somehow market timing. I don't know, buy high and sell low? Is that supposed to work better. I like my buy low, sell high formula better.
'Buy low, sell high' is a trite throwaway line. Of course everyone wants to pay the least and sell for the most - the problem is it is only known in retrospect whether that is indeed what happens and you shouldn't conflate 'higher today than yesterday' with selling high.

Whether or not the market inherently 'cannot' be time, every attempt I have seen to specify 'buying on Really Bad Days' enough to actually test it has shown it isn't a means of more consistently buying high and selling low than vanilla rebalancing methods.
I don't know, you can say about anything is a trite throwaway line. "Stay the course." "Don't do something, just stand there." "Age in bonds." There are a lot of rules of thumb in investing that are rules of thumb because they are mostly true and/or true most of the time. These are also rhetorical shortcuts to facilitate discussion. I could use a "trite phrase" to help describe something in a few short sentences rather than many paragraphs with extensive footnotes. We aren't writing textbooks here. Buy low, sell high is a pretty fundamental concept or at least I thought so. It implies looking for value, patience, and longer holding periods.

So my advice for you is to buy high and sell low and see if that works better. No one advises that strategy though many investors do this in practice when they let emotions rather than reason drive their investments. One could say that Bogleheadism is a collection of trite phrases. You just can't make everyone happy.
The difference is that the other phrases you mention are actionable*, whereas "Buy low, sell high" is not, since it can really only be determined in hindsight. Aside from a general belief that the stock market will go up over time, and thus buying earlier is better.

*Or anti-actionable for one of them

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by evancox10 » Thu Oct 05, 2017 10:18 pm

livesoft wrote:
Thu Oct 05, 2017 2:34 pm
nedsaid wrote:
Thu Oct 05, 2017 2:25 pm
I noticed today looked like another really good day. Did more rebalancing today in another account.
Watch out because the "definition" police will be along shortly to jump on you. After all, there is no way today was a "really good day" number-wise. It has been an up day for sure, but really good?

Also, it is highly unlikely that if one had not exceeded their asset allocation to equities that they would also not have exceeded their asset allocation to equities the next day if the equity market went down. That is, it is practically by definition that one will rebalance out of equities on a good day if one is actually paying attention to such things, right?

Or to put it another way, if one didn't need to rebalance OUT of equities yesterday, then if today is a Really Bad Day one should not need to rebalance OUT of equities today either.
Or your rebalancing strategy could just be to check your portfolio balances once a year, or or once every X months. No need to check markets every day for single percentage moves, what a pain in the rear...

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by livesoft » Thu Oct 05, 2017 10:21 pm

evancox10 wrote:
Thu Oct 05, 2017 10:18 pm
Or your rebalancing strategy could just be to check your portfolio balances once a year, or or once every X months. No need to check markets every day for single percentage moves, what a pain in the rear...
I don't have to check because I get an alert on my smart phone for things like that. Since I'm not checking, I have more time to do other things such as post on bogleheads.org.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by evancox10 » Thu Oct 05, 2017 10:33 pm

livesoft wrote:
Thu Oct 05, 2017 10:21 pm
evancox10 wrote:
Thu Oct 05, 2017 10:18 pm
Or your rebalancing strategy could just be to check your portfolio balances once a year, or or once every X months. No need to check markets every day for single percentage moves, what a pain in the rear...
I don't have to check because I get an alert on my smart phone for things like that. Since I'm not checking, I have more time to do other things such as post on bogleheads.org.
My "smart" phone already buzzes at me too much... I would still consider taking the time to look at the email "checking", but that's just me. I understand people would assign more or less costs to this activity.

Edit: of course, then you wouldn't be checking every day, so there is that.

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 11:00 pm

TheTimeLord wrote:
Thu Oct 05, 2017 9:43 pm
nedsaid wrote:
Thu Oct 05, 2017 5:09 pm
I rebalanced my portfolio over the last two days. I practice excellent personal hygiene. I even ran the dishes in the dishwasher yesterday. And on Mother's Day, I called my mother. Better than that, on Father's Day, I called my father. So I want to crow about my personal virtue. For a guy who had a rather relaxed view of rebalancing back in 2012 and early 2013 got religion after being scolded by fellow Bogleheads, I am not doing too bad. I guess I got that rebalancing religion but not enough of it. Didn't rebalance enough and I should have picked gooder days to do it. :wink:
I am finding it ironic that i haven't sold anything this week. Intended to sell some Fidelity Select Software & IT Svcs Port (FSCSX) (an insignificant guilty pleasure holding I picked up this year) today but never got around entering the order. It ended up 1.30%.
Well darn it, we will have to keep shaming until you rebalance. :wink: :wink:

You do bring up a good point, I suppose we could call it rebalancing regret or rebalancers' remorse. You rebalance your portfolio from stocks to bonds only to see the stock market zoom some more. One gives up some gains for (hopefully) de-risking the portfolio a bit.

All I know is the regret that I felt when things crashed in 2008-2009 that I had missed rebalancing opportunities. I let my stock allocation drift up to 72% and I was feeling pretty frisky and confident. That feeling was replaced with a pit in my stomach during the bear market. It wasn't fun. Pretty much, after the markets fully recovered, I promised myself that I wouldn't let my stock allocation run up again.
A fool and his money are good for business.

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nedsaid
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Thu Oct 05, 2017 11:10 pm

evancox10 wrote:
Thu Oct 05, 2017 10:14 pm
nedsaid wrote:
Wed Oct 04, 2017 6:52 pm
I don't know, you can say about anything is a trite throwaway line. "Stay the course." "Don't do something, just stand there." "Age in bonds." There are a lot of rules of thumb in investing that are rules of thumb because they are mostly true and/or true most of the time. These are also rhetorical shortcuts to facilitate discussion. I could use a "trite phrase" to help describe something in a few short sentences rather than many paragraphs with extensive footnotes. We aren't writing textbooks here. Buy low, sell high is a pretty fundamental concept or at least I thought so. It implies looking for value, patience, and longer holding periods.

So my advice for you is to buy high and sell low and see if that works better. No one advises that strategy though many investors do this in practice when they let emotions rather than reason drive their investments. One could say that Bogleheadism is a collection of trite phrases. You just can't make everyone happy.
The difference is that the other phrases you mention are actionable*, whereas "Buy low, sell high" is not, since it can really only be determined in hindsight. Aside from a general belief that the stock market will go up over time, and thus buying earlier is better.

*Or anti-actionable for one of them
Oh man, another retired English teacher taking a red pencil to my posts. :wink: Now I am being told what is actionable or not. I get your point but I have explained all of my thoughts on this in excruciating detail. The thing is, many investors do the opposite and buy high and sell low, buying right when market enthusiasm is near its peak and selling in disgust near the bottom. Then they wonder why investing never works out for them and they complain that the stock market is gambling and that the game is rigged against them. I just don't get why "buy low, sell high" gets people so riled up.
A fool and his money are good for business.

moneywise3
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by moneywise3 » Fri Oct 06, 2017 12:10 am

Go back to the basics: you can't time the market. Plus that much trading generates taxable events. Time and anxiety???

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by The Wizard » Fri Oct 06, 2017 2:49 am

moneywise3 wrote:
Fri Oct 06, 2017 12:10 am
Go back to the basics: you can't time the market. Plus that much trading generates taxable events. Time and anxiety???
No taxable events in my Roth and 403(b) accounts.
And while I do spend time monitoring my finances, I can't say there's any anxiety connected with it.
Others may vary...
Attempted new signature...

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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by blaugranamd » Fri Oct 06, 2017 5:39 am

livesoft wrote:
Tue Oct 03, 2017 10:41 am
BW1985 wrote:
Tue Oct 03, 2017 10:39 am
I thought BH's don't market time? :confused
Diehards don't market time. But Livesofts do.
I just realized that connection for your handle. But to the question at hand: too much work.
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by TheTimeLord » Fri Oct 06, 2017 7:30 am

nedsaid wrote:
Thu Oct 05, 2017 11:00 pm
TheTimeLord wrote:
Thu Oct 05, 2017 9:43 pm
nedsaid wrote:
Thu Oct 05, 2017 5:09 pm
I rebalanced my portfolio over the last two days. I practice excellent personal hygiene. I even ran the dishes in the dishwasher yesterday. And on Mother's Day, I called my mother. Better than that, on Father's Day, I called my father. So I want to crow about my personal virtue. For a guy who had a rather relaxed view of rebalancing back in 2012 and early 2013 got religion after being scolded by fellow Bogleheads, I am not doing too bad. I guess I got that rebalancing religion but not enough of it. Didn't rebalance enough and I should have picked gooder days to do it. :wink:
I am finding it ironic that i haven't sold anything this week. Intended to sell some Fidelity Select Software & IT Svcs Port (FSCSX) (an insignificant guilty pleasure holding I picked up this year) today but never got around entering the order. It ended up 1.30%.
Well darn it, we will have to keep shaming until you rebalance. :wink: :wink:

You do bring up a good point, I suppose we could call it rebalancing regret or rebalancers' remorse. You rebalance your portfolio from stocks to bonds only to see the stock market zoom some more. One gives up some gains for (hopefully) de-risking the portfolio a bit.

All I know is the regret that I felt when things crashed in 2008-2009 that I had missed rebalancing opportunities. I let my stock allocation drift up to 72% and I was feeling pretty frisky and confident. That feeling was replaced with a pit in my stomach during the bear market. It wasn't fun. Pretty much, after the markets fully recovered, I promised myself that I wouldn't let my stock allocation run up again.
Maybe its my age or where I am financially, but over the last 5ish years risk management and sleeping well at night have taken on a greater importance than potential gains. I put my sell order in this morning with Fidelity so I don't lose track of time again. Luckily Fidelity let's you cancel mutual fund buy/sell orders if you desire so I don't mind putting them in and letting the day unfold.
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nedsaid
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Re: Buy on Really Bad Days, Sell on Really Good Days?

Post by nedsaid » Fri Oct 06, 2017 12:05 pm

TheTimeLord wrote:
Fri Oct 06, 2017 7:30 am
nedsaid wrote:
Thu Oct 05, 2017 11:00 pm
TheTimeLord wrote:
Thu Oct 05, 2017 9:43 pm
nedsaid wrote:
Thu Oct 05, 2017 5:09 pm
I rebalanced my portfolio over the last two days. I practice excellent personal hygiene. I even ran the dishes in the dishwasher yesterday. And on Mother's Day, I called my mother. Better than that, on Father's Day, I called my father. So I want to crow about my personal virtue. For a guy who had a rather relaxed view of rebalancing back in 2012 and early 2013 got religion after being scolded by fellow Bogleheads, I am not doing too bad. I guess I got that rebalancing religion but not enough of it. Didn't rebalance enough and I should have picked gooder days to do it. :wink:
I am finding it ironic that i haven't sold anything this week. Intended to sell some Fidelity Select Software & IT Svcs Port (FSCSX) (an insignificant guilty pleasure holding I picked up this year) today but never got around entering the order. It ended up 1.30%.
Well darn it, we will have to keep shaming until you rebalance. :wink: :wink:

You do bring up a good point, I suppose we could call it rebalancing regret or rebalancers' remorse. You rebalance your portfolio from stocks to bonds only to see the stock market zoom some more. One gives up some gains for (hopefully) de-risking the portfolio a bit.

All I know is the regret that I felt when things crashed in 2008-2009 that I had missed rebalancing opportunities. I let my stock allocation drift up to 72% and I was feeling pretty frisky and confident. That feeling was replaced with a pit in my stomach during the bear market. It wasn't fun. Pretty much, after the markets fully recovered, I promised myself that I wouldn't let my stock allocation run up again.
Maybe its my age or where I am financially, but over the last 5ish years risk management and sleeping well at night have taken on a greater importance than potential gains. I put my sell order in this morning with Fidelity so I don't lose track of time again. Luckily Fidelity let's you cancel mutual fund buy/sell orders if you desire so I don't mind putting them in and letting the day unfold.
I have read your many posts, you pretty much have achieved critical mass and I remember a whole thread where you were wavering between continuing to work and retiring. That is a difficult decision as is asset allocation and rebalancing in retirement or near retirement.

I was teasing you a bit, you don't have to rebalance on my recommendation. You have to take into consideration your own personal situation. Part of what I was talking about was all the comments that I got when I expressed a rather relaxed attitude towards rebalancing. But then again, I have a relaxed attitude towards a lot of things.
A fool and his money are good for business.

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