Market timers thread

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flaccidsteele
Posts: 1021
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Market timers thread

Post by flaccidsteele »

goblue100 wrote: Mon Dec 30, 2019 7:26 am
revhappy wrote: Sun Mar 24, 2019 2:43 am
HomerJ wrote: Sat Mar 23, 2019 11:31 pm It's good that you have a plan.

What happens if the market keeps going up? Do you have a plan for that? What if the market goes up 50% from here? I assume your plan is stay in cash because then the market will be even MORE "over-valued", right?

But if Dec 2018 lows are never retested, does that mean you'll never get back in the market?

Or will you reset your entry point? Say, if the market goes up 100%, and then drops 40%, will you get back in thinking this is the best I can do, even though you'll be buying in higher than today? Or will you wait even then, since you'll be expecting the market drop even farther to test the Dec 2018 lows?

Serious question. This has to be a considered part of your plan.
In my career of past 15 odd years, I have remained invested very little and it has been adhoc and most of my networth is out of savings rather than investment returns. So I guess, I will continue to stay in fixed income until there is fear and turmoil on the streets.
Bolding is mine. This alone should be enough to tell you that market timing doesn't work. For every $100,000 in cash vs. stocks since march, you've missed out on $12,000 in gains.

Starting 15 years ago with $10,000 and investing $500 a month in a 70/30 portfolio would result in a $268,000 portfolio today. So a $100,000 investment would be worth 2.5 times as much the amount out of pocket, not most of my networth is out of savings rather than investment returns. Buy and hold stay the course works, no matter how hard people want it to fail.
Link to 15 year portfolio results:
https://www.portfoliovisualizer.com/bac ... tion3_1=30
I’m a market timer

It works well. I invest regularly in a US index and buy more during inevitable downturns. It’s a simple way to boost my returns because the US market always recovers. Always. It’s never different this time

Here are my long-held retirement accounts. The only thing in them is the US index

Image

Image

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I’ve beaten the US index not once, not twice, but three times, just by buying... the US index 😆 🔥

NB: the black images represent 2 retirement accounts that are ~10 years old and the white/yellow represent a retirement account that is ~15 years old

NB2: it’s not rocket science. It’s right there in the quote “be greedy when others are fearful”! 👈
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
B. Wellington
Posts: 239
Joined: Fri Mar 30, 2012 10:10 am

Re: Market timers thread

Post by B. Wellington »

HomerJ wrote: Mon Dec 30, 2019 1:23 pm
watchnerd wrote: Mon Dec 30, 2019 1:20 pm
HomerJ wrote: Mon Dec 30, 2019 1:07 pm
willthrill81 wrote: Mon Dec 30, 2019 1:00 pmBut in reality, I couldn't care less whether we label something as market timing or not. The phrase has become akin to a swear word around here, despite the forum's namesake unquestionably having done it himself in a big way at least once.
He technically didn't really market-time because he never switched back.

He just made a big one-time adjustment to his AA, because he realized his need to take risk had changed.

Yes, he looked at the current market conditions, and said "Jeeze, bonds are returning a lot, and stock prices are really getting high..."

But he also had a health scare, and, at his age, and looking at his portfolio, he realized he had no need to have so much in stocks, so he changed his Asset Allocation.

And he never switched back like a true market-timer would.

He never went back to a high stock allocation later thinking "Now is a better time to bet heavy on stocks".
So in that sense, if I pull my glide path forward based on returns, I'll be doing what Jack did (i.e. permanently adjusting AA based on risk needs).

If I shift from 70/30 to 60/40 earlier than expected if 2020 does better than expected, I won't be switching back to more stocks later in life.
Yes, this is what I just recently did.... I was 50/50, but the stock market has done so well, I'm well ahead of the game, and switched to 45/55.

Earlier than I planned. But because of what has happened in the past (this last year)... not because of what I expect will happen going forward.

And I don't ever plan to increase my allocation again.... Once I fully retire, I'll be 40/60.
I'm right with you Homer, the past ~30 years have been a great run. Did I market time? A couple of times, sure. But ONLY on the margins. It was more like taking advantage of the "dips" than anything else. Bought and held our core portfolio for years.

FWIW, a balanced portfolio (like VWELX) CAGR = 16.5 in that time frame. S&P 500? 16.94
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