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Market timers thread

Posted: Sat Mar 23, 2019 10:35 pm
by revhappy
Creating this thread specifically for people who are trying to time the markets and are in significant cash levels and underweight on equities. We have many similar threads on this forum but we get crowded out by 'stay the course' passive voice.

So question: What is your plan? When do you plan to get back into equities?

I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.

Re: Market timers thread

Posted: Sat Mar 23, 2019 10:37 pm
by Thesaints
You don't accept market timers who think stocks are gonna go much higher ?

Re: Market timers thread

Posted: Sat Mar 23, 2019 10:45 pm
by Chris42163
40% cash or treasuries at the moment. I don't expect lows to be retested, nor any other particular outcome regarding stock price. I do however, expect valuations, as defined by the Schiller P/E and Buffet Indicator, to return to more reasonable levels within the next several years.

Re: Market timers thread

Posted: Sat Mar 23, 2019 10:46 pm
by revhappy
Thesaints wrote: Sat Mar 23, 2019 10:37 pm You don't accept market timers who think stocks are gonna go much higher ?
If you think stocks are going much higher, then you are fully invested or overweight, so you are no different than the buy and hold crowd in the current circumstances.

Re: Market timers thread

Posted: Sat Mar 23, 2019 10:52 pm
by ronno2018
If you want to time the market what the heck are you doing on this forum? :oops:

Re: Market timers thread

Posted: Sat Mar 23, 2019 10:59 pm
by jminv
TLT (treasuries)->wait awhile->market crashes->sell TLT and buy equities when everyone is panicking. Would be nice if there’s nonstop talk of a second Great Depression or the end of finance as we know it.

Or you could just stick to an ips which is generally lots better for long run returns than trying to market time. Market can still go up, crash can be very far in the future, and you’ll have been out of the market for sometime. Then it can be hard behaviorally to get back in. So, the boglehead way.

Re: Market timers thread

Posted: Sat Mar 23, 2019 11:03 pm
by revhappy
ronno2018 wrote: Sat Mar 23, 2019 10:52 pm If you want to time the market what the heck are you doing on this forum? :oops:
I have seen people on this forum on various threads that have mentioned that they are timing the market. So there are people here who are doing it. I am just bringing them all together in one thread. In my view, I like the passive instruments, i.e. the ETFs and I dont like individual stocks trading or going short on the market etc. That is way too complicated. So I like the Boglehead 3 fund portfolio, just dont agree with sitting on your hands and doing nothing.

Re: Market timers thread

Posted: Sat Mar 23, 2019 11:22 pm
by Stinky
revhappy wrote: Sat Mar 23, 2019 10:35 pm
I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
If you believe that SPY is going below 200 within the next three years, why would you get back into equities once SPY goes below 250?

Why not hold cash/MM and earn some interest until SPY hits 200, and then go all in on equities?

Re: Market timers thread

Posted: Sat Mar 23, 2019 11:29 pm
by HomerJ
Chris42163 wrote: Sat Mar 23, 2019 10:45 pm 40% cash or treasuries at the moment. I don't expect lows to be retested, nor any other particular outcome regarding stock price. I do however, expect valuations, as defined by the Schiller P/E and Buffet Indicator, to return to more reasonable levels within the next several years.
Why do you think they will return to "reasonable" levels within the next several years?

Shiller PE (CAPE) has been high for nearly 27 years. It did briefly return to "reasonable" levels in 2009, but the rest of the time it's been high.

What do you think is different about the next several years compared to the past 27 years?

Re: Market timers thread

Posted: Sat Mar 23, 2019 11:31 pm
by HomerJ
revhappy wrote: Sat Mar 23, 2019 10:35 pm Creating this thread specifically for people who are trying to time the markets and are in significant cash levels and underweight on equities. We have many similar threads on this forum but we get crowded out by 'stay the course' passive voice.

So question: What is your plan? When do you plan to get back into equities?

I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
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.

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:02 am
by Day9
ronno2018 wrote: Sat Mar 23, 2019 10:52 pm If you want to time the market what the heck are you doing on this forum? :oops:
I agree. Boglehead core principal #5: Never try to time the market

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:09 am
by DonIce
ronno2018 wrote: Sat Mar 23, 2019 10:52 pm If you want to time the market what the heck are you doing on this forum? :oops:
The best way to improve your understanding is to discuss your ideas with smart people who disagree with you.

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:14 am
by PurpleArc
I am not trying to time the market per say. But I have been putting quite a bit of my savings into stocks and ETF and in a way it goes against dollar cost averaging. What I am doing is to put my savings into 6 and 12 months banks fixed deposits, and once they mature I will put it into equity market - my way of DCA. :)

I am not 35% equities 65% cash. Yes I know I am underweight in equities, but I basically pluck down my biggest ever earnings (that 35%) into equities in the past few months.

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:23 am
by typical.investor
revhappy wrote: Sat Mar 23, 2019 10:35 pm
So question: What is your plan? When do you plan to get back into equities?
Not getting out, but am thinking about Strategic Rebalancing if markets fall a great degree. Or perhaps, more likely, using such a strategy in retirement when sequence of return risk is a threat.
ABSTRACT
A mechanical rebalancing strategy, such as a monthly or quarterly reallocation towards fixed portfolio weights, is an active strategy. Winning asset classes are sold and losers are bought. During crises, when markets are often trending, this can lead to substantially larger drawdowns than a buy-and-hold strategy. Our paper shows that the negative convexity induced by rebalancing can be substantially mitigated, taking the popular 60-40 stock-bond portfolio as our use case. One alternative is an allocation to a trend-following strategy. The positive convexity of this overlay tends to counter the impact on drawdowns of the mechanical rebalancing strategy. The second alternative we call strategic rebalancing, which uses smart rebalancing timing based on trend-following signals –without a direct allocation to a trend-following strategy. For example, if the trend-following model suggests that stock markets are in a negative trend, rebalancing is delayed.
Strategic Rebalancing
NICOLAS GRANGER, CAMPBELL R. HARVEY, SANDY RATTRAY, and OTTO VAN HEMERT1

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:29 am
by DonIce
revhappy wrote: Sat Mar 23, 2019 10:35 pm I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
Did you get back in in December when SPY went as low as 233?

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:34 am
by SoonerD
DonIce wrote: Sun Mar 24, 2019 12:09 am
The best way to improve your understanding is to discuss your ideas with smart people who disagree with you.
Seems reasonable but I don’t think that improvement happens when OP creates “...
this thread specifically for people who are trying to time the markets”

Dissenting views are forbidden by the OP.

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:40 am
by mbasherp
Are you taking any advantage of the current valuations internationally?

Why not even hold bonds instead of cash? Cash is a proven loser. It is for transactions only.

I am almost totally invested in equities because they will most likely offer superior returns over my time horizon. Whether CAPE is 31 or 13, I don’t expect cash or bonds to beat stocks over the next 30-50 years.

Re: Market timers thread

Posted: Sun Mar 24, 2019 1:12 am
by MotoTrojan
Chris42163 wrote: Sat Mar 23, 2019 10:45 pm 40% cash or treasuries at the moment. I don't expect lows to be retested, nor any other particular outcome regarding stock price. I do however, expect valuations, as defined by the Schiller P/E and Buffet Indicator, to return to more reasonable levels within the next several years.
You are aware that P/E can go down without prices going down, ya?

Re: Market timers thread

Posted: Sun Mar 24, 2019 2:26 am
by alex123711
I have been looking into this also and I believe the PE10 ratio is important - the average of the past 10 years earnings of the market divided by current price. Historically the average has been around 15, and over 15 leads to below average returns over the next 10 years, over 25 is negative returns. The market is currently at 30 I belive.

Some good charts/info here:

http://www.early-retirement-planning-in ... eturn.html

http://www.early-retirement-planning-in ... ictor.html

http://www.early-retirement-planning-in ... heory.html

http://www.early-retirement-planning-in ... 6-VII.html

Re: Market timers thread

Posted: Sun Mar 24, 2019 2:42 am
by alpine_boglehead
revhappy wrote: Sat Mar 23, 2019 10:35 pm but we get crowded out by 'stay the course' passive voice.
What did you expect posting in a forum with Jack "stay the course" Bogle as a namesake? :D

Re: Market timers thread

Posted: Sun Mar 24, 2019 2:43 am
by revhappy
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.

Re: Market timers thread

Posted: Sun Mar 24, 2019 2:45 am
by revhappy
alpine_boglehead wrote: Sun Mar 24, 2019 2:42 am
revhappy wrote: Sat Mar 23, 2019 10:35 pm but we get crowded out by 'stay the course' passive voice.
What did you expect posting in a forum with Jack "stay the course" Bogle as a namesake? :D
Jack Bogle himself gave a hint recently that returns in the next 10 years will be disappointing, if you invest at current valuations. That doesnt mean there wont be volatility. If you wait for the right levels, then from there, the returns could be decent. That is my interpretation.

Re: Market timers thread

Posted: Sun Mar 24, 2019 2:48 am
by revhappy
DonIce wrote: Sun Mar 24, 2019 12:29 am
revhappy wrote: Sat Mar 23, 2019 10:35 pm I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
Did you get back in in December when SPY went as low as 233?
I loaded up on equities heavily(50%) in late 2018 and until middle of 2018 after being underweight(<20%) for a long time. So going into the Dec crash, I was at my historically highest allocation and it scared the shit out of me to invest anymore. Then the Fed doing the complete U turn and markets getting back to their highs, sort of told me, this is opportunity to get out, before it falls even more.

Re: Market timers thread

Posted: Sun Mar 24, 2019 2:52 am
by revhappy
Stinky wrote: Sat Mar 23, 2019 11:22 pm
revhappy wrote: Sat Mar 23, 2019 10:35 pm
I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
If you believe that SPY is going below 200 within the next three years, why would you get back into equities once SPY goes below 250?

Why not hold cash/MM and earn some interest until SPY hits 200, and then go all in on equities?
I am okay with not getting the exact bottom. Nobody knows where the exact bottom is. But SPY 250 is relative better than SPY 275. So 220 to 250 is the zone, I plan to do my buying.

Re: Market timers thread

Posted: Sun Mar 24, 2019 3:08 am
by DonIce
revhappy wrote: Sun Mar 24, 2019 2:52 am I am okay with not getting the exact bottom. Nobody knows where the exact bottom is. But SPY 250 is relative better than SPY 275. So 220 to 250 is the zone, I plan to do my buying.
So going into the Dec crash, I was at my historically highest allocation and it scared the shit out of me to invest anymore.
Ok but if you got spooked last time that the market went down 20% (December) than why do you expect that next time it goes down 20% you'll be any less spooked? What if it turns out that you're right and it drops to, lets say, 210 this summer, and you execute and buy in, but then it keeps going down? How scared will you be if you go all in at 210 and then SPY drops to 180? 150? Will you sell out at 180, locking in a 15% loss, and then be too scared to ever get back in? Lots of people got out in 2008-2009 and never got back in.

Easier to invest without being scared. If your equity allocations are giving you an emotional rollercoaster you're doing it wrong. Especially since December 2018 was literally a tiny blip in one of the smoothest and longest bull markets in history. I suspect most people on this site were entirely un-phased by it. Personally I used it as an opportunity to buy a little extra. When you are comfortable with your positions and aren't scared it's a lot easier to pounce on opportunities.

Re: Market timers thread

Posted: Sun Mar 24, 2019 3:24 am
by revhappy
I read this pretty detailed analysis from Nordea bank:

https://e-markets.nordea.com/#!/arti...hope-and-glory

https://e-markets.nordea.com/#!/article ... w-bet-hard

It is a bank, so it is not some small time permabear trying to sell doom. Most banks are always bullish as they make money from Investors going long in the markets.

But look at these guys, they seem to have done some unbiased research.

Re: Market timers thread

Posted: Sun Mar 24, 2019 3:44 am
by Chris42163
HomerJ wrote: Sat Mar 23, 2019 11:29 pm
Chris42163 wrote: Sat Mar 23, 2019 10:45 pm 40% cash or treasuries at the moment. I don't expect lows to be retested, nor any other particular outcome regarding stock price. I do however, expect valuations, as defined by the Schiller P/E and Buffet Indicator, to return to more reasonable levels within the next several years.
Why do you think they will return to "reasonable" levels within the next several years?

Shiller PE (CAPE) has been high for nearly 27 years. It did briefly return to "reasonable" levels in 2009, but the rest of the time it's been high.

What do you think is different about the next several years compared to the past 27 years?
I think 30+ is extreme and the low 20s is reasonable enough to run for a long, long time. 25 and lower is very high, but seems reasonable enough to stay invested. If you got out at 25, you missed a big part of this bull.

Re: Market timers thread

Posted: Sun Mar 24, 2019 3:46 am
by Chris42163
MotoTrojan wrote: Sun Mar 24, 2019 1:12 am
Chris42163 wrote: Sat Mar 23, 2019 10:45 pm 40% cash or treasuries at the moment. I don't expect lows to be retested, nor any other particular outcome regarding stock price. I do however, expect valuations, as defined by the Schiller P/E and Buffet Indicator, to return to more reasonable levels within the next several years.
You are aware that P/E can go down without prices going down, ya?
Ya

Re: Market timers thread

Posted: Sun Mar 24, 2019 3:50 am
by Chris42163
mbasherp wrote: Sun Mar 24, 2019 12:40 am Are you taking any advantage of the current valuations internationally?

Why not even hold bonds instead of cash? Cash is a proven loser. It is for transactions only.

I am almost totally invested in equities because they will most likely offer superior returns over my time horizon. Whether CAPE is 31 or 13, I don’t expect cash or bonds to beat stocks over the next 30-50 years.
Not sure who you're addressing, but yes. I intend to allocate non-stock portions to bonds. That said, with VMMXX returning ~2.5%, I don't feel like I'm missing out on a ton here.

Re: Market timers thread

Posted: Sun Mar 24, 2019 5:29 am
by JustinR
revhappy wrote: Sun Mar 24, 2019 2:48 am
DonIce wrote: Sun Mar 24, 2019 12:29 am
revhappy wrote: Sat Mar 23, 2019 10:35 pm I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
Did you get back in in December when SPY went as low as 233?
I loaded up on equities heavily(50%) in late 2018 and until middle of 2018 after being underweight(<20%) for a long time. So going into the Dec crash, I was at my historically highest allocation and it scared the shit out of me to invest anymore. Then the Fed doing the complete U turn and markets getting back to their highs, sort of told me, this is opportunity to get out, before it falls even more.
I don't think investing is for you... tbh.

Everything you've posted makes me think this is going to end poorly for you. Maybe just commit to staying in cash forever.

Re: Market timers thread

Posted: Sun Mar 24, 2019 5:57 am
by livesoft
revhappy wrote: Sat Mar 23, 2019 10:35 pm Creating this thread specifically for people who are trying to time the markets and are in significant cash levels and underweight on equities.
I can write that I am a market timer, but I am not in significant cash levels (I have zero cash) and I am not underweight in equities either. There are many other kinds of market timing than what the OP seems to be doing.

Re: Market timers thread

Posted: Sun Mar 24, 2019 6:06 am
by Tycoon
SoonerD wrote: Sun Mar 24, 2019 12:34 am
DonIce wrote: Sun Mar 24, 2019 12:09 am
The best way to improve your understanding is to discuss your ideas with smart people who disagree with you.
Seems reasonable but I don’t think that improvement happens when OP creates “...
this thread specifically for people who are trying to time the markets”

Dissenting views are forbidden by the OP.
"...but we get crowded out by 'stay the course' passive voice." OP's mind is made up. There will be no disagreement allowed.

Have fun!

Re: Market timers thread

Posted: Sun Mar 24, 2019 8:57 am
by Svensk Anga
revhappy wrote: Sun Mar 24, 2019 2:43 am
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.
So your investing experience extends back through the 2008/2009 crash. Did you load up on equities then, when we had the sale of a lifetime? My guess is not. Even experienced investors and some advisors were afraid to buy or even bailing out at the lows. That's the problem with planning to buy in at the low: economic prospects look terrible at the time. Every financial porn site is running stories about how much worse it is going to get. There is no optimism evident anywhere. Well, Warren Buffett was probably jumping with joy at the prospects for deploying his cash horde, but he is an outlier. So the low slips by while you are waiting for a lower low. The media will be saying the current rally off the bottom is just a dead cat bounce, more losses lie ahead. Beware the double-dip recession which is surely coming.

If you are hesitant to buy in at valuations that prevail 90% of the time, you will never screw up the courage to buy in when stocks are truly cheap.

Re: Market timers thread

Posted: Sun Mar 24, 2019 9:01 am
by Dottie57
ronno2018 wrote: Sat Mar 23, 2019 10:52 pm If you want to time the market what the heck are you doing on this forum? :oops:
Bingo!

Re: Market timers thread

Posted: Sun Mar 24, 2019 9:28 am
by dogagility
revhappy wrote: Sun Mar 24, 2019 2:43 am 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.
Let's see. According to a calculator here (http://www.moneychimp.com/features/market_cagr.htm), the inflation-adjusted, annualized total return of the sp500 over the last 15 years was about 6.7%. $1 grew into about $2.80 (inflation-adjusted, total return).

By all means, have a discussion about market timing. However, I would hope that this thread will convince you of the folly of your past (and future) market timing strategy.

"STAY THE COURSE"

Posted: Sun Mar 24, 2019 9:35 am
by Taylor Larimore
revhappy wrote: Sat Mar 23, 2019 10:35 pm Creating this thread specifically for people who are trying to time the markets and are in significant cash levels and underweight on equities. We have many similar threads on this forum but we get crowded out by 'stay the course' passive voice.

So question: What is your plan? When do you plan to get back into equities?

I am expecting the Dec 2018 lows to retested as a minimum and SPY going below 200 within the next 3 years. I am in 90% cash and my plan is to start getting back into equities once SPY goes below 250.
revhappy:

I started investing in 1950 at the age of 26. The S&P stocks were about 20. Today they are 2,800 not counting dividends.

I wish I had simply purchased the S&P stocks--then stayed the course.
Stay the course. It is the most important single piece of investment wisdom I can give to you. -- Jack Bogle in Common Sense on Investing
If Jack Bogle cannot convince you (and others) to stay-the-course, read what experts say:
Frank Armstrong, advisor and author of The Informed Investor: "Endless tinkering is unlikely to improve performance, and chasing last period's stellar achiever is a losing strategy."

Barber Odean Study: "Of 66,465 households with accounts at a large discount broker during 1991 to 1996, those that trade most earn an annual return of 11.4 percent, while the market returns 17.9 percent. Our central message is that trading is hazardous to your health."

William Bernstein, author of Four Pillars of Investing: If you become upset when one of your asset classes does poorly, even when the rest of your portfolio is doing well, then you should not be managing your own money."

Jack Bogle: "Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."

Bogleheads Guide to Investing: "Wall Street can't stand buy-and-hold strategies because brokers need trading activity to make money."

Jack Brennan, former Vanguard CEO: "If you're determined to succeed at investing, make it your first priority to become a buy-and-hold investor."

Warren Buffett: "Inactivity strikes us as intelligent behavior."

"Andrew Clarke, author of Wealth of Experience: "Setting a goal, developing an appropriate asset allocation, and selecting a handful of funds are not hugely complex tasks. The hard part comes next: Battling your emotions so that you can stick with your plan through thick and thin."

Jonathan Clements, author and Wall Street Journal columnist: "Take my word on it. Buy-and-hold is still your best long-run strategy."

Phil DeMuth, adviser and co-author of seven investment books: "The investor says to his adviser: 'Every year you tell me to do nothing. What do I need you for?' The adviser replied: 'Every year you need me to keep your from doing anything.' "

Paul Farrell, author of Lazy Persons Guide to Investing: "In a study of 66,400 Merrill Lynch investors, professors Odean and Barber discovered that buy-and-hold investors beat the more active investors by a fairly sizable margin: 18.5% to 11.4% over a six-year period."

Rick Ferri, advisor and financial author: "Write down your strategy -- and stay-the-course."

Steve Forbes: "Everyone is a long-term investor until the market goes down."

Alan Greenspan, former Chairman of the Federal Reserve: "The best strategy for equity investor has always been buy and hold, and forget it."

Mark Hebner, author of "Index Funds": "Prices change to reflect news which is both random and unpredictable. Stock picking and market timing don't work. Stay the course in a risk-appropriate index portfolio and invest and relax."

Morgan Housel, financial columnist: "Do nothing" are the two most powerful -- and underused -- words in investing. The urge to act has transferred an inconceivable amount of wealth from investors to brokers."

Michael LeBoeuf, author of The Millionaire in You: "Simple buy-and-hold index investing is one of the best, most efficient ways to grow your money to the ultimate goal of financial freedom."

Jessie Livermore, famous stock trader: "The big money is not in the buying or the selling, but in the sitting."

Burton Malkiel, author of Random Walk Down Wall Street: "Buying-and-holding a broad-based market index fund is still the only game in town."

Morningstar video: Bad Timing Costs Investors 2.5% Per Year

Mike Piper, editor of The Oblivious Investor: "One of the most important lessons in investing is that there is no “perfect” portfolio, but there are many “perfectly fine” portfolios. Once you are confident that you have a “perfectly fine” portfolio, just stick with the plan and let the portfolio do what it is meant to do."

Bill Schultheis, author of The Coffeehouse Investor: "42% of millionaires of this country make less than one transaction per year in their investments."

Fred Schwed Jr. author of "Where are the Customers' Yachts? "It turns out that I should have just bought them (securities) and thereafter I should have just sat on them like a fat, stupid peasant."

Chandan Sengupta, author of The Only Proven Road to Investment Success: "If you are not going to stick to your chosen investment method through thick and thin, there is almost no chance of your succeeding as an investor."

Dan Solin, financial author and adviser: "Once you understand that monitoring the markets is harmful to your long-term returns, a whole new world of opportunities will await you."

Larry Swedroe, advisor and financial author: "There are lots of people out there who have something to gain by your taking action instead of your adhering to your well-thought-out plan."

Eric Tyson, author of Mutual Funds for Dummies: "Don't trade in and out of funds. Stay invested. Not only does buy-and-hold investing offer better returns, but it's also less work."

Jason Zweig, financial author and Wall Street Journal columnist: "The ultimate benefits of owning stocks accrue only to those who can buy and hold."
Best wishes.
Taylor

Re: Market timers thread

Posted: Sun Mar 24, 2019 9:35 am
by letsgobobby
Deleted

Re: Market timers thread

Posted: Sun Mar 24, 2019 10:18 am
by market timer
revhappy wrote: Sun Mar 24, 2019 3:24 am I read this pretty detailed analysis from Nordea bank:

https://e-markets.nordea.com/#!/arti...hope-and-glory

https://e-markets.nordea.com/#!/article ... w-bet-hard

It is a bank, so it is not some small time permabear trying to sell doom. Most banks are always bullish as they make money from Investors going long in the markets.

But look at these guys, they seem to have done some unbiased research.
Nice articles. The view that resonates with my own line of thinking is that we could be headed for an earnings recession due to rising input costs, but not necessarily a large downturn in GDP. We are due for profit margin compression and rising labor share of income.

Corporate profit margins:

Image

Labor share of income (normalized to 100 in 2012):

Image

If the Q4 downturn in equities was primarily based on forecasts of declining profits, rather than declining economic activity, the Fed should not have reversed its policy stance. If it becomes clearer as we move into 2019 that profits will fall short of expectations while the labor market continues to improve, the Fed may need to make another pivot.

Re: Market timers thread

Posted: Sun Mar 24, 2019 10:41 am
by HomerJ
Chris42163 wrote: Sun Mar 24, 2019 3:44 am
HomerJ wrote: Sat Mar 23, 2019 11:29 pm
Chris42163 wrote: Sat Mar 23, 2019 10:45 pm 40% cash or treasuries at the moment. I don't expect lows to be retested, nor any other particular outcome regarding stock price. I do however, expect valuations, as defined by the Schiller P/E and Buffet Indicator, to return to more reasonable levels within the next several years.
Why do you think they will return to "reasonable" levels within the next several years?

Shiller PE (CAPE) has been high for nearly 27 years. It did briefly return to "reasonable" levels in 2009, but the rest of the time it's been high.

What do you think is different about the next several years compared to the past 27 years?
I think 30+ is extreme and the low 20s is reasonable enough to run for a long, long time. 25 and lower is very high, but seems reasonable enough to stay invested. If you got out at 25, you missed a big part of this bull.
But this is looking backwards. 25 years ago, lows 20 was considered high, and over 25 was considered "extreme".

People following the same logic you are following DID get out of the market waiting for CAPE to return to "reasonable" levels. And they've waited a long time.

CAPE is has been super high for a long time, and you've now reset your expectations. Your new rules may work better than the old rules, but make no mistake, you've changed the rules. You have a whole new system you're following. You've thrown out the 80 years of data Shiller originally used, and you're making your decisions only on the past 30 years.

Re: Market timers thread

Posted: Sun Mar 24, 2019 10:44 am
by stan1
Thesaints wrote: Sat Mar 23, 2019 10:37 pm You don't accept market timers who think stocks are gonna go much higher ?
Then let us know when you plan to sell equities.

Re: Market timers thread

Posted: Sun Mar 24, 2019 10:56 am
by DB2
revhappy wrote: Sun Mar 24, 2019 2:45 am
alpine_boglehead wrote: Sun Mar 24, 2019 2:42 am
revhappy wrote: Sat Mar 23, 2019 10:35 pm but we get crowded out by 'stay the course' passive voice.
What did you expect posting in a forum with Jack "stay the course" Bogle as a namesake? :D
Jack Bogle himself gave a hint recently that returns in the next 10 years will be disappointing, if you invest at current valuations. That doesnt mean there wont be volatility. If you wait for the right levels, then from there, the returns could be decent. That is my interpretation.
Vanguard and Morningstar are also predicting higher returns for International vs U.S. equities over the next 10 years.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:02 am
by HomerJ
alex123711 wrote: Sun Mar 24, 2019 2:26 am I have been looking into this also and I believe the PE10 ratio is important - the average of the past 10 years earnings of the market divided by current price. Historically the average has been around 15, and over 15 leads to below average returns over the next 10 years, over 25 is negative returns. The market is currently at 30 I belive.
See, here's the thing. The "experts" keep changing the system. They keep using new data to update the model, which is fine, but then they claim that the model has always worked.

See, 30 years ago, they would have claimed that over 20 was super high, and always lead to very low or negative returns.

Look at the data they had in 1996. 20 was obviously high. Every time we broke 20, things went downhill soon after. And breaking 25 had only been seen once before, right before a world-wide Great Depression.

Image

Now, after 27 years of CAPE being above 20 pretty much continuously, they change the danger level to 25, and pretend like the model always said 25, and therefore you could have safely followed it in the 1990s and the 2000s. Any serious valuation followers in the 1990s started getting out of stocks in 1992, 8 years before the crash, missing out on 14% annual returns from 1992 to 2002.

That's crazy wrong. Not just a little bit wrong. The model clearly showed that stocks did poorly after crossing a CAPE of 20, and instead your money quadrupled in 8 years (by 2000), and even after the dot-com crash, you still had 3x what you invested 10 years ago.

And even the new rule of CAPE 25 being bad doesn't really work... CAPE was over 25 in 2004-2007, and all four of those years had very good 10-year returns, not just positive, but like 7%-9% 10-year returns.

Even 1996 and 1997 had solid 10-year returns (like 9%) and they were above 25.

So I'm not even sure why you can say above that above 25 leads to negative 10-year returns.

The original CAPE model stopped working almost immediately after it was discovered.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:12 am
by finite_difference
I think it would be good to try to consolidate all the noise and quackery into a single thread.

I do not consider strategies such as rebalancing, momentum following with specific, pre-defined rules, or even buying active funds to be market timing.

I consider emotion-based and “intuition*”-based changes in AA to be market timing. Usually these decisions are driven by financial “news”, and, no, it does not help that you consider yourself to be a financial enthusiast.

*Unless your name happens to have the initials WEB your intuition is probably not the crystal ball you think it is.

I directly asked “market timer” for his past 1, 2, 3, 5, 10, 15, 20, 25, 30 and 40 year returns. But of course I received no answer. I guess market timers don’t even bother to track their performance (after fees, taxes). And why would you, if you believe you know more than everyone else? Your returns must be superior.

Ignore the noise. Stay the course.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:20 am
by HomerJ
DB2 wrote: Sun Mar 24, 2019 10:56 am
revhappy wrote: Sun Mar 24, 2019 2:45 am
alpine_boglehead wrote: Sun Mar 24, 2019 2:42 am
revhappy wrote: Sat Mar 23, 2019 10:35 pm but we get crowded out by 'stay the course' passive voice.
What did you expect posting in a forum with Jack "stay the course" Bogle as a namesake? :D
Jack Bogle himself gave a hint recently that returns in the next 10 years will be disappointing, if you invest at current valuations. That doesnt mean there wont be volatility. If you wait for the right levels, then from there, the returns could be decent. That is my interpretation.
Vanguard and Morningstar are also predicting higher returns for International vs U.S. equities over the next 10 years.
And I can find articles from 2010 and 2011 predicting the same thing. I'm not saying Vanguard and Morningstar are wrong this time. But they were wrong that time. So we have to take ALL predictions with a grain of salt.

Again, no one (or organization) ever seems to be held to account for past predictions. If they got them wrong in the past, it doesn't mean they're wrong this time, but a reasonable person certainly wouldn't follow the new recommendations blindly, right?

Just accept no one knows enough to predict anything.

Own some bond funds, own some stock funds (both U.S. and International), know there WILL be a crash sometime (but no one knows when), and just "stay the course".

Don't try to avoid the crash, don't try to pick which asset group is going to do better, just own a bit of everything, and "stay the course".

Long-term returns is the game. The historical long-term 10% return of the U.S. stock market INCLUDES all the crashes.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:27 am
by DB2
HomerJ wrote: Sun Mar 24, 2019 11:20 am
DB2 wrote: Sun Mar 24, 2019 10:56 am
revhappy wrote: Sun Mar 24, 2019 2:45 am
alpine_boglehead wrote: Sun Mar 24, 2019 2:42 am
revhappy wrote: Sat Mar 23, 2019 10:35 pm but we get crowded out by 'stay the course' passive voice.
What did you expect posting in a forum with Jack "stay the course" Bogle as a namesake? :D
Jack Bogle himself gave a hint recently that returns in the next 10 years will be disappointing, if you invest at current valuations. That doesnt mean there wont be volatility. If you wait for the right levels, then from there, the returns could be decent. That is my interpretation.
Vanguard and Morningstar are also predicting higher returns for International vs U.S. equities over the next 10 years.
And I can find articles from 2010 and 2011 predicting the same thing. I'm not saying Vanguard and Morningstar are wrong this time. But they were wrong that time. So we have to take ALL predictions with a grain of salt.

Again, no one (or organization) ever seems to be held to account for past predictions. If they got them wrong in the past, it doesn't mean they're wrong this time, but a reasonable person certainly wouldn't follow the new recommendations blindly, right?

Just accept no one knows enough to predict anything.

Own some bond funds, own some stock funds (both U.S. and International), know there WILL be a crash sometime (but no one knows when), and just "stay the course".

Don't try to avoid the crash, don't try to pick which asset group is going to do better, just own a bit of everything, and "stay the course".

Long-term returns is the game. The historical long-term 10% return of the U.S. stock market INCLUDES all the crashes.
Good points. But some of what you say is also why I've become a bigger fan lately of just going Total World Stock/Global market cap weighting for equities since we don't know what exactly is going to happen.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:30 am
by mhadden1
revhappy wrote: Sun Mar 24, 2019 2:43 am 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.
This investing thing is not for everyone. If you can achieve your goals without it, why bother? Just save all you can and call it good. Have fun with family and friends instead of waiting for fear and turmoil.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:41 am
by market timer
finite_difference wrote: Sun Mar 24, 2019 11:12 amI directly asked “market timer” for his past 1, 2, 3, 5, 10, 15, 20, 25, 30 and 40 year returns. But of course I received no answer. I guess market timers don’t even bother to track their performance (after fees, taxes). And why would you, if you believe you know more than everyone else? Your returns must be superior.
Sorry, must have missed this question. Most here know I was over-leveraged and wiped out 10 years ago as a student. I'm not trying to claim that I'm some sort of guru. It's only been about 5 years where I've had a substantial amount to invest, and I've shared performance numbers on the "What are you up YTD?" thread since 2014, as well as the recent thread where I discussed my decision to move to a more conservative allocation. I really don't keep detailed records of historical performance beyond the YTD numbers.

Re: Market timers thread

Posted: Sun Mar 24, 2019 11:57 am
by mbasherp
I believe it was Peter Lynch who said that more money has been lost preparing for recessions than has ever been lost in one.

I’ll add for the OP that your track record appears to be very poor, and for whatever reason you are doubling down on your fear based strategy which has not helped you so far. I used to be a lot like you. Eventually I took an honest look at my own behavior and made modifications.

You say you will wait to buy until there is fear in the streets. I say you may be that very same fear. Stay in cash or bonds if you cannot tolerate stocks. But don’t fool yourself into thinking that you’re smarter than the crowd based on a track record which proves otherwise.

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:39 pm
by Fallible
revhappy wrote: Sun Mar 24, 2019 2:48 am ...
Then the Fed doing the complete U turn and markets getting back to their highs, sort of told me, this is opportunity to get out, before it falls even more.
What do you mean by "sort of told me"?

Re: Market timers thread

Posted: Sun Mar 24, 2019 12:48 pm
by dkturner
ronno2018 wrote: Sat Mar 23, 2019 10:52 pm If you want to time the market what the heck are you doing on this forum? :oops:
Good question. I had noticed that Jack Bogle rarely posted anything on these boards either. I guess his remarks, that there was nothing wrong with taking advantage of depressed equity prices to increase equity exposure by up to 15 percentage points (remember - he didn’t believe in periodic “rebalancing”), didn’t fit in with the sensibilities of many of the usual suspects around here.