Well, I am market timing due to coronavirus... Wish me luck.

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ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

rockstar wrote: Fri Feb 07, 2020 1:01 pm
ignition wrote: Fri Feb 07, 2020 12:55 pm
But why would it be riskier when held for a long time? I assume he means compared to holding for a short time. The longer you hold, the more likely you will have a profit no?
Volatility goes down the longer you hold. It doesn’t mean you’ll profit. Look at how long it took NASDAQ to get back to its peak. What matters is how much you initially paid. If I buy the market now at 25x earnings, I should expect a lower return then when I bought it at 12x earnings.
I'm not saying you will profit and you're not answering my question at all...
Elysium
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Re: Well, I am market timing... Wish me luck.

Post by Elysium »

ignition wrote: Fri Feb 07, 2020 11:22 am
Elysium wrote: Thu Feb 06, 2020 6:01 pm Stocks can lose 90% of their value and not recover for a decade. There is no promise you will get your value back, otherwise there would be no risk. It is a fallacy to think stocks are not somehow riskier if held on for a long time. Risk is not volatility, if it were you could simply ignore it.
Why would stocks be riskier when held for a long time?
Assuming this is a serious question, there is plenty of literature available that you can search for that shows stocks are no less riskier if held for a long time. Boglehead wiki may even have some materials and/or links. Stock market can go into a 10% correction almost anytime in a given year, a 20% bear market is to be expected in almost any given year or every few years, a 30% to 40% recession is also to be expected every few years, and it is very much possible to have unprecedented events wiping away much of the value from stocks any given decade. The recovery is often not guaranteed and/or in anyone's control most of the time.

It is called the Triumph of the Optimists for a reason. See book reference: https://www.amazon.com/Triumph-Optimist ... 0691091943
Elysium
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Re: Well, I am market timing... Wish me luck.

Post by Elysium »

White Coat Investor wrote: Fri Feb 07, 2020 1:09 pm
bck63 wrote: Thu Feb 06, 2020 8:21 pm
White Coat Investor wrote: Wed Feb 05, 2020 11:22 am
CnC wrote: Wed Feb 05, 2020 10:46 am I did it, I just could not help myself. With markets are all time highest and the coronavirus causing China to quarantine 50 million people, the USA stopping all flights to China and China basically putting their economy on hold for a few weeks I had to take some profits and rebalance my investments.


I am 34 with ±10 years expenses saved.

I was 75/25 I am now 50/50. I have set a timer to get back in the market by the end of March. I figure that if this does cause a sell off I will be able to buy back in at a nice discount. If it doesn't, I'll buy back in and lose 1-2%.

I know this is a risk and I am rolling the dice, but it just seems like the negatives of waiting this particular event out outweigh the positives at the moment.


I'm not selling everything and investing in masks or hazmat suits or anything but I am having a hard time understanding how the markets are ignoring steps that haven't been taken in 50+ years.
Beginning investors have a hard time staying the course at market lows.
Intermediate investors have a hard time staying the course at market highs.
Advanced investors stay the course.
Jack Bogle would disagree with you. He pared back to 25/75 prior to the burst of the tech bubble.
Yea, an intermediate at best. :)

Seriously though, you got a citation for that one? I've never heard of him advocating more than a 5-10% portion of portfolio to tactical asset allocation.
This is a falsehood oft repeated on this forum by some people about Bogle timing the market based on valuations. What really happened was that he felt that his need to take risk has reduced by a significant level at that time, and he decided to change his AA to reflect that. It was a one time thing and not based on valuation metrics. As for the tactical asset allocation, he did say somewhere if you MUST do it then do so at the edges, no more than 5% to 10% of the portfolio. Bogle knew investor psychology, so he knew he had to give an out to those who gets anxious, that's the 5%-10% is for, so that they will not do massive mistakes by selling wholesale during time of distress.
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

Elysium wrote: Fri Feb 07, 2020 2:04 pm Assuming this is a serious question, there is plenty of literature available that you can search for that shows stocks are no less riskier if held for a long time. Boglehead wiki may even have some materials and/or links. Stock market can go into a 10% correction almost anytime in a given year, a 20% bear market is to be expected in almost any given year or every few years, a 30% to 40% recession is also to be expected every few years, and it is very much possible to have unprecedented events wiping away much of the value from stocks any given decade. The recovery is often not guaranteed and/or in anyone's control most of the time.

It is called the Triumph of the Optimists for a reason. See book reference: https://www.amazon.com/Triumph-Optimist ... 0691091943
But the longer you hold them, the higher the likelihood of a profit right? I just never understand what people mean exactly with "stocks don't become less risky if held for a long time". I tried reading Zvi Bodie's paper for example but didn't understand it at all.
rockstar
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Re: Well, I am market timing... Wish me luck.

Post by rockstar »

ignition wrote: Fri Feb 07, 2020 1:21 pm
rockstar wrote: Fri Feb 07, 2020 1:01 pm
ignition wrote: Fri Feb 07, 2020 12:55 pm
But why would it be riskier when held for a long time? I assume he means compared to holding for a short time. The longer you hold, the more likely you will have a profit no?
Volatility goes down the longer you hold. It doesn’t mean you’ll profit. Look at how long it took NASDAQ to get back to its peak. What matters is how much you initially paid. If I buy the market now at 25x earnings, I should expect a lower return then when I bought it at 12x earnings.
I'm not saying you will profit and you're not answering my question at all...
How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
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Ramjet
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Re: Well, I am market timing... Wish me luck.

Post by Ramjet »

Seekwhat wrote: Thu Feb 06, 2020 4:13 pm I’m market timing too...in a sense, and curious whether I will also hear warnings. But the circumstances are different. I’m 61 and 4 years from retirement. I’ve been uncomfortable for some time with my 62/38 allocation because of the short window and approaching retirement. My ISP calls for 50/50 in retirement, but I neglected to spell out a glide path. So I picked today to make the change to 50/50. I won’t pretend anxiety about valuations and pandemic played no part in the why today question. But I did it today and I feel better.
You did the right thing
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
rockstar
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Re: Well, I am market timing... Wish me luck.

Post by rockstar »

ignition wrote: Fri Feb 07, 2020 2:41 pm
rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
I agree if your holding period is at least 20 years.
Elysium
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Re: Well, I am market timing... Wish me luck.

Post by Elysium »

ignition wrote: Fri Feb 07, 2020 2:26 pm
Elysium wrote: Fri Feb 07, 2020 2:04 pm Assuming this is a serious question, there is plenty of literature available that you can search for that shows stocks are no less riskier if held for a long time. Boglehead wiki may even have some materials and/or links. Stock market can go into a 10% correction almost anytime in a given year, a 20% bear market is to be expected in almost any given year or every few years, a 30% to 40% recession is also to be expected every few years, and it is very much possible to have unprecedented events wiping away much of the value from stocks any given decade. The recovery is often not guaranteed and/or in anyone's control most of the time.

It is called the Triumph of the Optimists for a reason. See book reference: https://www.amazon.com/Triumph-Optimist ... 0691091943
But the longer you hold them, the higher the likelihood of a profit right? I just never understand what people mean exactly with "stocks don't become less risky if held for a long time". I tried reading Zvi Bodie's paper for example but didn't understand it at all.
What the long time frame is giving us is the chance for a recovery. Risk never goes away. The probability of recovery is better if we have a long time frame. For instance, think about a bear market that wipes out 10%, 15%, 20% in three consecutive years, it will then take more than 50% recovery, and suppose then you get a few years of slow growth like say 5 years, so now you have gone 8 years being negative. Now suppose in the 9th year an unexpected event happened wiping out 40%, where would that leave us? Even after 10 years you could be under water, and needing many more years of recovery. Having more time alone will not reduce any risk, it just gives us probability of success.

The other thing of course is you may have built up profits before the recession, so that will protect you from not losing your principal somewhat except in most extreme event. Combined with probability of recovery the long time frame then gives us some sense of safety. But again what if low probability events happen? that risk never goes away. Obviously, other considerations such as non-stock risk related issues are of importance. This gets often mixed up to then conclude long time frame reduces risk. For instance, you may be a 30 year old just about rising in your career with great potential for earnings for another 30 years. Your future income streams will overcome any small losses you encounter now. That allows you ability to take risk much as you want. But we cannot mix that with stock market risk and say stocks aren't riskier. Your personal situation makes taking that risk more palatable. Same thing for someone like Warren Buffett who can afford to risk a lot. Again no relation to market risk, just personal.
Elysium
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Re: Well, I am market timing... Wish me luck.

Post by Elysium »

ignition wrote: Fri Feb 07, 2020 2:41 pm
rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
I would suggest a correction and say instead the probability of a recovery increases, but the probability of losing money never goes away.
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

rockstar wrote: Fri Feb 07, 2020 2:42 pm
ignition wrote: Fri Feb 07, 2020 2:41 pm
rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
I agree if your holding period is at least 20 years.
Lower probability is not the same as guaranteed not to.
Elysium wrote: Fri Feb 07, 2020 2:53 pm
ignition wrote: Fri Feb 07, 2020 2:41 pm
rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
I would suggest a correction and say instead the probability of a recovery increases, but the probability of losing money never goes away.
Ok let me make a small change to make it clearer:

The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
Elysium
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Re: Well, I am market timing... Wish me luck.

Post by Elysium »

ignition wrote: Fri Feb 07, 2020 3:04 pm
rockstar wrote: Fri Feb 07, 2020 2:42 pm
ignition wrote: Fri Feb 07, 2020 2:41 pm
rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
I agree if your holding period is at least 20 years.
Lower probability is not the same as guaranteed not to.
Elysium wrote: Fri Feb 07, 2020 2:53 pm
ignition wrote: Fri Feb 07, 2020 2:41 pm
rockstar wrote: Fri Feb 07, 2020 2:27 pm How are you defining risk? I ask because I said that I expect volatility to drop the longer you hold a position.
I would define risk as the probability of losing money compared to your initial investment. If I look at the data I would say the longer you hold, the lower the probability of losing money.
I would suggest a correction and say instead the probability of a recovery increases, but the probability of losing money never goes away.
Ok let me make a small change to make it clearer:

The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
This is all fine. It could all come down to semantics perhaps. For instance, the risk of losing it all never really goes away even if you hold it for 50 years, because the company could go bankrupt on the 50th year of you holding it and thus wiping away all the gains plus your original investment. Obviously, this is why we spread the risk by diversifying to the whole market, not because we do not think the whole market cannot lose most of it's value on the 50th year, but because we think by taking only systemic risk we reduce the chance of that many companies going bankrupt at same time. But no, it is possible, what if a black swan event happened at the 50th year that wipes away most of the value, like 1931.

We can argue that the probability of such events are low, but that has nothing to do with holding period. We could argue that we would not be holding constant stock allocation and will be moving into bonds thus keeping our profits, but that again has no relation to holding period, just our skillful wealth management.

Where is the holding period coming in relation to stock risk? it doesn't anywhere. The risk is same whether it is 1 year or 50 years. Our ability to address the risk and the tools we have at our disposal keeps improving with various factors including age, human capital, time, wealth accumulated, so on.. but there is no direct relation between risk reduction and holding period. In other words, the length of holding period provides us with opportunities to better manage the risk and/or reduce the effects of it.
pascalwager
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Re: Well, I am market timing... Wish me luck.

Post by pascalwager »

OP, hopefully you haven't overestimated your market timing abilities. I know I have none.
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bluquark
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Re: Well, I am market timing... Wish me luck.

Post by bluquark »

michaeljc70 wrote: Fri Feb 07, 2020 9:30 am Out of 5 pages there are a lot of endorsements for market valuation timing. Yet I haven't really heard one definitive rule based strategy (like I will sell all my stocks when the CAPE is 22 and buy back in when it is 18). It sounds like the "strategy" is "I'll know when to get out and back in when I see it". I see three Boglehead principles being ignored: stay the course, don't market time and develop a workable plan. Obviously, I am not the Boglehead police and everyone can do what they want with their money.
Here is a concrete market valuation timing strategy I am thinking of following, although I haven't codified it in my IPS yet. CAPE doesn't take enough factors into account for my taste so I prefer Equity Risk Premium as my lodestar metric. I would switch my AA to 50/50 if Damodaran's monthly implied ERP estimate hits <3%, I'll remain at 70/30 in "normal times" like today when ERP is 4-6%, and I'll go to 90/10 if ERP is >7%. Historically, this strategy would've had me stay the course at 70/30 almost always, but hold more bonds for a few years in the late nineties and briefly hold more equities during March and April 2009.

1% changes in ERP are huge, so especially with retail investor sentiment driving valuations less and less, it's conceivable the strategy would not call for any action for the rest of my life. So part of the point of formulating it is to let me feel more comfortable doing nothing at times like this where we're at "all-time highs" and there is a lot of cause for fear and greed in the news stories, but when I look at the math, the ERP is sticking around 5% as it usually does.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
michaeljc70
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Re: Well, I am market timing... Wish me luck.

Post by michaeljc70 »

bluquark wrote: Fri Feb 07, 2020 7:10 pm
michaeljc70 wrote: Fri Feb 07, 2020 9:30 am Out of 5 pages there are a lot of endorsements for market valuation timing. Yet I haven't really heard one definitive rule based strategy (like I will sell all my stocks when the CAPE is 22 and buy back in when it is 18). It sounds like the "strategy" is "I'll know when to get out and back in when I see it". I see three Boglehead principles being ignored: stay the course, don't market time and develop a workable plan. Obviously, I am not the Boglehead police and everyone can do what they want with their money.
Here is a concrete market valuation timing strategy I am thinking of following, although I haven't codified it in my IPS yet. CAPE doesn't take enough factors into account for my taste so I prefer Equity Risk Premium as my lodestar metric. I would switch my AA to 50/50 if Damodaran's monthly implied ERP estimate hits <3%, I'll remain at 70/30 in "normal times" like today when ERP is 4-6%, and I'll go to 90/10 if ERP is >7%. Historically, this strategy would've had me stay the course at 70/30 almost always, but hold more bonds for a few years in the late nineties and briefly hold more equities during March and April 2009.

1% changes in ERP are huge, so especially with retail investor sentiment driving valuations less and less, it's conceivable the strategy would not call for any action for the rest of my life. So part of the point of formulating it is to let me feel more comfortable doing nothing at times like this where we're at "all-time highs" and there is a lot of cause for fear and greed in the news stories, but when I look at the math, the ERP is sticking around 5% as it usually does.
I hope it works out for you. I didn't have time to fully look into it right now. I hope you follow it closely unlike the strategy mentioned by someone above that they followed when they weren't too busy. :shock:
Financologist
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Re: Well, I am market timing... Wish me luck.

Post by Financologist »

Good luck.

If I were handicapping... 40% odds it works out and 60% it does not.

Disagree with your rationale. This is a terrible tragedy. And the market is making constant assessments of economic impacts.

Is your assessment more comprehensive or accurate? Or is your brain reacting to the weight of the tragedy and not doing much math on the impacts?

I've been market timing also.. rebalancing toward bonds. But I've determined it's a reaction to feeling rich after the run up. I need big returns less today than I ever have. Income simultaneously increasing, so appetite for risk/need for market driven reward is in decline.
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

Elysium wrote: Fri Feb 07, 2020 4:35 pm
ignition wrote: Fri Feb 07, 2020 3:04 pm Ok let me make a small change to make it clearer:

The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
This is all fine. It could all come down to semantics perhaps. For instance, the risk of losing it all never really goes away even if you hold it for 50 years, because the company could go bankrupt on the 50th year of you holding it and thus wiping away all the gains plus your original investment. Obviously, this is why we spread the risk by diversifying to the whole market, not because we do not think the whole market cannot lose most of it's value on the 50th year, but because we think by taking only systemic risk we reduce the chance of that many companies going bankrupt at same time. But no, it is possible, what if a black swan event happened at the 50th year that wipes away most of the value, like 1931.
Holding for 50 years (1882-1932) you would have had a 5.2% annual return or a 12-fold increase in value after inflation according to this calculator: https://dqydj.com/sp-500-return-calculator/. That is with the big crash of 1931 taken into account!
Elysium wrote: Fri Feb 07, 2020 4:35 pm We can argue that the probability of such events are low, but that has nothing to do with holding period. We could argue that we would not be holding constant stock allocation and will be moving into bonds thus keeping our profits, but that again has no relation to holding period, just our skillful wealth management.

Where is the holding period coming in relation to stock risk? it doesn't anywhere. The risk is same whether it is 1 year or 50 years. Our ability to address the risk and the tools we have at our disposal keeps improving with various factors including age, human capital, time, wealth accumulated, so on.. but there is no direct relation between risk reduction and holding period. In other words, the length of holding period provides us with opportunities to better manage the risk and/or reduce the effects of it.
You seem to define risk as volatility: the risk of your portfolio crashing at a given moment in time. I use a very different definition as mentioned above. I like my definition better because that is eventually what matters right? If you lose money or not at the end of your holding period. Who cares if your portfolio crashes at the end of your holding period when you still have a lot more money than you started with.
Candor
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Re: Well, I am market timing... Wish me luck.

Post by Candor »

I moved from 75/25 to 50/50 last year and purchased my first bonds (besides a small amount of ibonds) but I'm 52 and plan on retiring in the next couple of years if not sooner.

Your move seems like a relatively painless way to learn a valuable lesson that will hopefully serve you well in future. Just don't make a habit of it.
michoco911
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Re: Well, I am market timing... Wish me luck.

Post by michoco911 »

Only one advise. If you cannot stay idle and you have some anxiety, i would suggest to adopt my strategy to not ruin your investment.
Move 10% of your total allocation and keep it for stock picking and buying low selling high.
For the remaining 90%, just agree on the right allocation for you and stick to it no matter what is happening in the outside world.
This will help you satisfy your instinct and be active, without learning it the hard way and gambling your retirement money.
30% VWRD 30% VUSD 40% AGGG until further notice
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Steve Reading
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Re: Well, I am market timing... Wish me luck.

Post by Steve Reading »

ignition wrote: Fri Feb 07, 2020 3:04 pm
The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
While true, this measure of risk is rather useless because it's not incorporating the magnitude of the outcomes. If a given investment ABC had a 1% higher chance of losing money over 20 years than investment DEF, but when it did lose money, it only lost a couple of dollars (while DEF lost everything), then evidently DEF is riskier. Even though there is a lower probability of DEF losing money.

Stocks, if modeled as a random walk, do get riskier over longer time periods. The probability of a loss decreases, but the magnitude of the losses increases (because they compound).

ignition wrote: Sat Feb 08, 2020 5:42 am
Elysium wrote: Fri Feb 07, 2020 4:35 pm
ignition wrote: Fri Feb 07, 2020 3:04 pm Ok let me make a small change to make it clearer:

The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
This is all fine. It could all come down to semantics perhaps. For instance, the risk of losing it all never really goes away even if you hold it for 50 years, because the company could go bankrupt on the 50th year of you holding it and thus wiping away all the gains plus your original investment. Obviously, this is why we spread the risk by diversifying to the whole market, not because we do not think the whole market cannot lose most of it's value on the 50th year, but because we think by taking only systemic risk we reduce the chance of that many companies going bankrupt at same time. But no, it is possible, what if a black swan event happened at the 50th year that wipes away most of the value, like 1931.
Holding for 50 years (1882-1932) you would have had a 5.2% annual return or a 12-fold increase in value after inflation according to this calculator: https://dqydj.com/sp-500-return-calculator/. That is with the big crash of 1931 taken into account!
What you're doing here is called Survivorship Bias. You've preselected a market that has not displayed large losses that were extended for decades. You then test the idea that large losses grow in magnitude over time, don't find them in the US data, and so conclude risk is lower the longer you hold. This is circular logic at its finest.

The hypothesis is that the longer the time period, the larger the losses but they less likely they become. You're not accounting for that last part. If I am correct, then there should only be a few markets where you'd see this out of hundreds (and you wouldn't notice it in every one, certainly not one preselected to be one of the very best ones, like the US). Fortunately we DO see this as many markets over the history of mankind have gone to zero (including Russia in the 20th Century). In other words, if you don't cherry pick a market that supports what you say, and you actually look at as much data as you can to try to find those rare, extended loss events, then you will find them (Japan is another more modern example).
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

305pelusa wrote: Sat Feb 08, 2020 11:17 am
ignition wrote: Fri Feb 07, 2020 3:04 pm
The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
While true, this measure of risk is rather useless because it's not incorporating the magnitude of the outcomes. If a given investment ABC had a 1% higher chance of losing money over 20 years than investment DEF, but when it did lose money, it only lost a couple of dollars (while DEF lost everything), then evidently DEF is riskier. Even though there is a lower probability of DEF losing money.
I'm talking about holding stocks for a longer time vs holding them for a shorter time. Not stocks vs bonds for example.
305pelusa wrote: Sat Feb 08, 2020 11:17 am Stocks, if modeled as a random walk, do get riskier over longer time periods. The probability of a loss decreases, but the magnitude of the losses increases (because they compound).
I don't believe stocks are a pure random walk. I believe they go up in the long run.
305pelusa wrote: Sat Feb 08, 2020 11:17 am
ignition wrote: Sat Feb 08, 2020 5:42 am
Elysium wrote: Fri Feb 07, 2020 4:35 pm
ignition wrote: Fri Feb 07, 2020 3:04 pm Ok let me make a small change to make it clearer:

The longer you hold, the lower the probability that you'll have less money than your initial investment at the end of your holding period.
This is all fine. It could all come down to semantics perhaps. For instance, the risk of losing it all never really goes away even if you hold it for 50 years, because the company could go bankrupt on the 50th year of you holding it and thus wiping away all the gains plus your original investment. Obviously, this is why we spread the risk by diversifying to the whole market, not because we do not think the whole market cannot lose most of it's value on the 50th year, but because we think by taking only systemic risk we reduce the chance of that many companies going bankrupt at same time. But no, it is possible, what if a black swan event happened at the 50th year that wipes away most of the value, like 1931.
Holding for 50 years (1882-1932) you would have had a 5.2% annual return or a 12-fold increase in value after inflation according to this calculator: https://dqydj.com/sp-500-return-calculator/. That is with the big crash of 1931 taken into account!
What you're doing here is called Survivorship Bias. You've preselected a market that has not displayed large losses that were extended for decades. You then test the idea that large losses grow in magnitude over time, don't find them in the US data, and so conclude risk is lower the longer you hold. This is circular logic at its finest.
Was just responding to the crash of 1931 mentioned by Elysium and a 50 year holding period. You can do the same with a global portfolio if you like but I don't have data going back to 1882 unfortunately.
305pelusa wrote: Sat Feb 08, 2020 11:17 am The hypothesis is that the longer the time period, the larger the losses but they less likely they become. You're not accounting for that last part. If I am correct, then there should only be a few markets where you'd see this out of hundreds (and you wouldn't notice it in every one, certainly not one preselected to be one of the very best ones, like the US). Fortunately we DO see this as many markets over the history of mankind have gone to zero (including Russia in the 20th Century). In other words, if you don't cherry pick a market that supports what you say, and you actually look at as much data as you can to try to find those rare, extended loss events, then you will find them (Japan is another more modern example).
I don't really care about individual markets. Most are not very diversified. Preferably I would use a global portfolio.
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Steve Reading
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Re: Well, I am market timing... Wish me luck.

Post by Steve Reading »

ignition wrote: Sat Feb 08, 2020 2:16 pm
I'm talking about holding stocks for a longer time vs holding them for a shorter time. Not stocks vs bonds for example.
So was I.
ignition wrote: Sat Feb 08, 2020 2:16 pm
305pelusa wrote: Sat Feb 08, 2020 11:17 am Stocks, if modeled as a random walk, do get riskier over longer time periods. The probability of a loss decreases, but the magnitude of the losses increases (because they compound).
I don't believe stocks are a pure random walk. I believe they go up in the long run.
These two things aren't inconsistent with one another. A random walk can have a positive return (ex: throw a die and you make a dollar on numbers 1-5 and lose a dollar on the number 6... this is a random walk that will make you money over the long run).
ignition wrote: Sat Feb 08, 2020 2:16 pm
305pelusa wrote: Sat Feb 08, 2020 11:17 am The hypothesis is that the longer the time period, the larger the losses but they less likely they become. You're not accounting for that last part. If I am correct, then there should only be a few markets where you'd see this out of hundreds (and you wouldn't notice it in every one, certainly not one preselected to be one of the very best ones, like the US). Fortunately we DO see this as many markets over the history of mankind have gone to zero (including Russia in the 20th Century). In other words, if you don't cherry pick a market that supports what you say, and you actually look at as much data as you can to try to find those rare, extended loss events, then you will find them (Japan is another more modern example).
I don't really care about individual markets. Most are not very diversified. Preferably I would use a global portfolio.
You're conflating two issues here. What you mention is a matter of scale. A global portfolio is less likely to have large loss magnitudes than a country's, which in turn is less likely that a sector's, which in turn is less likely than a city's companies, that in turn is less likely that one singular company. But the point remains that given a certain scale, the longer you hold the stocks, the smaller the probability of losing money but the larger the magnitude of the losses should one occur.
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

305pelusa wrote: Sat Feb 08, 2020 2:35 pm
ignition wrote: Sat Feb 08, 2020 2:16 pm
305pelusa wrote: Sat Feb 08, 2020 11:17 am Stocks, if modeled as a random walk, do get riskier over longer time periods. The probability of a loss decreases, but the magnitude of the losses increases (because they compound).
I don't believe stocks are a pure random walk. I believe they go up in the long run.
These two things aren't inconsistent with one another. A random walk can have a positive return (ex: throw a die and you make a dollar on numbers 1-5 and lose a dollar on the number 6... this is a random walk that will make you money over the long run).
I believe that stocks are a random walk day to the day but over the long run they will grow with the general economy. And I think the general economy will improve over the long run unless we have some catastrophic event.
305pelusa wrote: Sat Feb 08, 2020 2:35 pm
ignition wrote: Sat Feb 08, 2020 2:16 pm
305pelusa wrote: Sat Feb 08, 2020 11:17 am The hypothesis is that the longer the time period, the larger the losses but they less likely they become. You're not accounting for that last part. If I am correct, then there should only be a few markets where you'd see this out of hundreds (and you wouldn't notice it in every one, certainly not one preselected to be one of the very best ones, like the US). Fortunately we DO see this as many markets over the history of mankind have gone to zero (including Russia in the 20th Century). In other words, if you don't cherry pick a market that supports what you say, and you actually look at as much data as you can to try to find those rare, extended loss events, then you will find them (Japan is another more modern example).
I don't really care about individual markets. Most are not very diversified. Preferably I would use a global portfolio.
You're conflating two issues here. What you mention is a matter of scale. A global portfolio is less likely to have large loss magnitudes than a country's, which in turn is less likely that a sector's, which in turn is less likely than a city's companies, that in turn is less likely that one singular company. But the point remains that given a certain scale, the longer you hold the stocks, the smaller the probability of losing money but the larger the magnitude of the losses should one occur.
Sorry but I don't see why that last sentence is true.
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Steve Reading
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Re: Well, I am market timing... Wish me luck.

Post by Steve Reading »

ignition wrote: Sat Feb 08, 2020 2:50 pm
305pelusa wrote: Sat Feb 08, 2020 2:35 pm
ignition wrote: Sat Feb 08, 2020 2:16 pm
305pelusa wrote: Sat Feb 08, 2020 11:17 am Stocks, if modeled as a random walk, do get riskier over longer time periods. The probability of a loss decreases, but the magnitude of the losses increases (because they compound).
I don't believe stocks are a pure random walk. I believe they go up in the long run.
These two things aren't inconsistent with one another. A random walk can have a positive return (ex: throw a die and you make a dollar on numbers 1-5 and lose a dollar on the number 6... this is a random walk that will make you money over the long run).
I believe that stocks are a random walk day to the day but over the long run they will grow with the general economy. And I think the general economy will improve over the long run unless we have some catastrophic event.
Understood. If that's your conviction, then disregard the arguments I presented before since it doesn't satisfy the "if" statement in my original argument.

ignition wrote: Sat Feb 08, 2020 2:50 pm
305pelusa wrote: Sat Feb 08, 2020 2:35 pm
ignition wrote: Sat Feb 08, 2020 2:16 pm
305pelusa wrote: Sat Feb 08, 2020 11:17 am The hypothesis is that the longer the time period, the larger the losses but they less likely they become. You're not accounting for that last part. If I am correct, then there should only be a few markets where you'd see this out of hundreds (and you wouldn't notice it in every one, certainly not one preselected to be one of the very best ones, like the US). Fortunately we DO see this as many markets over the history of mankind have gone to zero (including Russia in the 20th Century). In other words, if you don't cherry pick a market that supports what you say, and you actually look at as much data as you can to try to find those rare, extended loss events, then you will find them (Japan is another more modern example).
I don't really care about individual markets. Most are not very diversified. Preferably I would use a global portfolio.
You're conflating two issues here. What you mention is a matter of scale. A global portfolio is less likely to have large loss magnitudes than a country's, which in turn is less likely that a sector's, which in turn is less likely than a city's companies, that in turn is less likely that one singular company. But the point remains that given a certain scale, the longer you hold the stocks, the smaller the probability of losing money but the larger the magnitude of the losses should one occur.
Sorry but I don't see why that last sentence is true.
You don't see how it's true given that stocks move in a random walk (my argument) or you don't see it given that they don't behave like a random walk in the long term (i.e. they must keep growing barring a catastrophe)? Because it's only true in the former and, almost by construction, false in the latter. That is, if you believe stocks must increase in value after 30 years, then obviously it's false that they will lose a lot of money in 30 years.
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
acegolfer
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Re: Well, I am market timing... Wish me luck.

Post by acegolfer »

ignition wrote: Sat Feb 08, 2020 2:16 pm I don't believe stocks are a pure random walk. I believe they go up in the long run.
These 2 are not mutually exclusive. When ppl say stock price follows a random walk process, then usually mean random walk "with a drift".
acegolfer
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Re: Well, I am market timing... Wish me luck.

Post by acegolfer »

ignition wrote: Fri Feb 07, 2020 2:26 pm
I just never understand what people mean exactly with "stocks don't become less risky if held for a long time". I tried reading Zvi Bodie's paper for example but didn't understand it at all.
This is a simple statistical fact, if you assume independent random variable.

Suppose Y = X1 + X2 + ... + Xn, where Xi is log return and iid.
Then E(Y) = n * E(X) and stdev(Y) = sqrt(n) * stdev(X)

Statistically, the longer the term (large n), the larger the mean return and the larger the risk. However, the risk increases at a slower rate (sqrt(n)) than the mean (n).
Last edited by acegolfer on Sat Feb 08, 2020 3:54 pm, edited 1 time in total.
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

305pelusa wrote: Sat Feb 08, 2020 3:13 pm
ignition wrote: Sat Feb 08, 2020 2:50 pm
305pelusa wrote: Sat Feb 08, 2020 2:35 pm You're conflating two issues here. What you mention is a matter of scale. A global portfolio is less likely to have large loss magnitudes than a country's, which in turn is less likely that a sector's, which in turn is less likely than a city's companies, that in turn is less likely that one singular company. But the point remains that given a certain scale, the longer you hold the stocks, the smaller the probability of losing money but the larger the magnitude of the losses should one occur.
Sorry but I don't see why that last sentence is true.
You don't see how it's true given that stocks move in a random walk (my argument) or you don't see it given that they don't behave like a random walk in the long term (i.e. they must keep growing barring a catastrophe)? Because it's only true in the former and, almost by construction, false in the latter. That is, if you believe stocks must increase in value after 30 years, then obviously it's false that they will lose a lot of money in 30 years.
Must increase in value is maybe a bit strong. Of course the price you pay also matters. But still, all else equal (you buy for the same price at the same moment), I think the probability of a loss and the probability of the loss being bigger will be lower the longer you hold.
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Steve Reading
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Re: Well, I am market timing... Wish me luck.

Post by Steve Reading »

ignition wrote: Sat Feb 08, 2020 3:50 pm
Must increase in value is maybe a bit strong. Of course the price you pay also matters. But still, all else equal (you buy for the same price at the same moment), I think the probability of a loss and the probability of the loss being bigger will be lower the longer you hold.
I just want you to notice the circular logic. To determine if stocks are riskier over long periods, you need to:
1) Develop a model/probability distribution as to how stocks will behave.
2) Test that model short term vs long term to decide.

I assumed a model (random walk) and then concluded under such assumptions, the magnitudes of potential losses grows with time.

You're combining both. You already have a model in your head that the probability and size of the losses decreases over time. Your model doesn't necessarily mean they must increase in value but the model in your head implicitly says that, all else equal, the magnitude of losses drops over time. You then test the short term vs long term and, not surprisingly, find the probability and size of losses decreases over time. There's nothing rigorous here. It's just your opinion. Which is fine, you're entitled to one :happy
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
ignition
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Re: Well, I am market timing... Wish me luck.

Post by ignition »

305pelusa wrote: Sat Feb 08, 2020 4:42 pm
ignition wrote: Sat Feb 08, 2020 3:50 pm
Must increase in value is maybe a bit strong. Of course the price you pay also matters. But still, all else equal (you buy for the same price at the same moment), I think the probability of a loss and the probability of the loss being bigger will be lower the longer you hold.
I just want you to notice the circular logic. To determine if stocks are riskier over long periods, you need to:
1) Develop a model/probability distribution as to how stocks will behave.
2) Test that model short term vs long term to decide.

I assumed a model (random walk) and then concluded under such assumptions, the magnitudes of potential losses grows with time.
You seem to be hung up on this random walk model, treating stocks like pieces of paper that go up and down in a random fashion. As I said before I don't follow this logic over the long term. Over the long run they should rise assuming they were bought at a reasonable price and barring some sort of worldwide catastrophe. I believe the world will become a better place for more and more people and that the worldwide economy will keep on growing in the coming decades. Yes that is my opinion, I can't prove it.
305pelusa wrote: Sat Feb 08, 2020 4:42 pm You're combining both. You already have a model in your head that the probability and size of the losses decreases over time. Your model doesn't necessarily mean they must increase in value but the model in your head implicitly says that, all else equal, the magnitude of losses drops over time. You then test the short term vs long term and, not surprisingly, find the probability and size of losses decreases over time. There's nothing rigorous here. It's just your opinion. Which is fine, you're entitled to one :happy
Of course it's not rigorous. I'm not writing an academic paper here. I just think your model of the random walk is flawed to begin with. Investing is not an exact science. In the end I still haven't seen a satisfying explanation as to why stocks become riskier the longer you hold them.

I think the historical data bears out that stocks become less risky the longer you hold (yes, even in Japan). The onus is on those who say that stocks become more risky to prove this in my opinion.

The only markets were stocks became more risky are Russia before 1917 and China before 1949 as both governments confiscated all your assets. But how useful is that? How can you protect against something like that?
acegolfer
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Re: Well, I am market timing... Wish me luck.

Post by acegolfer »

ignition wrote: Sun Feb 09, 2020 5:57 am You seem to be hung up on this random walk model, treating stocks like pieces of paper that go up and down in a random fashion. As I said before I don't follow this logic over the long term. Over the long run they should rise assuming they were bought at a reasonable price and barring some sort of worldwide catastrophe. I believe the world will become a better place for more and more people and that the worldwide economy will keep on growing in the coming decades. Yes that is my opinion, I can't prove it.
You should look into geometric random walk with a drift. It reflects your belief that price should go up in long run.

https://people.duke.edu/~rnau/411georw.htm
Gufomel
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Re: Well, I am market timing... Wish me luck.

Post by Gufomel »

I don’t know when exactly you made the trade, but at the time stamp of your OP the S&P 500 was at 3319.10 and today it has closed at 3352.09. Almost exactly 1% in 4 business days.

If you think 1-2% is the maximum gain you can miss out on in a month or two, I’m afraid you’re sorely mistaken. Just because annual percentage gain expectations are in the single digits doesn’t mean that monthly gains are 1-2% max. The swings are significantly wider than that.

I wish you luck, but at the same time fear that if you get lucky this time it will only embolden you to do it again.

Edit: in fact look at this chart. Of the last 50 months, I count 17 (34%) that returned greater 2%. And that’s excluding dividends.

https://ycharts.com/indicators/sp_500_monthly_return
GoldenFinch
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Re: Well, I am market timing... Wish me luck.

Post by GoldenFinch »

Another bad day to be out of the market. When you’re young, it’s better to automate your investments into the market and get busy doing something else. Come back and obsess over the daily or monthly ups and downs when you’re in your fifties or sixties (which is still kind of young).
Hustlinghustling
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Re: Well, I am market timing... Wish me luck.

Post by Hustlinghustling »

re: random walks. inflation targeting by central banks already means there's a systemic bias towards asset price increases over time.
tesuzuki2002
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Re: Well, I am market timing... Wish me luck.

Post by tesuzuki2002 »

CnC wrote: Wed Feb 05, 2020 10:46 am

I was 75/25 I am now 50/50. I have set a timer to get back in the market by the end of March. I figure that if this does cause a sell off I will be able to buy back in at a nice discount. If it doesn't, I'll buy back in and lose 1-2%.
If the market goes up 10 % in the next month how will you fell? Just curious... It may not bother you at all...

on the other side... what if it goes down 10% ... will you continue to hold on longer and wait for a 20% decline?

sounds like a great idea at your age!!!
Finridge
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Re: Well, I am market timing... Wish me luck.

Post by Finridge »

columbia wrote: Wed Feb 05, 2020 10:51 am Good luck.

Maybe you’ll find 50/50 to be your real comfort zone and just stay there for the duration.
That's what I'm thinking. The way I see it, if you find yourself wanting to switch to a more conservative portfolio for any reason other than your age or retirement date, etc., then strongly consider whether that is where you belonged all along.
ochotona
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Re: Well, I am market timing... Wish me luck.

Post by ochotona »

The original poster is not market timing in the sense of having a rigorous, quantitative, rules based trading method. He's just discovering he's less risk tolerant than he thought.

For my trades, I use Paul Novell's newsletter, a refinement of Gary Antonacci's GEM method.

And it's not market timing, it's trendfollowing. No one can time the market.
Peter W., MBA, CRPC
Gufomel
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Re: Well, I am market timing... Wish me luck.

Post by Gufomel »

ochotona wrote: Tue Feb 11, 2020 6:59 am The original poster is not market timing in the sense of having a rigorous, quantitative, rules based trading method. He's just discovering he's less risk tolerant than he thought.

For my trades, I use Paul Novell's newsletter, a refinement of Gary Antonacci's GEM method.

And it's not market timing, it's trendfollowing. No one can time the market.
Except the OP wants to get back in after a couple months when he believes the market will be lower. He’s totally market timing. If he’s realized he’s less risk tolerant than he thought, then he’d be making a permanent adjustment to his AA.
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tvubpwcisla
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Re: Well, I am market timing... Wish me luck.

Post by tvubpwcisla »

Look, he may be right. Before Jack passed away he was quoted as saying, "Trees don't grow to the skies."

For me personally, I will continue to buy and acquire shares of low cost index funds with every penny I possibly have and never watch the market.

:moneybag
alfaspider
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Re: Well, I am market timing... Wish me luck.

Post by alfaspider »

Someone has made a thread almost exactly like this every few months for at least the last decade. Every one has been burned to date.
lostdog
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Re: Well, I am market timing... Wish me luck.

Post by lostdog »

alfaspider wrote: Tue Feb 11, 2020 8:43 am Someone has made a thread almost exactly like this every few months for at least the last decade. Every one has been burned to date.
+1

Then the OP leaves the bogleheads forum for good or takes a long break from the forum. The OP has been gone for 6 days.
Pierre Delecto
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Re: Well, I am market timing... Wish me luck.

Post by Pierre Delecto »

lostdog wrote: Tue Feb 11, 2020 9:07 am
alfaspider wrote: Tue Feb 11, 2020 8:43 am Someone has made a thread almost exactly like this every few months for at least the last decade. Every one has been burned to date.
+1

Then the OP leaves the bogleheads forum for good or takes a long break from the forum. The OP has been gone for 6 days.
This may be overly harsh but this post illustrates the other side of the trade when stocks climb the proverbial wall of worry.

OP may still turn out to be right on impact of news on markets, but even if so will he/she actually pull the trigger to get back in at an appropriate time? I have my doubts given the initial move. Many people that exited during the Great Recession at a good time never got back in as they were always waiting for the 2nd/3rd knife drop.
alfaspider
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Re: Well, I am market timing... Wish me luck.

Post by alfaspider »

Pierre Delecto wrote: Tue Feb 11, 2020 9:12 am
lostdog wrote: Tue Feb 11, 2020 9:07 am
alfaspider wrote: Tue Feb 11, 2020 8:43 am Someone has made a thread almost exactly like this every few months for at least the last decade. Every one has been burned to date.
+1

Then the OP leaves the bogleheads forum for good or takes a long break from the forum. The OP has been gone for 6 days.
This may be overly harsh but this post illustrates the other side of the trade when stocks climb the proverbial wall of worry.

OP may still turn out to be right on impact of news on markets, but even if so will he/she actually pull the trigger to get back in at an appropriate time? I have my doubts given the initial move. Many people that exited during the Great Recession at a good time never got back in as they were always waiting for the 2nd/3rd knife drop.
Yep. That's the problem with market timing. You can't just be right once. You have to do it twice- a tall order.
Gufomel
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Re: Well, I am market timing... Wish me luck.

Post by Gufomel »

Dow Jones Surges 200 Points To Record High As Coronavirus Cases Slow

https://www.investors.com/market-trend/ ... yptr=yahoo


The market was already well aware of the coronavirus fears you expressed in your OP, and that was already priced in when you sold. You don’t get to avoid uncertainty in the market by getting out after the event has already taken place (e.g. attacking Russia or China as I believe you mentioned elsewhere in the thread).

Your sale was a bet that the coronavirus outbreak would become worse than already expected. So far you’re on the losing side of that bet. The S&P is up close to 2% in a few days since you sold - the amount you thought was the max over a 1-2 month period.

You may still yet win this bet, but don’t mistake that for a wise process.
Unladen_Swallow
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Re: Well, I am market timing... Wish me luck.

Post by Unladen_Swallow »

tvubpwcisla wrote: Tue Feb 11, 2020 8:32 am Look, he may be right. Before Jack passed away he was quoted as saying, "Trees don't grow to the skies."

For me personally, I will continue to buy and acquire shares of low cost index funds with every penny I possibly have and never watch the market.

:moneybag
How far away is the sky?
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
tombonneau
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Re: Well, I am market timing... Wish me luck.

Post by tombonneau »

Not sure if it's been posted on this thread, but this game is:

a) A fun time-waster;
b) A sobering (and free!) realization that it's impossible to time the market

https://www.personalfinanceclub.com/tim ... rket-game/
acegolfer
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Re: Well, I am market timing... Wish me luck.

Post by acegolfer »

tombonneau wrote: Wed Feb 12, 2020 2:55 pm Not sure if it's been posted on this thread, but this game is:

a) A fun time-waster;
b) A sobering (and free!) realization that it's impossible to time the market

https://www.personalfinanceclub.com/tim ... rket-game/
"You LOST to the market by $0"
Yay!
Gufomel
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Re: Well, I am market timing... Wish me luck.

Post by Gufomel »

acegolfer wrote: Thu Feb 13, 2020 11:12 am
tombonneau wrote: Wed Feb 12, 2020 2:55 pm Not sure if it's been posted on this thread, but this game is:

a) A fun time-waster;
b) A sobering (and free!) realization that it's impossible to time the market

https://www.personalfinanceclub.com/tim ... rket-game/
"You LOST to the market by $0"
Yay!
The game must be using Fidelity’s 0 expense ratio funds. 😁
Financologist
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Re: Well, I am market timing... Wish me luck.

Post by Financologist »

ignition wrote: Fri Feb 07, 2020 2:26 pm
Elysium wrote: Fri Feb 07, 2020 2:04 pm Assuming this is a serious question, there is plenty of literature available that you can search for that shows stocks are no less riskier if held for a long time. Boglehead wiki may even have some materials and/or links. Stock market can go into a 10% correction almost anytime in a given year, a 20% bear market is to be expected in almost any given year or every few years, a 30% to 40% recession is also to be expected every few years, and it is very much possible to have unprecedented events wiping away much of the value from stocks any given decade. The recovery is often not guaranteed and/or in anyone's control most of the time.

It is called the Triumph of the Optimists for a reason. See book reference: https://www.amazon.com/Triumph-Optimist ... 0691091943
But the longer you hold them, the higher the likelihood of a profit right? I just never understand what people mean exactly with "stocks don't become less risky if held for a long time". I tried reading Zvi Bodie's paper for example but didn't understand it at all.
Perhaps there is a risk curve of some sort. To illustrate, is it riskier to hold the S&P 500 index for one week? Or 20 years? Depending on your definition of risk one could argue that a 20 year holding period poses greater risk of the index going to 0. World war or some other terrible fate is more likely to occur over a long period. History has shown us an ever increasing index value. If you plot in spaced enough intervals you may perceive little risk. The future may not be so kind to stock investors.
rchmx1
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Re: Well, I am market timing... Wish me luck.

Post by rchmx1 »

Gufomel wrote: Wed Feb 12, 2020 2:07 pm Dow Jones Surges 200 Points To Record High As Coronavirus Cases Slow

https://www.investors.com/market-trend/ ... yptr=yahoo


The market was already well aware of the coronavirus fears you expressed in your OP, and that was already priced in when you sold. You don’t get to avoid uncertainty in the market by getting out after the event has already taken place (e.g. attacking Russia or China as I believe you mentioned elsewhere in the thread).

Your sale was a bet that the coronavirus outbreak would become worse than already expected. So far you’re on the losing side of that bet. The S&P is up close to 2% in a few days since you sold - the amount you thought was the max over a 1-2 month period.

You may still yet win this bet, but don’t mistake that for a wise process.
It was an incredibly pessimistic bet, considering that estimates put average yearly world-wide deaths from the garden variety flu at around 400,000:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6815659/

At the time of the OP there were 565 reported deaths from this coronavirus...

When something like this most recent coronavirus pops up, no doubt it's scary stuff, but it's the scary stuff that's most in need of being put into perspective.
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boo-yah
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Re: Well, I am market timing... Wish me luck.

Post by boo-yah »

The problem with wishing you luck, is that if you make this move and you actually do avoid a crash and end up ahead, it will be exactly that - just luck. It won't be because you smarter than everybody else, saw something that nobody else did, or have a special instinct about the markets - yet you will convince yourself that these are true. Because the outcome was good, you will think your market timing strategy was the correct one, and you will be more likely to continue making market timing moves in the future... until your luck runs out.

So I won't wish you luck, but do wish you well.
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