Form of market timing?

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Deltaflaze
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Joined: Tue Dec 26, 2017 10:53 am

Form of market timing?

Post by Deltaflaze »

Curious if anyone has opinions on this philosophy...

I contribute X to my investments each month because I have decided it is the most I can contribute while still enjoying my life with Y (money used for recreation).

When the market is lower, I find I want to reduce my Y so I can increase X. I find a bear market lowers my desire to have fun so I can put more money into the market when it is low, or on “sale.” I feel good when the market is constantly at highs, because I know I’m still contributing a constant strong rate since markets will always continuously beat previous records. But then I know I’m not missing out on enjoying life now either.

While this is probably anyone’s constant battle of enjoying life now vs later, I’m just curious what others thoughts are on this.
jdilla1107
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Re: Form of market timing?

Post by jdilla1107 »

There are countless mental tricks similar to this to tell yourself. The best approach is to develop a plan and then follow it with no emotion whatsoever.

Your approach seems to involve emotion, causing me not to like it. (Even if the emotion seems to be in the "right direction")

My equity portfolio is down $200k+ in the last week and I have no emotion about it. The market will be higher in 30 years and this is a big part of my investment plan. I thank this board for helping to coach me to get to this point.
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Eagle33
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Re: Form of market timing?

Post by Eagle33 »

Is your AA off from target and you are just investing new $ (part of Y) to get AA back to desired target?
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
mega317
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Re: Form of market timing?

Post by mega317 »

As a boglehead and kind of a cheapskate I find it hard, but not impossible, to criticize a strategy that involves saving more and spending less even if temporary. But let me ask you, the market is "lower" than it was last week, but it's higher than almost any point in history. How were you feeling in October at these prices?
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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willthrill81
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Re: Form of market timing?

Post by willthrill81 »

jdilla1107 wrote: Sat Feb 29, 2020 12:26 pmThe best approach is to develop a plan and then follow it with no emotion whatsoever.
Good luck with that. Most investors aren't like Data, able to turn off their emotions like a switch.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
dru808
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Re: Form of market timing?

Post by dru808 »

Seems like the least worst form of market timing there is. as long as you aren’t selling at all or contributing less than your predetermined amount when markets are high.
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Caduceus
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Re: Form of market timing?

Post by Caduceus »

Anything that causes you to save more is good. So you can't lose with this strategy. I don't happen to think the US stock market is on sale (it's still at late 2019 highs) but there are particular equities that I want to buy, so I've been doing what you are doing. Deferring spending on large purchases, doing what I can to increase my investments.
jdilla1107
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Re: Form of market timing?

Post by jdilla1107 »

willthrill81 wrote: Sun Mar 01, 2020 12:23 am
jdilla1107 wrote: Sat Feb 29, 2020 12:26 pmThe best approach is to develop a plan and then follow it with no emotion whatsoever.
Good luck with that. Most investors aren't like Data, able to turn off their emotions like a switch.
No emotion and time in the market is the ONLY edge that an individual investor has. I have worked in trading for 15 years and seen it first hand of what it means to compete against thousands of Ivy League grads working 100 hour weeks. As an individual, your ONLY edge is:

- You don't have to hit quarterly goals and can invest for 20 years.
- Setting a constant level of risk and accepting it.

Trying to trick yourself into believing that you are controlling risk to satisfy your emotions is a fools errand.
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nps
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Re: Form of market timing?

Post by nps »

willthrill81 wrote: Sun Mar 01, 2020 12:23 am
jdilla1107 wrote: Sat Feb 29, 2020 12:26 pmThe best approach is to develop a plan and then follow it with no emotion whatsoever.
Good luck with that. Most investors aren't like Data, able to turn off their emotions like a switch.
I would say that developing a plan in advance of market volatility helps mitigate emotional decision making. It might not prevent against having emotions, but acting on them is the real danger.
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