Why all these timing threads?

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windaar
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Why all these timing threads?

Post by windaar »

A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
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David Jay
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Re: Why all these timing threads?

Post by David Jay »

F E A R
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
dboeger1
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Re: Why all these timing threads?

Post by dboeger1 »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
It's market sentiment. To put it in terms of your Veganhead analogy, you might expect a wave of burger grilling threads to pop up after an announcement of some new brand of plant-based imitation meat. Now, if that imitation meat was raining in mass quantities from the sky, it might start to resemble the panic we're seeing in the markets right now. These are the kinds of markets that will reveal the vulnerable and unprepared. At this point, I'm not so sure I'm not among them, haha.
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Re: Why all these timing threads?

Post by jdilla1107 »

They didn't have a plan they believed in. Now they run around full of emotion convincing themselves they can see the future.

I invest in equities for the gains than come from 30-40 years of earnings growth. This is a blip to shake out the weak ones. If it goes to 50%, it will shake out more weak ones.

Stay the course.
tman9999
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Re: Why all these timing threads?

Post by tman9999 »

Dunno. Could be greed, not fear. I know I'm looking at things and thinking about when it might be time to deploy some dry powder. At the very least I'm glad my robo is rebalancing and doing my TLH for me, which is helping to capture some alpha from this. Just seems like a juicy opportunity for some easy money by just tilting my AA 5-10% more toward equities. But when?? :wink:
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Re: Why all these timing threads?

Post by JonnyDVM »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
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Re: Why all these timing threads?

Post by nisiprius »

There was some of that around 2008 or so. My good-faith interpretation is that we're in a volatility cluster, to say the least, and volatility increases the possibility of winning big by successful timing moves. I personally think the possibility is illusory, but the traders only make their gains when there are price movement to gain from--their losses, too, of course. So if you think you can do it, you are going to be more interested in trying when volatility is high.

Also, of course, the prospects of buy-and-hold investors seeing big losses leads to interest in the possibility of dodging them.
Last edited by nisiprius on Mon Mar 16, 2020 11:10 am, edited 1 time in total.
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Re: Why all these timing threads?

Post by cashboy »

best advice, for your consideration, is simply don't read them....
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Ari
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Re: Why all these timing threads?

Post by Ari »

As nisiprius says, timing is more profitable at extremes. A common Boglehead principle is to have the exact same strategy no matter what the market is doing, but the instinct, and the advice outside of this forum, is to act when the market is changing.

I'm guilty of this, myself, with my small amount of leveraging up (about 5% leverage at the moment). I try to keep it small. Part of it, for me, is that when the market is volatile, investing is more FUN. Boglehead investing is generally very dull. Now things are happening, and acting in this environment is exciting. I try not to do anything that will seriously jeopardize my portfolio, but man, it's exciting times.

For others, it might have to do with feeling the need to take some control. Just watching the market wreak havoc on your portfolio can make you feel a bit helpless. Acting makes you feel you're in control, doing things.
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Re: Why all these timing threads?

Post by Lee_WSP »

nisiprius wrote: Mon Mar 16, 2020 10:54 am There was some of that around 2008 or so. My good-faith interpretation is that we're in a volatility cluster, to say the least, and volatility increases the possibility of winning big by successful timing moves. I personally think the possibility is illusory, but the traders only make their gains when there are price movement to gain from--their losses, too, of course. So if you think you can do it, you are going to be more interested in trying when volatility is high.

Also, of course, the prospects of buy-and-hold investors seeing big losses leads to interest in the possibility of dodging them.
I think there's some good insights there. A bear market is about the only time when a market timer can truly and utterly beat buy & hold. However, I do wonder if the odds of 'winning' are actually not that great and maybe only as good as 50/50. Depending on how big of a bet one makes.
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Re: Why all these timing threads?

Post by Fallible »

Ari wrote: Mon Mar 16, 2020 11:13 am ... Boglehead investing is generally very dull. Now things are happening, and acting in this environment is exciting. I try not to do anything that will seriously jeopardize my portfolio, but man, it's exciting times.

For others, it might have to do with feeling the need to take some control. Just watching the market wreak havoc on your portfolio can make you feel a bit helpless. Acting makes you feel you're in control, doing things.
That's the irony, that acting makes one feel in control when it's often just the opposite and acting is a loss of control, of self-discipline to stay the course. It's similar to the prediction involved in true market timing, where predicting is acting, again implying control when it can mean a loss of control.

As for "all these timing threads," they are out there no matter what the market does and probably always will be. Fortunately, so is Taylor Larimore with his market-timing "gems" to save us from ourselves.
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Re: Why all these timing threads?

Post by SuperGrafx »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
Because staying the course can be a flawed strategy.
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Re: Why all these timing threads?

Post by DonIce »

Lee_WSP wrote: Mon Mar 16, 2020 12:07 pm I think there's some good insights there. A bear market is about the only time when a market timer can truly and utterly beat buy & hold. However, I do wonder if the odds of 'winning' are actually not that great and maybe only as good as 50/50. Depending on how big of a bet one makes.
I don't know if that's really true. A market timer can theoretically beat buy & hold at all times. In bull markets, the indexes don't just go up a steady 0.05% every day. They fluctuate with 1-2% moves up and down still being fairly common. If you can time daily and intraday price swings, you can make money timing all the time. And you can always adjust your leverage / bet size to match the volatility of the times. And even in very flat markets, traders can make money through various option strategies provided they have reliably superior insight.

I think the reality comes back to your second point, the "odds of winning". I think they are actually considerably worse than 50/50, especially as people begin to trade with their emotions rather than rationally

The reason these threads come up is because everyone who is normally calm in times of slow moving or rising markets becomes fearful. All the people who thought they were committed to "buy and hold" suddenly find themselves questioning as they see 20%+ of their net worth evaporate in days. Is it gonna go to -50%? Can they get out and preserve their wealth before their years of hard work disappear? Emotion takes over.
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Re: Why all these timing threads?

Post by baconavocado »

I think it's because the last bull market run was so long that there are many new investors on the forum that have never experienced a bear market and maybe have never lost money in the market at all and therefore feel invincible.
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Re: Why all these timing threads?

Post by Lee_WSP »

DonIce wrote: Mon Mar 16, 2020 1:06 pm
Lee_WSP wrote: Mon Mar 16, 2020 12:07 pm I think there's some good insights there. A bear market is about the only time when a market timer can truly and utterly beat buy & hold. However, I do wonder if the odds of 'winning' are actually not that great and maybe only as good as 50/50. Depending on how big of a bet one makes.
I don't know if that's really true. A market timer can theoretically beat buy & hold at all times. In bull markets, the indexes don't just go up a steady 0.05% every day. They fluctuate with 1-2% moves up and down still being fairly common. If you can time daily and intraday price swings, you can make money timing all the time. And you can always adjust your leverage / bet size to match the volatility of the times. And even in very flat markets, traders can make money through various option strategies provided they have reliably superior insight.

I think the reality comes back to your second point, the "odds of winning". I think they are actually considerably worse than 50/50, especially as people begin to trade with their emotions rather than rationally
First, I'm excluding arbitrageurs whose entire career is to find out the smallest price difference and exploit it. They're not timing the market, they're just trying to run in front of it & try not to get run over in the process. I grudgingly admit that they're probably successful most of the time.

That's my point though, the odds of winning are not great enough for all timers to beat the market during a bull run. In fact, I'd say the odds are stacked against them. Some will win of course, that's just how betting works. But most will lose.

Even with their little leveraged bets, a buy & hold leveraged bet is likely to do just as well as the market timer if you compare leveraged to leveraged.

All bets are off in a bear.
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Re: Why all these timing threads?

Post by DonIce »

Lee_WSP wrote: Mon Mar 16, 2020 1:10 pm First, I'm excluding arbitrageurs whose entire career is to find out the smallest price difference and exploit it. They're not timing the market, they're just trying to run in front of it & try not to get run over in the process. I grudgingly admit that they're probably successful most of the time.

That's my point though, the odds of winning are not great enough for all timers to beat the market during a bull run. In fact, I'd say the odds are stacked against them. Some will win of course, that's just how betting works. But most will lose.

Even with their little leveraged bets, a buy & hold leveraged bet is likely to do just as well as the market timer if you compare leveraged to leveraged.

All bets are off in a bear.
That's the part I'm not so sure about. I think the market swings are scale-independent. You can make just as much profit if you are a successful market timer from the 0.1% moves that happen every hour as the 10% moves that happen once a year or the 50% moves that happen once a decade. I don't think the probability of profiting or winning is higher for the bigger moves, especially as trading costs approach zero. The "types" of market insight you might need to win may be different, but I think it mostly comes down to dumb luck in almost all cases, whether for big moves or small.

If someone has the skill and insight to predict market movements better than everyone else reliably for big market moves due to big news, why not moves of individual companies on company news, which happens almost daily? Why not 1% moves of the index on small news? If anything it should be easier to win for smaller events that have way fewer eyes on them and possibility of other people missing something important being higher.

The hypothetical successful market timer should have no problem winning whether the moves are big or small.

But I think that such a hypothetical market timer that truly reliabily wins due to consistently superior insight essentially doesn't exist. Maybe there have been a handful of such people in the last century, at most?

Real life market timers (of which there are millions) trade with their emotions and win or lose based on luck. Again, independent of the size of the moves.
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Re: Why all these timing threads?

Post by Lee_WSP »

DonIce wrote: Mon Mar 16, 2020 1:18 pm
Lee_WSP wrote: Mon Mar 16, 2020 1:10 pm First, I'm excluding arbitrageurs whose entire career is to find out the smallest price difference and exploit it. They're not timing the market, they're just trying to run in front of it & try not to get run over in the process. I grudgingly admit that they're probably successful most of the time.

That's my point though, the odds of winning are not great enough for all timers to beat the market during a bull run. In fact, I'd say the odds are stacked against them. Some will win of course, that's just how betting works. But most will lose.

Even with their little leveraged bets, a buy & hold leveraged bet is likely to do just as well as the market timer if you compare leveraged to leveraged.

All bets are off in a bear.
That's the part I'm not so sure about. I think the market swings are scale-independent. You can make just as much profit if you are a successful market timer from the 0.1% moves that happen every hour as the 10% moves that happen once a year or the 50% moves that happen once a decade. I don't think the probability of profiting or winning is higher for the bigger moves, especially as trading costs approach zero. The "types" of market insight you might need to win may be different, but I think it mostly comes down to dumb luck in almost all cases, whether for big moves or small.

If someone has the skill and insight to predict market movements better than everyone else reliably for big market moves due to big news, why not moves of individual companies on company news, which happens almost daily? Why not 1% moves of the index on small news? If anything it should be easier to win for smaller events that have way fewer eyes on them and possibility of other people missing something important being higher.

The hypothetical successful market timer should have no problem winning whether the moves are big or small.

But I think that such a hypothetical market timer that truly reliabily wins due to consistently superior insight essentially doesn't exist. Maybe there have been a handful of such people in the last century, at most?

Real life market timers (of which there are millions) trade with their emotions and win or lose based on luck. Again, independent of the size of the moves.
You've just described the difference between an arbitrageur and a market timer.

Arbitrageurs will always have jobs until AI takes over all the decision making from humans.

Market timers can fail or succeed wildly.
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Re: Why all these timing threads?

Post by windaar »

DonIce wrote: Mon Mar 16, 2020 1:18 pm
Lee_WSP wrote: Mon Mar 16, 2020 1:10 pm First, I'm excluding arbitrageurs whose entire career is to find out the smallest price difference and exploit it. They're not timing the market, they're just trying to run in front of it & try not to get run over in the process. I grudgingly admit that they're probably successful most of the time.

That's my point though, the odds of winning are not great enough for all timers to beat the market during a bull run. In fact, I'd say the odds are stacked against them. Some will win of course, that's just how betting works. But most will lose.

Even with their little leveraged bets, a buy & hold leveraged bet is likely to do just as well as the market timer if you compare leveraged to leveraged.

All bets are off in a bear.
That's the part I'm not so sure about. I think the market swings are scale-independent. You can make just as much profit if you are a successful market timer from the 0.1% moves that happen every hour as the 10% moves that happen once a year or the 50% moves that happen once a decade. I don't think the probability of profiting or winning is higher for the bigger moves, especially as trading costs approach zero. The "types" of market insight you might need to win may be different, but I think it mostly comes down to dumb luck in almost all cases, whether for big moves or small.

If someone has the skill and insight to predict market movements better than everyone else reliably for big market moves due to big news, why not moves of individual companies on company news, which happens almost daily? Why not 1% moves of the index on small news? If anything it should be easier to win for smaller events that have way fewer eyes on them and possibility of other people missing something important being higher.

The hypothetical successful market timer should have no problem winning whether the moves are big or small.

But I think that such a hypothetical market timer that truly reliabily wins due to consistently superior insight essentially doesn't exist. Maybe there have been a handful of such people in the last century, at most?

Real life market timers (of which there are millions) trade with their emotions and win or lose based on luck. Again, independent of the size of the moves.
If someone could actually consistently always make more money than lose money by timing then they could have all the money in the world.
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Re: Why all these timing threads?

Post by zaboomafoozarg »

hagridshut wrote: Mon Mar 16, 2020 10:50 amHere is an example: viewtopic.php?f=10&t=306816. The OP in that thread has also previously lied to the community. You can check their post history and verify this.
Click OP's name in that post - looks like their account has been nuked from orbit :D
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Re: Why all these timing threads?

Post by chevca »

While I'm sure some is fear. I'm reminded of one of the finance books I have where someone asks a class of college students which of them is an above average driver... most of the class raised their hands. Most of them probably weren't above average. I think a lot of it is some folks are okay with getting average or market returns... until they think they can do better. Seems folks are thinking they are above average about now and can nail this market swing to make some money. To me it seems that way at least.

Good luck to them. Me... I'm honest with myself, know I'm probably below average as an investor, and I will take what the market gives me in good times and in bad.
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Re: Why all these timing threads?

Post by AnalogKid22 »

Clearly a lot of "Bogleheads" haven't taken the time to learn about the philosophy. They're index investors looking to this forum for investment advice, but never embraced the concept of following a Boglehead plan and mindset.
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Re: Why all these timing threads?

Post by oldmotos »

I follow the Boglehead philosophy for the most part. Last year I retired so I went from 80/20 to 30/70 because I figured I had won the game. With the extreme drop in the market I am now gradually going to 60/40 as it looks like a great opportunity. Only time will tell but it is not going to make a huge difference in my life either way.
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Re: Why all these timing threads?

Post by Phineas J. Whoopee »

It happens every time there's a significant downward move in equity prices. Beyond that I don't know why.
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Re: Why all these timing threads?

Post by Phineas J. Whoopee »

SuperGrafx wrote: Mon Mar 16, 2020 1:04 pm
windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
Because staying the course can be a flawed strategy.
Flawed with respect to achieving what objectives?

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oken
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Re: Why all these timing threads?

Post by oken »

AnalogKid22 wrote: Mon Mar 16, 2020 4:53 pm Clearly a lot of "Bogleheads" haven't taken the time to learn about the philosophy. They're index investors looking to this forum for investment advice, but never embraced the concept of following a Boglehead plan and mindset.
I'm new to this forum so forgive me if this has been discussed. I went to look for the exact statements that talked about market timing in the given link:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
This seems to be quite specific in terms of market timing.
(1) Don't chase yield.
(2) Don't panic and sell low and buy high.

What is interesting to me about many of the more recent comments on "market timing" was that people were suggesting selling while the index was high. Yes, before the index even dropped. This doesn't sound at all like either of the cases above, yet they were jumped on quite quickly and made fun of.

Now, I'm not suggesting that they will always be right, but somehow the idea of market timing, in this forum, seems to have taken on a life of its own. It is now interpreted in a very strong way to be, "Never make any market moves no matter how much information you have. Just hold."

Forgive me for saying so, but sometimes it feels even like anti-intellectualism. I know it isn't so, because the bogle principles have been developed over the course of research, but the way it is being transmitted and communicated sounds a lot like, "Don't think. You don't have to, you don't need to. Thinking will kill you. Just stay the course."

That's my view as a new bogle. Thank you for reading.
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Re: Why all these timing threads?

Post by Ari »

Ari wrote: Mon Mar 16, 2020 11:13 amPart of it, for me, is that when the market is volatile, investing is more FUN. Boglehead investing is generally very dull. Now things are happening, and acting in this environment is exciting. I try not to do anything that will seriously jeopardize my portfolio, but man, it's exciting times.
Ironically, the day after writing this, I'm now struggling to keep the interest. I'm getting bored with this market. :oops: I guess I'll keep buying, but apart from that, I'll probably just get on with my life.
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Re: Why all these timing threads?

Post by alluringreality »

In Unconventional Success, David Swensen suggests there are only three tools to generate returns:
1) Asset allocation
2) Securities selection
3) Market timing

He indicates that studies suggest asset allocation may account for 90%-100% of variability in returns, but there are also comments within his book and others that supports buying during a time of lower asset prices as possibly being more productive than the usual tendency of individual investors to chase recent winners.
Targets: 15% I Bonds, 15% EE Bonds, 45% US Stock (Mid & Small Tilt), 25% Ex-US Stock (Small Tilt)
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Re: Why all these timing threads?

Post by cheese_breath »

When the rubber meets the road you discover who are real Bogleheads and who aren't.
The surest way to know the future is when it becomes the past.
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Re: Why all these timing threads?

Post by Orbuculum Nongata »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
I believe it’s because risk can’t be appreciated until it materializes.
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Re: Why all these timing threads?

Post by EdNorton »

There are not more timing threads, there are less can I afford this sports car, house, vacation house, etc., threads.
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Re: Why all these timing threads?

Post by Nowizard »

Because preservation is a key for many. It is not market timing if you realize your risk level is not what you thought it was, in spite of those who mistakenly believe that staying the course is an absolute. An absolute may fit some, but not all. Dogma is the enemy of necessary flexibility in the same manner that the search for a perfect portfolio is the enemy of a good or excellent one.

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Re: Why all these timing threads?

Post by AnalogKid22 »

oken wrote: Tue Mar 17, 2020 12:32 am
AnalogKid22 wrote: Mon Mar 16, 2020 4:53 pm Clearly a lot of "Bogleheads" haven't taken the time to learn about the philosophy. They're index investors looking to this forum for investment advice, but never embraced the concept of following a Boglehead plan and mindset.
I'm new to this forum so forgive me if this has been discussed. I went to look for the exact statements that talked about market timing in the given link:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
This seems to be quite specific in terms of market timing.
(1) Don't chase yield.
(2) Don't panic and sell low and buy high.

What is interesting to me about many of the more recent comments on "market timing" was that people were suggesting selling while the index was high. Yes, before the index even dropped. This doesn't sound at all like either of the cases above, yet they were jumped on quite quickly and made fun of.

Now, I'm not suggesting that they will always be right, but somehow the idea of market timing, in this forum, seems to have taken on a life of its own. It is now interpreted in a very strong way to be, "Never make any market moves no matter how much information you have. Just hold."

Forgive me for saying so, but sometimes it feels even like anti-intellectualism. I know it isn't so, because the bogle principles have been developed over the course of research, but the way it is being transmitted and communicated sounds a lot like, "Don't think. You don't have to, you don't need to. Thinking will kill you. Just stay the course."

That's my view as a new bogle. Thank you for reading.
The philosophy states to "develop a plan" and "invest early and often". What are you investing for and how much do you need to accumulate to meet your goals? If you have money to invest, meaning money you don't need in the next 5-10 years, then get it in. If the markets drop, like we're experiencing now, you benefit from cheaper prices, but, cheaper doesn't mean cheapest or that the price will soon return to its previous levels. In this current volatility, the market has been swinging thousands of point in both directions. Buying, hoping for the bottom, and selling, hoping to not lose money, at this time is no different than taking your money to a casino. Some might win, others will lose. We're now in a bear market, which, in a few months, could turn into a recession. Stocks could fall even further or remain flat for years while you wait anxiously for the next rebound and return to the levels we saw only a month ago.

Bogle always recommended a mix of stocks and bonds that will allow you to not have to think. These asset classes let you decide how much risk to take so that all you have to think about it earning the money to invest. If you own bonds, for example, no one knew a buyback was coming, but, it's slowly on it's way. You could see a decent return on your bond holdings, or not, while your stocks don't budge.

Bogle also had the famous quote of 'Don't do something; just stand there", because many people invest with emotion, thinking there's an edge or an opportunity in front of them, only to get burned. How many posts have you seen people state "This seems or feels like the right time"?
langlands
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Re: Why all these timing threads?

Post by langlands »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
There really aren't that many good investing forums. And no, reddit is not a substitute. It's a compliment, really. Bogleheads is now the forum for all investors who aren't 19 and trying to invest their college allowances. I anticipate this trend towards a large influx of "nontraditional" Bogleheads to only continue.
lostdog
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Re: Why all these timing threads?

Post by lostdog »

cheese_breath wrote: Tue Mar 17, 2020 7:50 am When the rubber meets the road you discover who are real Bogleheads and who aren't.
+1

Still staying the course. I'm 30% from my high in January. Nothing else I can do expect ride the roller coaster and NOT jump off. Thanks Jack and Bogleheads.

There has been an emergence lately of extreme fear mongering and market timing members on this forum. It's like they came out of nowhere when the volatility showed up.

I see these members as noise. It was a real challenge to tune them out in the beginning.

The calm thread is working well.
Last edited by lostdog on Tue Mar 17, 2020 10:13 am, edited 1 time in total.
oken
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Re: Why all these timing threads?

Post by oken »

AnalogKid22 wrote: Tue Mar 17, 2020 8:33 am The philosophy states to "develop a plan" and "invest early and often". What are you investing for and how much do you need to accumulate to meet your goals? If you have money to invest, meaning money you don't need in the next 5-10 years, then get it in. If the markets drop, like we're experiencing now, you benefit from cheaper prices, but, cheaper doesn't mean cheapest or that the price will soon return to its previous levels. In this current volatility, the market has been swinging thousands of point in both directions. Buying, hoping for the bottom, and selling, hoping to not lose money, at this time is no different than taking your money to a casino. Some might win, others will lose. We're now in a bear market, which, in a few months, could turn into a recession. Stocks could fall even further or remain flat for years while you wait anxiously for the next rebound and return to the levels we saw only a month ago.

Bogle always recommended a mix of stocks and bonds that will allow you to not have to think. These asset classes let you decide how much risk to take so that all you have to think about it earning the money to invest. If you own bonds, for example, no one knew a buyback was coming, but, it's slowly on it's way. You could see a decent return on your bond holdings, or not, while your stocks don't budge.

Bogle also had the famous quote of 'Don't do something; just stand there", because many people invest with emotion, thinking there's an edge or an opportunity in front of them, only to get burned. How many posts have you seen people state "This seems or feels like the right time"?
Without going into too much detail (because I think we may be thinking about different groups of people) I think it is worth pointing out that Bogle himself also reacted to the market. He covered himself by saying he wasn't market timing, but if he was here on this board under another name, he would probably be ridiculed as well.
"Trees don't grow to the sky, and I see clouds on the horizon. I don't know if and when they'll arrive. A little extra caution should be the watchword," Bogle told Barron's. "If you were comfortable at a 70 percent to 30 percent [allocation to stocks and fixed income], under these circumstances you'd like to go back to 60 percent to 40 percent, or something like that."

Bogle did not believe investors for the long term should try to pull completely out and time the market, which he said is "a really dumb strategy." Instead, he said it's time "to really be thinking how much risk you want to have" and make some defensive moves.
Most of what I've personally been drawn to are people wondering about the clouds they are seeing and whether it warrants some extra caution. They voice their thoughts about whether or not they are taking on too much risk and whether it is time to make defensive moves.

And the part that gets me isn't that people disagree. It's fine to disagree, I assume that's what forums are for. If we all agree all the time, it's just an echo chamber.

What gets to me is how unkind people are when they disagree. How snobbish. How holier than thou. Very rarely do people try to fully explain their stand. They just tell you that you are wrong and foolish and wrong and mistaken and wrong.

Again I hasten to say that I have learnt a lot from these forums and there are wonderful discussions going on in some threads. Just voicing what I see in some other threads I guess.
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AnalogKid22
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Re: Why all these timing threads?

Post by AnalogKid22 »

langlands wrote: Tue Mar 17, 2020 9:28 am
windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
There really aren't that many good investing forums. And no, reddit is not a substitute. It's a compliment, really. Bogleheads is now the forum for all investors who aren't 19 and trying to invest their college allowances. I anticipate this trend towards a large influx of "nontraditional" Bogleheads to only continue.
Things change, I get that, but, this forum was a fantastic place to get excellent advice when setting out on your "Boglehead" journey or when making investment decisions. The "members" contributing now, are more focused on get-rich-quick and would be better off joining a day-trading forum.
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meowcat
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Re: Why all these timing threads?

Post by meowcat »

It's how Wall Street weeds out the "dumb money."
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson
UpperNwGuy
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Re: Why all these timing threads?

Post by UpperNwGuy »

SuperGrafx wrote: Mon Mar 16, 2020 1:04 pm
windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
Because staying the course can be a flawed strategy.
Can you elaborate on this rather controversial assertion?
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windaar
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Re: Why all these timing threads?

Post by windaar »

langlands wrote: Tue Mar 17, 2020 9:28 am
windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
There really aren't that many good investing forums. And no, reddit is not a substitute. It's a compliment, really. Bogleheads is now the forum for all investors who aren't 19 and trying to invest their college allowances. I anticipate this trend towards a large influx of "nontraditional" Bogleheads to only continue.
This makes complete sense and answers my question. The forum has become a kind of generic investing forum where Jim Cramer ideas are as welcome as those of Jack B. I’m not a purist; I just wish that this forum could return to what it is supposed to be, which is the following, from the “philosophy” section of this site:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
Nobody knows nothing.
vipertom1970
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Re: Why all these timing threads?

Post by vipertom1970 »

so is over re-balance in a bear market considered market timing ?
sixtyforty
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Re: Why all these timing threads?

Post by sixtyforty »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
I actually don't think there are that many timing threads. Probably two real ones. I think the rest are more about people not having the right allocation. In a bear market, one's risk profile will be tested.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci
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timboktoo
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Re: Why all these timing threads?

Post by timboktoo »

The default behavior of human beings who are experiencing something bad is to try to fix the situation. We like to take action. It is incredibly counterintuitive to us to just sit and do nothing. It goes against our instincts.

Anybody can say that they agree with the Boglehead philosophy cerebrally. Practicing it is harder.

On the other hand, one thing we never really know on the forum are what the quiet ones are doing. After all, these principles are pretty easy to learn. I imagine that most people just move on and live their lives without posting much, if at all. But we have no way of knowing what they're doing. It's not like everybody is going to post "I'm staying the course today" every day.

I'd be lying if I said I didn't think about timing. It occurred to me a few times today actually that it would be really nifty if I could put some of our emergency fund to use when the time "feels right." It would help make up for some lost income and it would make me feel oh so clever. But I reminded myself that I have no way of knowing when the time is actually right. Plus, my emergency fund needs to be available to cover our butts. And imagine how dumb I'd feel if I put it to work and lost even more for us and then we lost our income altogether.

Anyway, it's all pretty normal behavior :) It doesn't matter how much you read. It probably doesn't matter how many bear markets you go through. We're all still just human beings.

- Tim
fwellimort
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Re: Why all these timing threads?

Post by fwellimort »

The general notion of market timing is that it fails because markets over time goes up and so if you leave, you have a higher probability of leaving the up days than the down days (and that the fees + taxes would lower your returns on top).

Market timings in at least the earlier stages of recessions can be different because there is a higher probability you will leave a market going down than going up (and now, fees + taxes are no longer an issue in today's environment of 0 fee trades in IRAs).
Basically, if you are the type who do it in the earlier stage in a recession, theoretically, you should be ahead (i mean, it's just simple probability. Otherwise the reverse case shouldn't be true so denying this would mean denying mathematics itself).
And in environments when volatility is high, there is real possibility of taking advantage of price arbitrage. Whether retail investors can actually take advantage them is a different story (and one I too would like to know since there's been no studies on this either).

That said, I made a post about day trading in the other post for more theoretical purposes. Cause I want to know what is the % of retail investors (who understand these concepts) beat the market in this short time frame [after all, don't you want to know how market timing fares in different time periods depending on market conditions + volatility?].
There just hasn't been any research papers really done for those people. There's nothing wrong with being curious.
Learning is always a good thing. To discourage it I find to be anti-intellectual.

Once this recession passes, maybe I'll create some algorithm and test my ideas (maybe after a few years when I have time).
And see how 'market timing' does with some generic algorithms in different stages of the bear market (and also depending on the volatility).
I suspect at the earlier start, 'market timing' should get out ahead (as markets are going down more than up, you are missing more down) but the only issue is, once markets start to leave the bear market, it should be the other way. When that 'balance' is I also want to know. And yes, in real life, you wouldn't know when the 'rise out of the bear market' is. But, in the earlier parts of the recession that has a known issue (e.g. a global pandemic), investors should be able to at least take advantage of the scenario initially before quickly turning to buy and hold throughout most of the panic.

That said, for most retail investors, understand historically:
1. Trade Fees
2. Taxes
3. Good Faith Violations
4. Day Trading Preventions under $25k
5. Unable to trade real time
all exist. Sure to bypass this, you need to have over $25k and have a margins (and use the non-fee portion of the margin) but I am trying to roll my head right now in today's environment and the math just doesn't work out to those who claim you would be losing money right now if market timing. Probability doesn't work like that. Before the bottom of the recession, 'getting out of the market' favours traders more because there's more and more chance of leaving the downside of the market. I would assume hence while stock market is not at the bottom, market timers should be in average (if not emotional) be ahead of buy and hold. It is only once the stock market is no longer at the bottom (since market timers don't know) that the results should go the other way. Hence, in the earlier portions of market timing, it makes sense probabilistically (and then quickly join 'buy and hold' throughout the recession).
Last edited by fwellimort on Tue Mar 17, 2020 6:55 pm, edited 1 time in total.
Rosencrantz1
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Re: Why all these timing threads?

Post by Rosencrantz1 »

oken wrote: Tue Mar 17, 2020 10:12 am
AnalogKid22 wrote: Tue Mar 17, 2020 8:33 am The philosophy states to "develop a plan" and "invest early and often". What are you investing for and how much do you need to accumulate to meet your goals? If you have money to invest, meaning money you don't need in the next 5-10 years, then get it in. If the markets drop, like we're experiencing now, you benefit from cheaper prices, but, cheaper doesn't mean cheapest or that the price will soon return to its previous levels. In this current volatility, the market has been swinging thousands of point in both directions. Buying, hoping for the bottom, and selling, hoping to not lose money, at this time is no different than taking your money to a casino. Some might win, others will lose. We're now in a bear market, which, in a few months, could turn into a recession. Stocks could fall even further or remain flat for years while you wait anxiously for the next rebound and return to the levels we saw only a month ago.

Bogle always recommended a mix of stocks and bonds that will allow you to not have to think. These asset classes let you decide how much risk to take so that all you have to think about it earning the money to invest. If you own bonds, for example, no one knew a buyback was coming, but, it's slowly on it's way. You could see a decent return on your bond holdings, or not, while your stocks don't budge.

Bogle also had the famous quote of 'Don't do something; just stand there", because many people invest with emotion, thinking there's an edge or an opportunity in front of them, only to get burned. How many posts have you seen people state "This seems or feels like the right time"?
Without going into too much detail (because I think we may be thinking about different groups of people) I think it is worth pointing out that Bogle himself also reacted to the market. He covered himself by saying he wasn't market timing, but if he was here on this board under another name, he would probably be ridiculed as well.
"Trees don't grow to the sky, and I see clouds on the horizon. I don't know if and when they'll arrive. A little extra caution should be the watchword," Bogle told Barron's. "If you were comfortable at a 70 percent to 30 percent [allocation to stocks and fixed income], under these circumstances you'd like to go back to 60 percent to 40 percent, or something like that."

Bogle did not believe investors for the long term should try to pull completely out and time the market, which he said is "a really dumb strategy." Instead, he said it's time "to really be thinking how much risk you want to have" and make some defensive moves.
Most of what I've personally been drawn to are people wondering about the clouds they are seeing and whether it warrants some extra caution. They voice their thoughts about whether or not they are taking on too much risk and whether it is time to make defensive moves.

And the part that gets me isn't that people disagree. It's fine to disagree, I assume that's what forums are for. If we all agree all the time, it's just an echo chamber.

What gets to me is how unkind people are when they disagree. How snobbish. How holier than thou. Very rarely do people try to fully explain their stand. They just tell you that you are wrong and foolish and wrong and mistaken and wrong.

Again I hasten to say that I have learnt a lot from these forums and there are wonderful discussions going on in some threads. Just voicing what I see in some other threads I guess.

Welcome to Bogleheads! I'm just teasing with you. To your point - I've noticed some of the same. However, I try to keep something in mind...

This is **just** an internet forum filled with strangers that happen to have a (generally) common interest in low cost index investing with a side of "stay the course" - as pioneered by Jack Bogle. Having said that, I'd suggest there are some very, VERY sharp folks on this site (and it appears some like to demonstrate that capacity occasionally in a somewhat caustic way). My advice is to 'shrug it off' - the "holier than thou" comments can sometimes come with the territory. Just my 0.02 cents. Best of luck to you. :beer
CoastalWinds
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Re: Why all these timing threads?

Post by CoastalWinds »

windaar wrote: Mon Mar 16, 2020 10:07 am A core Boglehead philosophy is to never time the market and to stay the course. Why are so many people choosing this particular website to discuss timing? It’s a free country but it seems to me that’s like going to a Veganhead site to ask for hamburger grilling advice. :happy
Let’s call them Impossible Burgers!
fwellimort
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Re: Why all these timing threads?

Post by fwellimort »

I would say this. If we are still in the earlier portions of the recession (basically not at the 'bottom), market timing should objectively and mathematically (no emotional trading) beat timing in the market most of the time.

You can't say
"Time in the market beats market timing" because markets tend to go up and you can miss more up days than down days
then say the same
when the markets are tending to go down than going up

Hence, why these timing threads exist. Simple math says that for market timers in the past month should be in an advantage over buy and hold currently given they weren't trading out of greed and emotions and instead, being very mechanical/objective (following an algorithm).

To outright deny this would be to deny mathematics. And Bogleheaders can hate me all they want at me.
I studied theoretical computer science + pure mathematics at Columbia Univ in NY (and considered getting a Phd until I bailed out for money and love -which failed-) and from my world view of mathematics, I cannot understand why market timers shouldn't be ahead as of at least 'up to now' when markets are trending downwards. Especially with no more trading costs.

It's just simple logic. Think of a line. In a bull market, that line has a positive slope hence if you get out of the market, you tend to miss the 'going up' more. But in a bear market, that line has a negative slope hence if you get out of the market, you tend to miss the 'going down' more.
This is literally second grade mathematics.
That said, "when is the bottom". I have no idea. And as the stage of the bear market goes to 'later and later', I would not dare recommend market timing.

Basically, what I am trying to say is, there should be small 'time frames' in which rational market timers should be ahead most of the time. And that 'time frame' is when markets are trending downwards to the bottom.
Rosencrantz1
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Re: Why all these timing threads?

Post by Rosencrantz1 »

fwellimort wrote: Tue Mar 17, 2020 6:59 pm I would say this. If we are still in the earlier portions of the recession (basically not at the 'bottom), market timing should objectively and mathematically (no emotional trading) beat timing in the market.

You can't say
"Time in the market beats market timing" because markets tend to go up and you can miss more up days than down days
then say the same
when the markets are tending to go down than going up

Hence, why these timing threads exist. Simple math says that for market timers in the past month should be in an advantage over buy and hold currently given they weren't trading out of greed and emotions and instead, being very mechanical/objective (following an algorithm).

To outright deny this would be to deny mathematics. And Bogleheaders can hate me all they want at me.
I studied theoretical computer science + pure mathematics at Columbia Univ in NY (and considered getting a Phd until I bailed out for money and love -which failed-) and from my world view of mathematics, I cannot understand why market timers shouldn't be ahead as of at least 'up to now' when markets are trending downwards. Especially with no more trading costs.

It's just simple logic. Think of a line. In a bull market, that line has a positive slope hence if you get out of the market, you tend to miss the 'going up' more. But in a bear market, that line has a negative slope hence if you get out of the market, you tend to miss the 'going down' more.
That said, "when is the bottom". I have no idea. And as the stage of the bear market goes to 'later and later', I would not dare recommend market timing.

Basically, what I am trying to say is, there should be small 'time frames' in which rational market timers should be ahead. And that 'time frame' is when markets are trending downwards to the bottom.
Good point. The fact remains that (assuming truth) there were SOME individuals on this site that were able to see the gathering, dark clouds of coronavirus and take some action to protect their portfolios. I am not suggesting folks "market time" - I'm merely noting that some folks moved to protect their portfolios and they, evidently, will have a laaaarge window to reenter the market (at lower prices). Of course, I suppose it remains to be seen as to whether or not some will, in fact, reenter the market...
DLR62
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Re: Why all these timing threads?

Post by DLR62 »

As mentioned there are very few quality investment sites. I belong to a good dividend growth investing forum. Small and well behaved crowd. Those places are rare now that forums are less popular. A significant portion of the investors I run across online have either never lived a bear market, or they were just starting out and the financial crisis did not deliver the real bear market experience. As I'm sure everyone here knows, you have to watch $100K+ disappear from your portfolio in a hurry to understand how you are going to feel. This correction have been particularly violent so you know it is causing people to react.
james22
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Re: Why all these timing threads?

Post by james22 »

timboktoo wrote: Tue Mar 17, 2020 6:16 pmThe default behavior of human beings who are experiencing something bad is to try to fix the situation. We like to take action. It is incredibly counterintuitive to us to just sit and do nothing. It goes against our instincts.

Anybody can say that they agree with the Boglehead philosophy cerebrally. Practicing it is harder.
Like golf, it is hard to trust your game and swing easy.
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hagridshut
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Re: Why all these timing threads?

Post by hagridshut »

AnalogKid22 wrote: Tue Mar 17, 2020 10:25 amThings change, I get that, but, this forum was a fantastic place to get excellent advice when setting out on your "Boglehead" journey or when making investment decisions. The "members" contributing now, are more focused on get-rich-quick and would be better off joining a day-trading forum.
Sadly, I agree with this. There is a lot of advocacy for taking actions to get quick gains, or to react to emotionally difficult events. I don't think it was like this early in the last decade.

It makes me question whether further participation here is worthwhile.

fwellimort wrote: Tue Mar 17, 2020 6:59 pm Hence, why these timing threads exist. Simple math says that for market timers in the past month should be in an advantage over buy and hold currently given they weren't trading out of greed and emotions and instead, being very mechanical/objective (following an algorithm).

To outright deny this would be to deny mathematics. And Bogleheaders can hate me all they want at me.
I studied theoretical computer science + pure mathematics at Columbia Univ in NY (and considered getting a Phd until I bailed out for money and love -which failed-) and from my world view of mathematics, I cannot understand why market timers shouldn't be ahead as of at least 'up to now' when markets are trending downwards. Especially with no more trading costs.
I watch a lot of trader chatter on Reddit. I don't believe that any trader who is a real person (and not a Bot) can ever completely separate emotions from trading. Psychology is probably more useful than Mathematics for studying market timing.

Outside of certain tax advantaged accounts, trading does have costs. Taxes on capital gains can be substantial in the short term.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio
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