Another New Investor (Market Timing)

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TheHouse7
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Another New Investor (Market Timing)

Post by TheHouse7 » Mon Sep 11, 2017 9:04 pm

I've read some resent wisdom to expect lower average real returns from bonds/stocks.

I've read some other resent treads of taking investment in other more risky ventures to meet goals.

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?

Thank you for your kind replies. :|
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

MNGopher
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Re: Another New Investor (Market Timing)

Post by MNGopher » Mon Sep 11, 2017 9:55 pm

What if your strategy to earn 15% falls short, or even goes negative? What if your shift to go dramatically more conservative happens right when the market takes off again?

Don't time the market. You are betting that you know more then all the professionals and their high speed computers. Pick an AA that you can stick with whether the market goes up or down.

avecmoi
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Re: Another New Investor (Market Timing)

Post by avecmoi » Mon Sep 11, 2017 10:07 pm

If you begrudge others' wisdom...
were the other threads posted multiple times for them to be resent?
---------------------------------------
Warren Buffett's performance is close to 20% CAGR. Madoff made up profits were less than that. Almost guaranteed 15% annual gains almost always one day guarantees a 100% loss.

You asked for free advice and so you got what this is worth.

TheHouse7
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Re: Another New Investor (Market Timing)

Post by TheHouse7 » Mon Sep 11, 2017 11:30 pm

MNGopher wrote:
Mon Sep 11, 2017 9:55 pm
What if your strategy to earn 15% falls short, or even goes negative? What if your shift to go dramatically more conservative happens right when the market takes off again?

Don't time the market. You are betting that you know more then all the professionals and their high speed computers. Pick an AA that you can stick with whether the market goes up or down.
I would keep it until next year to add more... I don't really know where this is going. I was just thinking that I already have "above average returns" YTD why not keep them?
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

JBTX
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Re: Another New Investor (Market Timing)

Post by JBTX » Mon Sep 11, 2017 11:44 pm

TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm
I've read some resent wisdom to expect lower average real returns from bonds/stocks.

I've read some other resent treads of taking investment in other more risky ventures to meet goals.

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?

Thank you for your kind replies. :|
If you have a plan to earn 15% a year, then I'd go all in. Keep doing it forever. You will double your money every five years. You will turn $1000 into $64,000 over 30 years. If you could invest $10,000 a year for 10 years, and then stopped investing, at the end of 40 years you would have somewhere in the ballpark of $15 million.

MotoTrojan
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Re: Another New Investor (Market Timing)

Post by MotoTrojan » Tue Sep 12, 2017 12:37 am

TheHouse7 wrote:
Mon Sep 11, 2017 11:30 pm
MNGopher wrote:
Mon Sep 11, 2017 9:55 pm
What if your strategy to earn 15% falls short, or even goes negative? What if your shift to go dramatically more conservative happens right when the market takes off again?

Don't time the market. You are betting that you know more then all the professionals and their high speed computers. Pick an AA that you can stick with whether the market goes up or down.
I would keep it until next year to add more... I don't really know where this is going. I was just thinking that I already have "above average returns" YTD why not keep them?

What is this strategy?

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LiveSimple
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Re: Another New Investor (Market Timing)

Post by LiveSimple » Tue Sep 12, 2017 1:08 am

TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm
What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.
Please come back the same day in 2020, and let us know how your strategy did work for you.

ivk5
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Re: Another New Investor (Market Timing)

Post by ivk5 » Tue Sep 12, 2017 7:53 am

TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm
What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.
You mean, beat the odds for a while, then take some off the table? This is gambling. The statement might as well have been about slot machines or craps.

Subject references investing but content doesn't.

pkcrafter
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Re: Another New Investor (Market Timing)

Post by pkcrafter » Tue Sep 12, 2017 8:36 am

What if I have a strategy to earn 15% per year
That would be great, but you don't have a strategy to earn 15% a year.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Alexa9
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Re: Another New Investor (Market Timing)

Post by Alexa9 » Tue Sep 12, 2017 8:43 am

A 100% Global Small Cap Value allocation would likely outperform a 60/40 total market allocation but it would be very volatile so you would need an iron stomach and you would want a long time span with many years of underperformance.

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Pajamas
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Re: Another New Investor (Market Timing)

Post by Pajamas » Tue Sep 12, 2017 8:43 am

TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm
I've read some resent wisdom to expect lower average real returns from bonds/stocks.

I've read some other resent treads of taking investment in other more risky ventures to meet goals.

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?

Thank you for your kind replies. :|
Sounds like cashing out your chips at the casino after a winning streak. I think that is a better strategy than continuing to play until you lose everything, but there are other options like not gambling at the casino in the first place.

ivk5
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Re: Another New Investor (Market Timing)

Post by ivk5 » Tue Sep 12, 2017 8:55 am

Pajamas wrote:
Tue Sep 12, 2017 8:43 am
Sounds like cashing out your chips at the casino after a winning streak. I think that is a better strategy than continuing to play until you lose everything, but there are other options like not gambling at the casino in the first place.
+1

But maybe gambling is exactly what OP's looking for (see username).

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Pajamas
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Re: Another New Investor (Market Timing)

Post by Pajamas » Tue Sep 12, 2017 9:02 am

ivk5 wrote:
Tue Sep 12, 2017 8:55 am
But maybe gambling is exactly what OP's looking for (see username).
Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.

TheHouse7
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Re: Another New Investor (Market Timing)

Post by TheHouse7 » Tue Sep 12, 2017 9:27 am

Pajamas wrote:
Tue Sep 12, 2017 9:02 am
ivk5 wrote:
Tue Sep 12, 2017 8:55 am
But maybe gambling is exactly what OP's looking for (see username).
Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.
I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

TheHouse7
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Re: Another New Investor (Market Timing)

Post by TheHouse7 » Tue Sep 12, 2017 9:32 am

ivk5 wrote:
Tue Sep 12, 2017 7:53 am
TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm
What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.
You mean, beat the odds for a while, then take some off the table? This is gambling. The statement might as well have been about slot machines or craps.

Subject references investing but content doesn't.
This is exactly the reaction I expected. Do you never have plans to sell?

I'm not looking to gamble. I'm just trying to understand duration in the market is viewed as a positive, but seeing numerous posts on a lower than average return for 10-20 years makes it seem like duration isn't worth the risk.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

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nedsaid
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Re: Another New Investor (Market Timing)

Post by nedsaid » Tue Sep 12, 2017 9:43 am

TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm
I've read some resent wisdom to expect lower average real returns from bonds/stocks.

I've read some other resent treads of taking investment in other more risky ventures to meet goals.

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?

Thank you for your kind replies. :|
I just wish it was that easy. Markets just do weird things and you never know when. Markets can be really volatile, I have seen two 50% down bear markets since the year 2000. I saw an amazing bull run in the stock market from 1984 through 1999. I saw an essentially flat US Stock Market from 2000 until 2012 or 2013. You also have to be willing to buck the tide of relentless negativism from the financial press. I have seen books predicting doom for the US dollar, the next stock market crash, and the next Great Depression since I started investing in 1984.

Pretty much you have to be on the train when it leaves the station. I would not try market timing. What you can to is to try to buy cheaper assets when you can, that will help. Over the long term, cheap beats expensive. My advice is to be broadly diversified all over the world with a stock and bond portfolio. Markets will do what markets will do, you will find that time in the market will make you money and not the timing of the market.
A fool and his money are good for business.

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Pajamas
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Re: Another New Investor (Market Timing)

Post by Pajamas » Tue Sep 12, 2017 9:53 am

TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am

I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
I have sold part of a position in a stock with huge returns because it had grown to be too large of an allocation in my portfolio. I would have made more money in the long run by not doing so, but at the time I felt it was more important to manage risk caused by over-concentration, not to maximize returns despite the risks. Do I sometimes have small pangs of regret at the money I could have made but didn't? Yes, but then I remind myself why I did it and that the opposite could have happened and believe that I made the right decision.

There have been many discussions here about whether rebalancing is a form of market timing and similar that you might be interested in reading.

https://www.google.com/search?q=market+ ... eheads.org

Yes, if my investments increased 1,000% this year, I would take some off the table. There are also threads about stopping playing after you win the game.

https://www.google.com/search?q=winning ... eheads.org

However, I think doing this on an annual basis based on 15% gains or similar is market timing. Often the markets yield more or less than that on an annual basis and you need a longer perspective.

A calendar (or other) year of investing is also largely arbitrary as far as returns. Of course it is not arbitrary to the extent it relates to taxes, contribution limits, required minimum distributions, etc.

Slothmeister
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Re: Another New Investor (Market Timing)

Post by Slothmeister » Tue Sep 12, 2017 9:56 am

It's hard to imagine the market staying at this trajectory much longer but the 1980 to 1999 timeframe says it's possible.

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randomizer
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Re: Another New Investor (Market Timing)

Post by randomizer » Tue Sep 12, 2017 10:02 am

TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am
If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
Well, if an investment did very well it would probably trigger a rebalancing band, and that would not be market timing, just maintaining desired asset allocation. In practice though, investments tend not to go up 1000% in a year, and this bull market has been very steady and boring, which means that I haven't even had to rebalance (beyond directing new contributions). Note that if your investments are large and go up 1000% then your IPS may call for you to rebalance to a new AA according to some glide path, and that wouldn't be market timing either.

KlangFool
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Re: Another New Investor (Market Timing)

Post by KlangFool » Tue Sep 12, 2017 10:17 am

OP,

If you have a fixed Asset Allocation like 60/40, you do not need to time the market.

<<What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.>.

If the stock goes up, you sell stock to buy the bond in order to maintain the 60/40 ratio. You do not need to change your AA. This is called rebalancing.

Vice versa, if the bond goes up, you sell the bond to buy stock.

By maintaining a fixed AA, you always "Sell High and Buy Low"

KlangFool

fantasytensai
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Re: Another New Investor (Market Timing)

Post by fantasytensai » Tue Sep 12, 2017 10:32 am

TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am
Pajamas wrote:
Tue Sep 12, 2017 9:02 am
ivk5 wrote:
Tue Sep 12, 2017 8:55 am
But maybe gambling is exactly what OP's looking for (see username).
Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.
I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
If your AA is 90/10, then your stocks made a 1000% increase (10 fold), then you re-balance, so no it would not be market timing.

Example: You have $100 invested, $90 in stocks $10 in bonds. Your $90 in stocks becomes $900 now you have $910. You sell $81 of stocks and buy bonds so now you have $819 in stocks and $91 in bonds.

frankbrenowitz
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Re: Another New Investor (Market Timing)

Post by frankbrenowitz » Tue Sep 12, 2017 12:14 pm

TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?
Please elaborate on your strategy to earn a sustained 15% CAGR and specify the date for dramatically shifting to the more conservative AA after achieving your investment goals.

TheHouse7
Posts: 101
Joined: Fri Jan 13, 2017 2:40 am

Re: Another New Investor (Market Timing)

Post by TheHouse7 » Tue Sep 12, 2017 12:39 pm

KlangFool wrote:
Tue Sep 12, 2017 10:17 am
OP,

If you have a fixed Asset Allocation like 60/40, you do not need to time the market.

<<What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.>.

If the stock goes up, you sell stock to buy the bond in order to maintain the 60/40 ratio. You do not need to change your AA. This is called rebalancing.

Vice versa, if the bond goes up, you sell the bond to buy stock.

By maintaining a fixed AA, you always "Sell High and Buy Low"

KlangFool
I agree, it just seems starting in a prolonged bull market is buying high or buying high. :annoyed
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

TheHouse7
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Re: Another New Investor (Market Timing)

Post by TheHouse7 » Tue Sep 12, 2017 12:52 pm

frankbrenowitz wrote:
Tue Sep 12, 2017 12:14 pm
TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?
Please elaborate on your strategy to earn a sustained 15% CAGR and specify the date for dramatically shifting to the more conservative AA after achieving your investment goals.
I'm just using this year as an example.

I put $100 in TSM and hold till it reaches $115.

I then sell it all and hold cash for the rest of the year.

The next year I add anythin extra I want to invest along with $115. (Hopefully this cash period is when the market reverts to the mean)

The idea would be to rebalance extreme.

Thank you for all your replies, my stupid questions are finished/ unactionable.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

KlangFool
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Re: Another New Investor (Market Timing)

Post by KlangFool » Tue Sep 12, 2017 12:53 pm

TheHouse7 wrote:
Tue Sep 12, 2017 12:39 pm
KlangFool wrote:
Tue Sep 12, 2017 10:17 am
OP,

If you have a fixed Asset Allocation like 60/40, you do not need to time the market.

<<What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.>.

If the stock goes up, you sell stock to buy the bond in order to maintain the 60/40 ratio. You do not need to change your AA. This is called rebalancing.

Vice versa, if the bond goes up, you sell the bond to buy stock.

By maintaining a fixed AA, you always "Sell High and Buy Low"

KlangFool
I agree, it just seems starting in a prolonged bull market is buying high or buying high. :annoyed
TheHouse7,

Unless you are 100/0, you will be buying the bond now. So, why would you be buying high?

KlangFool

avalpert
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Re: Another New Investor (Market Timing)

Post by avalpert » Tue Sep 12, 2017 1:16 pm

TheHouse7 wrote:
Tue Sep 12, 2017 12:52 pm
frankbrenowitz wrote:
Tue Sep 12, 2017 12:14 pm
TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?
Please elaborate on your strategy to earn a sustained 15% CAGR and specify the date for dramatically shifting to the more conservative AA after achieving your investment goals.
I'm just using this year as an example.

I put $100 in TSM and hold till it reaches $115.

I then sell it all and hold cash for the rest of the year.

The next year I add anythin extra I want to invest along with $115. (Hopefully this cash period is when the market reverts to the mean)

The idea would be to rebalance extreme.

Thank you for all your replies, my stupid questions are finished/ unactionable.
The reason you don't do it because stocks don't work by the calendar and you don't know when the gains/losses will come. Say you take it out after earning 15% this year, it goes up another 10% before the end of the year, you put your money back in and it promptly goes down 10% - why is that a less likely scenario than pulling it out, not missing out on gains and it starting to gain again when you go back in?

alex_686
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Re: Another New Investor (Market Timing)

Post by alex_686 » Tue Sep 12, 2017 1:22 pm

As others have posted the math behind this does not work. I could ad nauseam on this. Managing risk and expectations is critical for a investor.

A question for you - as your wealth increases does you willingness to take risk increase or decrease? You ability does, but that is not the question that I am asking. This might inform you on the rebalancing technique you use, Constant Mix or Constant Proportion Portfolio Insurance (CPPI). Read up on these.

GoldenFinch
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Re: Another New Investor (Market Timing)

Post by GoldenFinch » Tue Sep 12, 2017 1:27 pm

TheHouse7 wrote:
Tue Sep 12, 2017 12:52 pm
frankbrenowitz wrote:
Tue Sep 12, 2017 12:14 pm
TheHouse7 wrote:
Mon Sep 11, 2017 9:04 pm

What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.

Would I not be meeting my investment goals and not have to tolerate as much risk?
Please elaborate on your strategy to earn a sustained 15% CAGR and specify the date for dramatically shifting to the more conservative AA after achieving your investment goals.
I'm just using this year as an example.

I put $100 in TSM and hold till it reaches $115.

I then sell it all and hold cash for the rest of the year.

The next year I add anythin extra I want to invest along with $115. (Hopefully this cash period is when the market reverts to the mean)

The idea would be to rebalance extreme.

Thank you for all your replies, my stupid questions are finished/ unactionable.
What if it doesn't reach $115, but instead goes down to 93? Your plan is messed up.

What if the market doesn't revert to the mean? (There's a mean? What is the current mean?)

TheHouse7
Posts: 101
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Re: Another New Investor (Market Timing)

Post by TheHouse7 » Tue Sep 12, 2017 1:48 pm

KlangFool wrote:
Tue Sep 12, 2017 12:53 pm
TheHouse7 wrote:
Tue Sep 12, 2017 12:39 pm
KlangFool wrote:
Tue Sep 12, 2017 10:17 am
OP,

If you have a fixed Asset Allocation like 60/40, you do not need to time the market.

<<What if I have a strategy to earn 15% per year and then shift dramaticly to a more conservative AA.>.

If the stock goes up, you sell stock to buy the bond in order to maintain the 60/40 ratio. You do not need to change your AA. This is called rebalancing.

Vice versa, if the bond goes up, you sell the bond to buy stock.

By maintaining a fixed AA, you always "Sell High and Buy Low"

KlangFool
I agree, it just seems starting in a prolonged bull market is buying high or buying high. :annoyed
TheHouse7,

Unless you are 100/0, you will be buying the bond now. So, why would you be buying high?

KlangFool
Because bonds seem expensive, low to no real return.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

TheHouse7
Posts: 101
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Re: Another New Investor (Market Timing)

Post by TheHouse7 » Tue Sep 12, 2017 1:49 pm

alex_686 wrote:
Tue Sep 12, 2017 1:22 pm
As others have posted the math behind this does not work. I could ad nauseam on this. Managing risk and expectations is critical for a investor.

A question for you - as your wealth increases does you willingness to take risk increase or decrease? You ability does, but that is not the question that I am asking. This might inform you on the rebalancing technique you use, Constant Mix or Constant Proportion Portfolio Insurance (CPPI). Read up on these.
Thank you, I will
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

mega317
Posts: 706
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Re: Another New Investor (Market Timing)

Post by mega317 » Tue Sep 12, 2017 11:34 pm

TheHouse7 wrote:
Tue Sep 12, 2017 12:39 pm
I agree, it just seems starting in a prolonged bull market is buying high or buying high. :annoyed
I'll just point out, since others have mentioned the 80s and 90s, that on 6/16/1995, about 15 years into a bull market, that the S&P 500 was at an all-time high of 539. It never went lower. The lowest point in the future crashes was north of 700 in 2009. There are many many more examples like this.

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unclescrooge
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Re: Another New Investor (Market Timing)

Post by unclescrooge » Wed Sep 13, 2017 6:50 am

TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am
Pajamas wrote:
Tue Sep 12, 2017 9:02 am
ivk5 wrote:
Tue Sep 12, 2017 8:55 am
But maybe gambling is exactly what OP's looking for (see username).
Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.
I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
No, it's called rebalancing.

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stemikger
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Re: Another New Investor (Market Timing)

Post by stemikger » Wed Sep 13, 2017 7:01 am

I didn't read the other replies yet, but will you mind emailing me the secret sauce for 15% returns. lol
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

KlangFool
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Re: Another New Investor (Market Timing)

Post by KlangFool » Wed Sep 13, 2017 7:18 am

unclescrooge wrote:
Wed Sep 13, 2017 6:50 am
TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am
Pajamas wrote:
Tue Sep 12, 2017 9:02 am
ivk5 wrote:
Tue Sep 12, 2017 8:55 am
But maybe gambling is exactly what OP's looking for (see username).
Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.
I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
No, it's called rebalancing.
unclescrooge,

It is market timing since OP rebalance to cash and it is not based on any AA ratio. OP is 100/0.

KlangFool

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unclescrooge
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Re: Another New Investor (Market Timing)

Post by unclescrooge » Wed Sep 13, 2017 5:16 pm

KlangFool wrote:
Wed Sep 13, 2017 7:18 am
unclescrooge wrote:
Wed Sep 13, 2017 6:50 am
TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am
Pajamas wrote:
Tue Sep 12, 2017 9:02 am
ivk5 wrote:
Tue Sep 12, 2017 8:55 am
But maybe gambling is exactly what OP's looking for (see username).
Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.
I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
No, it's called rebalancing.
unclescrooge,

It is market timing since OP rebalance to cash and it is not based on any AA ratio. OP is 100/0.

KlangFool
That's coz he's doing it wrong.
He asked for "your" investments, not "his" investments performance. :mrgreen:

KlangFool
Posts: 6484
Joined: Sat Oct 11, 2008 12:35 pm

Re: Another New Investor (Market Timing)

Post by KlangFool » Wed Sep 13, 2017 5:31 pm

unclescrooge wrote:
Wed Sep 13, 2017 5:16 pm
KlangFool wrote:
Wed Sep 13, 2017 7:18 am
unclescrooge wrote:
Wed Sep 13, 2017 6:50 am
TheHouse7 wrote:
Tue Sep 12, 2017 9:27 am
Pajamas wrote:
Tue Sep 12, 2017 9:02 am


Maybe so.

It's generally considered appropriate to take more risk in the form of a higher allocation to stocks when you are young and then moving to a more conservative allocation when you are older. Isn't that what targeted retirement funds are all about?

I think the primary problem here is the assumption that the initial investment strategy will return 15% annually, not the eventual shift to a more conservative allocation.
I think the problem is more than enough returns in the first half of the year and then assuming more risk by not "locking in" those returns.

If your investments increased 1000% this year, wouldn't you want to take some off the table?(is this market timing?)
No, it's called rebalancing.
unclescrooge,

It is market timing since OP rebalance to cash and it is not based on any AA ratio. OP is 100/0.

KlangFool
That's coz he's doing it wrong.
He asked for "your" investments, not "his" investments performance. :mrgreen:
Okay. I missed that.

KlangFool

ReadyOrNot
Posts: 93
Joined: Sun Aug 21, 2016 1:51 pm

Re: Another New Investor (Market Timing)

Post by ReadyOrNot » Wed Sep 13, 2017 8:20 pm

Very confusing, but finally decided that OP means:
Wait for market to gain 15%, then sell. Repeat so you always make at least 15%, selling on highs.
A more common scheme may be where you wait for the market to drop 15%, then buy. So you always are buying on lows.
People have tried these strategies, and they generally don't really beat the market. If the market is random, you miss gains while you are out of the market, or the amount you are waiting to re-invest is out of the market.

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