Not market timing is hard

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markcoop
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Not market timing is hard

Post by markcoop » Thu Sep 12, 2019 10:56 am

In the past couple of years, every time the market has reached new highs, I find myself wanting to sell some stocks. I have always allowed myself to market time a little bit - I play around at the edges of my rebalancing bands (for example, if 60% with a 5% rebalancing band, then sell down to 55% if I feel the market is high). But after such a long stock run up and uncertainty in our gov't, the yearning is as strong as ever to go beyond that point. Of course, I know in my head that it is better to just keep rebalancing as needed and call it a day. It is really fascinating to understand this feeling - the feeling of is this a golden opportunity?
Mark

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Clever_Username
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Re: Not market timing is hard

Post by Clever_Username » Thu Sep 12, 2019 11:02 am

I find it works best to tune out noise. I will periodically want to check the valuations, or to watch a morning financial show, etc. I find watching Morning Drive when I'm home and want to put on the TV in the AM helps quite a bit.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

TSR
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Re: Not market timing is hard

Post by TSR » Thu Sep 12, 2019 11:05 am

I understand what you're saying, but if you read all the people on this site advocating at this very moment that you should instead sell all of your bonds then you have a pretty clear picture of the many ways in which nobody knows nothing, as they say.

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bligh
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Re: Not market timing is hard

Post by bligh » Thu Sep 12, 2019 11:05 am

Agreed.

What has worked for me over the years that I've been a Boglehead is to set aside one of my smaller investment accounts for market timing moves (ie. it makes up < 2% of my portfolio). It acts as a "pressure release valve" for my instinct to tinker, without actually affecting my overall investment outcome very much.

Also the fact that this investment account has significantly underperformed the rest of my portfolio only helps to re-inforce the lesson NOT to tinker with my asset allocation or market time. :oops:

renue74
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Re: Not market timing is hard

Post by renue74 » Thu Sep 12, 2019 11:09 am

I have the same issue. I think because the investing is actually of interest. So you're hyper involved in the day to day.

I find that if I'm doing a hobby more, working more, vacationing more, etc., that I pay less attention to the financial news cycles.

Maybe find an alternative thing to do.

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Re: Not market timing is hard

Post by AHTFY » Thu Sep 12, 2019 11:15 am

"There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily—or sufficient knowledge to make his play an intelligent play." ~ Reminiscences of a Stock Operator

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Re: Not market timing is hard

Post by AnalogKid22 » Thu Sep 12, 2019 11:17 am

As other have said, I think tuning out the noise (i.e. the news), which is mostly gloom and doom to attract attention, is even harder. If you have a long investing horizon of 5 or more years, you shouldn't care at all about the market. It's only when you're nearing retirement or need the money in the short term that you would be worried.

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Re: Not market timing is hard

Post by cherijoh » Thu Sep 12, 2019 11:28 am

markcoop wrote:
Thu Sep 12, 2019 10:56 am
In the past couple of years, every time the market has reached new highs, I find myself wanting to sell some stocks. I have always allowed myself to market time a little bit - I play around at the edges of my rebalancing bands (for example, if 60% with a 5% rebalancing band, then sell down to 55% if I feel the market is high). But after such a long stock run up and uncertainty in our gov't, the yearning is as strong as ever to go beyond that point. Of course, I know in my head that it is better to just keep rebalancing as needed and call it a day. It is really fascinating to understand this feeling - the feeling of is this a golden opportunity?
IMO, now is the perfect time for a gut check on your AA if you are a long way from retirement - for example anyone who started investing during the Great Recession or shortly afterwards when stocks started their climb back up. If you are 100% stocks or 90/10 and have never had your resolution tested, it might be a good time to think about whether you are still comfortable with your AA especially if you have accumulated a decent-sized nut.

Or if you are within a few years of retirement, it might be time to consider a potential acceleration of your glide path especially if you are at a re;atively aggressive AA (e.g., age in bonds - 20%). But you need to be prepared to leave it there and not second guess yourself or you are likely to do more harm than good.

azanon
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Re: Not market timing is hard

Post by azanon » Thu Sep 12, 2019 11:30 am

It's interesting to see that this thread keeps getting bumped. The OP was actually right (Mar 2007 was a very decent time to take profits - "golden opportunity"?). I wonder if he acted on his suspicion?

I think the better way to say it though is to say to not care how much you pay for stock is hard, not that not market timing is hard. Maybe it should feel hard to pay 30 times 10yr earnings for stocks?

MotoTrojan
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Re: Not market timing is hard

Post by MotoTrojan » Thu Sep 12, 2019 11:36 am

TSR wrote:
Thu Sep 12, 2019 11:05 am
I understand what you're saying, but if you read all the people on this site advocating at this very moment that you should instead sell all of your bonds then you have a pretty clear picture of the many ways in which nobody knows nothing, as they say.
Just sell all your equities AND bonds and put it all into TMV (3x inverse long-term US treasuries). If you believe everything you read here, it is a quick, easy, and low-risk way to make millions.

MotoTrojan
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Re: Not market timing is hard

Post by MotoTrojan » Thu Sep 12, 2019 11:37 am

azanon wrote:
Thu Sep 12, 2019 11:30 am
It's interesting to see that this thread keeps getting bumped. The OP was actually right (Mar 2007 was a very decent time to take profits - "golden opportunity"?). I wonder if he acted on his suspicion?

I think the better way to say it though is to say to not care how much you pay for stock is hard, not that not market timing is hard. Maybe it should feel hard to pay 30 times 10yr earnings for stocks?
What? This is not an old post from 2007, but that would've been interesting for sure.

TSR
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Re: Not market timing is hard

Post by TSR » Thu Sep 12, 2019 11:39 am

MotoTrojan wrote:
Thu Sep 12, 2019 11:36 am
TSR wrote:
Thu Sep 12, 2019 11:05 am
I understand what you're saying, but if you read all the people on this site advocating at this very moment that you should instead sell all of your bonds then you have a pretty clear picture of the many ways in which nobody knows nothing, as they say.
Just sell all your equities AND bonds and put it all into TMV (3x inverse long-term US treasuries). If you believe everything you read here, it is a quick, easy, and low-risk way to make millions.
Can't lose!

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Re: Not market timing is hard

Post by SevenBridgesRoad » Thu Sep 12, 2019 11:54 am

azanon wrote:
Thu Sep 12, 2019 11:30 am
It's interesting to see that this thread keeps getting bumped. The OP was actually right (Mar 2007 was a very decent time to take profits - "golden opportunity"?). I wonder if he acted on his suspicion?...
Looks like OP joined the forum in March 2007. Thread started this morning.

I wonder if tinkering (market timing) is age-related or years-from-retirement related? Probably tangled up with other variables, such as comfort level with one's plan. The closer I got to retirement the more comfortable I was with not thinking about changes to the portfolio/retirement plan. Not thinking about market timing at all now (but did when I was younger/farther from retirement/still working towards plan).
Retired 2018 age 61 | "Not using an alarm is one of the great glories of my life." Robert Greene

azanon
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Re: Not market timing is hard

Post by azanon » Thu Sep 12, 2019 12:05 pm

MotoTrojan wrote:
Thu Sep 12, 2019 11:37 am
azanon wrote:
Thu Sep 12, 2019 11:30 am
It's interesting to see that this thread keeps getting bumped. The OP was actually right (Mar 2007 was a very decent time to take profits - "golden opportunity"?). I wonder if he acted on his suspicion?

I think the better way to say it though is to say to not care how much you pay for stock is hard, not that not market timing is hard. Maybe it should feel hard to pay 30 times 10yr earnings for stocks?
What? This is not an old post from 2007, but that would've been interesting for sure.
Whoops - I've been away for a month+ and for whatever reason casually assumed the dates I was seeing on the side (joined dates) was posting dates. My mistake. Doh!

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markcoop
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Re: Not market timing is hard

Post by markcoop » Thu Sep 12, 2019 12:11 pm

Since it came up, I have been a member of this community since the Morningstar days. So close to 20 years. I am 53 years old and really haven't changed my tune too much about investing over that time frame. I have always been tempted at the extremes. The last time I felt the way I have felt the past year was in the late 1990s. But every high I typically want to sell and in big drops I want to buy.
Mark

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Re: Not market timing is hard

Post by Fallible » Thu Sep 12, 2019 12:14 pm

markcoop wrote:
Thu Sep 12, 2019 10:56 am
... Of course, I know in my head that it is better to just keep rebalancing as needed and call it a day. It is really fascinating to understand this feeling - the feeling of is this a golden opportunity?
The feeling is human nature, one of temptation, of emotion over reason requiring discipline. And it's more about tinkering than timing.

My advice is to take the advice of those here who have suggested finding something else to do with your valuable time. This is what has worked for me and I've been fortunate to have many other interests that, for the most part, keep me from tinkering.
Last edited by Fallible on Thu Sep 12, 2019 12:17 pm, edited 1 time in total.
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MotoTrojan
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Re: Not market timing is hard

Post by MotoTrojan » Thu Sep 12, 2019 12:14 pm

markcoop wrote:
Thu Sep 12, 2019 12:11 pm
Since it came up, I have been a member of this community since the Morningstar days. So close to 20 years. I am 53 years old and really haven't changed my tune too much about investing over that time frame. I have always been tempted at the extremes. The last time I felt the way I have felt the past year was in the late 1990s. But every high I typically want to sell and in big drops I want to buy.
Valuations are VASTLY different now than the late 1990's and returns since that period are pretty benign. I will say though that if a 5% move here and there keeps you from cashing out, then maybe it is a worthy compromise.

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whodidntante
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Re: Not market timing is hard

Post by whodidntante » Thu Sep 12, 2019 12:20 pm

You don't need the permission of the Bogleheads to change your asset allocation. But just know you're probably really bad at market timing.

I've decided I need to increase my fixed income allocation. But I find investing in bonds at these yields repugnant, although the capital gains lately have been nice but may not continue. So I'm prepaying my highest cost debt to shave the short side of my fixed income. This increases my net exposure to fixed income without making me want to vomit with every bond fund purchase.

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Re: Not market timing is hard

Post by stocknoob4111 » Thu Sep 12, 2019 12:52 pm

MotoTrojan wrote:
Thu Sep 12, 2019 12:14 pm
Valuations are VASTLY different now than the late 1990's and returns since that period are pretty benign. I will say though that if a 5% move here and there keeps you from cashing out, then maybe it is a worthy compromise.
Looking at historical P/Es for the S&P 500 I see P/Es were elevated for many years in the 90s as well, in fact higher than today.

https://www.multpl.com/s-p-500-pe-ratio/table/by-year

If geopolitical risks are resolved (i.e. trade war) I think this market may have way higher to go before it reaches an absolute top.

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Re: Not market timing is hard

Post by MotoTrojan » Thu Sep 12, 2019 1:02 pm

stocknoob4111 wrote:
Thu Sep 12, 2019 12:52 pm
MotoTrojan wrote:
Thu Sep 12, 2019 12:14 pm
Valuations are VASTLY different now than the late 1990's and returns since that period are pretty benign. I will say though that if a 5% move here and there keeps you from cashing out, then maybe it is a worthy compromise.
Looking at historical P/Es for the S&P 500 I see P/Es were elevated for many years in the 90s as well, in fact higher than today.

https://www.multpl.com/s-p-500-pe-ratio/table/by-year

If geopolitical risks are resolved (i.e. trade war) I think this market may have way higher to go before it reaches an absolute top.
Furthermore, today’s value may be a low that’s never passed again.

DonIce
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Re: Not market timing is hard

Post by DonIce » Thu Sep 12, 2019 1:05 pm

You're not gonna do much damage by adjusting AA within say a 10% band of a target (i.e. sliding between 60/40 and 80/20) in response to market conditions.

DonIce
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Re: Not market timing is hard

Post by DonIce » Thu Sep 12, 2019 1:08 pm

MotoTrojan wrote:
Thu Sep 12, 2019 12:14 pm
Valuations are VASTLY different now than the late 1990's and returns since that period are pretty benign.
Indeed. Also, the mood now is very different. In the late 1990s, (almost) everyone was very bullish, throwing caution to the wind, irrationally exuberant, assuming that the stock market would keep going up with double digit annual returns every year forever. Today, the situation is very different, everyone is very cautious and fearful of a possible recession.

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Re: Not market timing is hard

Post by firebirdparts » Thu Sep 12, 2019 2:31 pm

The struggle is real! I am an incurable optimist. I know I am totally biased. Ugh. I have done some things right and some things wrong. The biggest thing I did right was to save early. I put everything in the 401k where nobody could spend it (take that!) When I was young, I was invested 100% stocks and that worked out okay for me. I was accumulating through the lost decade.

My greatest market timing mistake of all was taking a bunch of money to cash when it looked like Greece was going to default on all their debt. Boy that was dumb, and after a decade of accumulation it was a lot of money. As the market just kept going up and up you don't know how to get back in. In hindsight, you want to get back in really fast. Looking ahead, it's not so clear.

There were times that I did not look at my accounts at all for years. That can be good.

An additional mistake was I never really understood the bond environment we were in nor how to profit from that.
A fool and your money are soon partners

student
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Re: Not market timing is hard

Post by student » Thu Sep 12, 2019 2:37 pm

If you stick strictly to you AA and simply play around within the 5% band, I think it is ok in the sense that a mistake will not be detrimental.

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Re: Not market timing is hard

Post by SuperSaver1975 » Thu Sep 12, 2019 3:10 pm

Decide an AA, then tune out all financial news.

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Re: Not market timing is hard

Post by House Blend » Fri Sep 13, 2019 9:22 am

markcoop wrote:
Thu Sep 12, 2019 10:56 am
In the past couple of years, every time the market has reached new highs, I find myself wanting to sell some stocks. I have always allowed myself to market time a little bit - I play around at the edges of my rebalancing bands (for example, if 60% with a 5% rebalancing band, then sell down to 55% if I feel the market is high). But after such a long stock run up....
My IPS allows me to do this sort of thing, but going beyond the bands is verboten.

In any case, the philosophy of my IPS is that rebalancing is only for risk control. As long as my portfolio is inside the rebalancing bands, no actions are required.

But within that sandbox, I'm *allowed* to make trades as long as:
(a) it triggers no tax costs, and
(b) it moves the portfolio *closer* to the allocation targets.

In practice, I've typically done ~1% moves, and none recently.
Did do a few in 2013 and 2017.

In any case, I think it is a good idea to make room in your IPS for your ego. Just enough to make it feel like it has some control, but not enough to actually make a material difference.

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markcoop
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Re: Not market timing is hard

Post by markcoop » Fri Sep 13, 2019 12:58 pm

House Blend wrote:
Fri Sep 13, 2019 9:22 am
But within that sandbox, I'm *allowed* to make trades as long as:
(a) it triggers no tax costs, and
(b) it moves the portfolio *closer* to the allocation targets.
I guess in my case, I am not always moving closer to the target allocation. If my target is 60% and the market has a run-up where it goes to 65%, I may rebalance beyond 60%. I only do this when I think the market is high. It's also a gradual thing. I may sell 6% to get to 54%. Then if we have another run, I may sell another 1%. But I won't go lower than 55%. A good question is when would I bring it back to 60%. Well, if it drops, I start buy back. The bigger the drop, the bigger I buy back. Again, never going beyond the upper band. If it keeps going up and never goes down, it will bring it back top my original 60% on it's own. I do realize that I then would've lost some gains on what I sold, but again I only do this when I think the market is really high. Does all this actually help my returns? I really have no idea.
Mark

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Re: Not market timing is hard

Post by NearlyRetired » Sat Sep 14, 2019 9:52 am

Clever_Username wrote:
Thu Sep 12, 2019 11:02 am
I find it works best to tune out noise. I will periodically want to check the valuations, or to watch a morning financial show, etc. I find watching Morning Drive when I'm home and want to put on the TV in the AM helps quite a bit.
In my case, when I was younger, I never looked at my investments, other than when the annual statements came through (and that was through the nineties, Y2K, 2007 etc.), because it just wasn't relevant/of interest - retirement was a long way away. However now I am just about to move into retirement I find I am looking at the investments every day and wondering whether I should consolidate my gains. I know from reading in this forum that it is a bad idea and I shall resist, but I find it really hard to stay true to the course. I do find it interesting that I take much more of an interest where in the past I didn't - its the same market with the same vagaries etc, and yet I feel different about it! I need something to focus on instead to take my mind of things :D
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Re: Not market timing is hard

Post by livesoft » Sat Sep 14, 2019 10:29 am

markcoop wrote:
Thu Sep 12, 2019 10:56 am
In the past couple of years, every time the market has reached new highs, I find myself wanting to sell some stocks. I have always allowed myself to market time a little bit - I play around at the edges of my rebalancing bands (for example, if 60% with a 5% rebalancing band, then sell down to 55% if I feel the market is high). ....
Since I know that the stock market spends a significant fraction of its time at or near new highs, I have never found myself wanting to sell stocks when it reaches new highs. Instead, I find myself wanting to buy stocks whenever new intermediate lows are reached. In fact, these intermediate lows are often (not always!) the result of an RBD.

That written, I do sell equities from time to time in order to get back down to my desired allocation to equities. As expected, a rebalancing sell trigger is only likely to happen when the stock market reaches new highs. Duh! At the moment, my equities are at 63.5% of the portfolio when my nominal asset allocation for them is 58% (or is it 60%?).
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firebirdparts
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Re: Not market timing is hard

Post by firebirdparts » Sat Sep 14, 2019 7:46 pm

NearlyRetired wrote:
Sat Sep 14, 2019 9:52 am
In my case, when I was younger, I never looked at my investments, other than when the annual statements came through (and that was through the nineties, Y2K, 2007 etc.), because it just wasn't relevant/of interest - retirement was a long way away. However now I am just about to move into retirement I find I am looking at the investments every day and wondering whether I should consolidate my gains. I know from reading in this forum that it is a bad idea ...
What? It's not always a bad idea. It is certainly okay to have the same assets for your entire life, and if you do have a portfolio that seems appropriate for that, fine. But I don't think it's a bad idea at all if you retire and want to initiate a new strategy that applies to retirement. It should still be a "good" strategy, but not necessarily the same strategy.
A fool and your money are soon partners

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markcoop
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Re: Not market timing is hard

Post by markcoop » Thu Nov 07, 2019 11:30 am

So just about 2 months later since I made this post. Still a big believer in buy and hold. Still a believer that once in while a little market timing at extremes will likely (not definitely) pay off. Markets now at all time highs. Again. I have sold small amounts a couple of times in the past few weeks, even going a little below my lower band (I guess I am weak). I will never get out of the market totally, but feel comfortable taking small amounts off the table as the market rises after a 10 year bull run. If it keeps rising, things will still be good (I just won't be up as much as I could've been). If the markets start to drop, I will be buying back.
Mark

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Re: Not market timing is hard

Post by Portfolio7 » Thu Nov 07, 2019 12:17 pm

I hear you. You and I make a market. My AA carries as much stock as my IPS allows (I allow myself some variance.)

I am ultra bullish at the moment, and looking for loopholes in my IPS so I can invest more stock! :greedy (I'm joking about looking for loopholes, but it's crossed my mind!).
"An investment in knowledge pays the best interest" - Benjamin Franklin

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