Why not stand on the sidelines for a little while?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Waiting_for_Godot
Posts: 72
Joined: Mon Oct 22, 2018 3:57 pm

Re: Why not stand on the sidelines for a little while?

Post by Waiting_for_Godot » Thu Mar 26, 2020 3:36 am

Kudos to you for weathering a bit of snark! I ended up capitulating today by moving into treasuries; I also see myself continuing to closely watch the news, probably daily... in that sense I'm trading the problem of kicking myself for not bailing after reading CnC's post on Feb 5th on every down day, for trying to figure out when to go back in. Picking a set-and-forget date like you did in December might help in my case... currently I'm tempted to reinvest into VTSAX instead of my old Target Date fund (separate can of worms) much sooner rather than later. Perhaps I'll only be putting my 'money where my mouth is' for a few days, but such is the risk of all rabbit holes.

Clearly I struggle with an inability to turn off the news, and the nagging feeling that this specific event was avoidable and is perhaps still actionable.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 4:11 am

rossington wrote:
Thu Mar 26, 2020 3:24 am
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
...but everyone can agree that the current administration is highly unusual, and what the admin decides to do matters greatly for the outcome, and all of this playing out in the midst of a historically totally unusual election (??)
^^^This is from your post on Monday
...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
^^^This is from today's post.

It is apparent you are hoping for an election outcome that makes it worth waiting until December to get back in.

You should sit on the sidelines.
The number of posts containing confident declarations of What I Really Think is really something - from me being a hopeless scared noob, to apparently deep interest in my political inclinations. There are several posters in here who deserve honorary PhD's in internet-forum pop psychology. If it's not clear already, I think this sort of thing is pretty worthless and I don't quite understand why you spend your time on it, vs just reading what I write, assuming both best intent and some level of competence on my part, and responding. It's so relentless that I have a "lady doth protest too much" impression forming, in which the personal insecurities of the poster are inadvertently causing them to reveal what really drives them. (But don't take that seriously, it's just pop psychology)

Hopefully the following will satisfy the politically-triggered here: as you've read, my general worry is that downside risk is not properly priced in. When I look out at all that can happen in what I consider to be a foreseeable timeframe, an obviously huge event is the US election. And my worry about downside risk is that political leaders will make this worse, as Hoover and R's famously did after the '29 crash. Elections are when politicians compete for a job, and they are more prone to doing things just before elections that they perhaps would not in normal times, in pursuit of keeping said jobs. It's not just the president, there are governors of both parties running, senators, and on and on. There are many opportunities for election year shenanigans in the midst of a pandemic that could make this bad situation much worse. Given that valuations are at (relatively rich historically) 2017 level, I think it's fair to say that we all have our money currently riding on a bet that says they won't screw things up too badly.

User avatar
avenger
Posts: 848
Joined: Mon Dec 02, 2013 12:11 pm

Re: Why not stand on the sidelines for a little while?

Post by avenger » Thu Mar 26, 2020 4:26 am

How many market timing threads are we going to have to endure?
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [3 fund portfolio: VTI, VXUS, SV fund (yield 3.01%)]

onourway
Posts: 2467
Joined: Thu Dec 08, 2016 3:39 pm

Re: Why not stand on the sidelines for a little while?

Post by onourway » Thu Mar 26, 2020 5:06 am

He’s not market timing, didn’t you hear? Only jumping back in and out as it suits him and that’s not the same thing. :P

minimalistmarc
Posts: 889
Joined: Fri Jul 24, 2015 4:38 pm

Re: Why not stand on the sidelines for a little while?

Post by minimalistmarc » Thu Mar 26, 2020 5:25 am

I’m enjoying the rollercoaster ride.

User avatar
HomerJ
Posts: 14606
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Thu Mar 26, 2020 7:09 am

fitterhappier wrote:
Thu Mar 26, 2020 2:46 am
Better reeeeally believe that Bogleism works in all circumstances, folks

Image
Bogleism is long-term investing. We won't know if stopped working until another 15-20 years goes by.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

User avatar
HomerJ
Posts: 14606
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Thu Mar 26, 2020 7:17 am

fitterhappier wrote:
Thu Mar 26, 2020 2:08 am
HomerJ wrote:
Wed Mar 25, 2020 10:04 pm
nanameg wrote:
Wed Mar 25, 2020 5:03 pm
Thanks but is that TRUE? Hasn’t the inverse relationship between stocks and bonds been decoupled? I see people on the forum questioning and wondering about returns on their bond funds
Here's Vanguard's Total Bond Market Index Fund Year-to-Date compared to Vanguard's Total Stock Market Index Fund Year-to-Date.

Image

Looks to me like Total Bond Index Fund is doing EXACTLY what I want it to do...

It's up 1.22% for the year, while Total Stock Market is down 25% for the year.
I haven't brought up relative price moves before but thank you for doing so HomerJ. Something obviously crazy is happening right now, and it's quite visible on the right side of this chart. Bonds and stocks are (supposedly, from what I read) being sold because businesses and individuals simply need to get ahold of any cash they can probably because what we're about to experience, over the next 8 quarters, is historic-level very-very-bad.

https://www.nytimes.com/2020/03/12/upsh ... virus.html

So the bond/equity relationship is at least temporarily broken (to the doxxer types who are digging up my past and posting about my switch from 3-fund to 100% equities, it's not looking super terrible at the moment right now, is it? Are you all rebalancing into down stocks with...down BND sales?)

Now think about the volatility we're seeing. All of these things are telling us that the ability of "the market" to correctly price equities is pretty messed messed up right now. "We've crashed down to 2017 levels", doesn't seem like THAT big of a deal to me. Are equity prices really reflecting the damage to world output? Are they really reflecting the downside risk that we go from, say, 2017 to 2014 levels? In 2014 the Shiller P/E had been above 20 for 4 years - point being that these lower levels aren't some terrifying place nor are they far-off historically...
I have no idea what you think that chart proves, That NY Times article talked about how bonds are falling at the same time stocks are falling, but that was like a couple of days two weeks ago, and that was after bonds had already gone up so the net effect was zero.

That chart above shows the Total Bond Market Index Fund has held up very well during this crisis. It's NOT going down at the same time as stocks... How do you look at the graph and say "the bond/equity relationship is broken"?

Here's 3 months in 2008 to match the 3 months on the chart above. How exactly are the past 3 months so crazy different from the start of the crash in 2008 when talking about bonds vs. stocks?

Image
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 7:49 am


Here's 3 months in 2008 to match the 3 months on the chart above. How exactly are the past 3 months so crazy different from the start of the crash in 2008 when talking about bonds vs. stocks?
All excellent points HomerJ, and re-reading this chart, I think I was just mistaken in that line of commenting.

jon eciu
Posts: 2
Joined: Wed Mar 25, 2020 5:33 pm

Re: Why not stand on the sidelines for a little while?

Post by jon eciu » Thu Mar 26, 2020 8:23 am

fitterhappier wrote:
Thu Mar 26, 2020 1:18 am
At some level of chaos and destabilization of the world economy to function well, much less grow, you gotta get "smart" and perhaps modify strategy, right? Especially if the market (i.e. equity pricing) looks broken.
We tend to think asset allocation addresses the need to ever get smart and modify strategy. For many of us, the concept of risk includes the edge cases. I would go so far as to say "if done correctly," meditation on risk tolerance would include the nightmare scenario of your hypothetical, and worse. This is part of the reason for all the platitudes you see in response to complex questions about current events. They are being uttered by people who, in theory, would not change their behavior if they saw their equity holdings destroyed overnight. That is essentially how I feel. That said, for older investors on the brink of retirement, the onset of a bear market represents the most difficult test of this principle, and it's hard to fault anybody that feels the need to sideline it. Particularly in such a novel and existentially terrifying situation, as you've noted, OP.

lostdog
Posts: 2668
Joined: Thu Feb 04, 2016 2:15 pm

Re: Why not stand on the sidelines for a little while?

Post by lostdog » Thu Mar 26, 2020 8:29 am

OP,

Reading most of your responses you use some very powerful words. Chaos, insanity, unprecedented, "millions will die", "the world has never seen before", doomsday, etc...and many more concerning scenarios that are out of bounds.

This could be more of a psychological issue with you rather than an investment issue. The psychological issue needs to be fixed first and then you can consider long term investing. Probably seek a counselor. Once you get your steady hand back, you can then come up with a solid plan and stay the course.
Global Market Cap Equity || Taxable: VTSAX+VTIAX || IRA: VTWAX

User avatar
Kenkat
Posts: 6214
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Why not stand on the sidelines for a little while?

Post by Kenkat » Thu Mar 26, 2020 8:44 am

Novine wrote:
Thu Mar 26, 2020 1:51 am
Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Clearly what has happened over the past 6 weeks was not priced into the market on Feb. 12. How could it have been? It hadn’t happened yet. It’s easy to say it was so obvious that this thing was going to get bad, but that’s only because we now know what actually happened. It could have happened differently and there would be no conversation happening on this.

Elysium
Posts: 2811
Joined: Mon Apr 02, 2007 6:22 pm

Re: Why not stand on the sidelines for a little while?

Post by Elysium » Thu Mar 26, 2020 8:50 am

Unemployment numbers came in, headlines are screaming historic record high numbers, and the market responds, by going up 2%!

The folly of trying to predict every day what the market will do depending on new information coming out. Some people really do need to test the electric fence to learn.

onourway
Posts: 2467
Joined: Thu Dec 08, 2016 3:39 pm

Re: Why not stand on the sidelines for a little while?

Post by onourway » Thu Mar 26, 2020 8:51 am

Novine wrote:
Thu Mar 26, 2020 1:51 am

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Numbers are out. Largest on record. Market is up nearly 2%.

Nobody knows 'nothin.

Leesbro63
Posts: 6498
Joined: Mon Nov 08, 2010 4:36 pm

Re: Why not stand on the sidelines for a little while?

Post by Leesbro63 » Thu Mar 26, 2020 8:54 am

technovelist wrote:
Wed Mar 25, 2020 7:27 am
watchnerd wrote:
Wed Mar 25, 2020 7:16 am
fitterhappier wrote:
Wed Mar 25, 2020 7:13 am

Maybe it's just me but risks only make sense to take if you have a model you're working with which says it's worth it. If you never question the model in the face of novel information - like even in the face of events that actuaries can't deal with - maybe you don't have a model at all, and it's all just dogma/faith.

Warren Buffet is buying.

Think about that.
Warren Buffet is a billionaire who is almost 90 years old.
I would agree that his example is very relevant to anyone else in his same situation.
How do we know what he’s doing? He’s been eerily quiet for a few weeks now.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 8:58 am

lostdog wrote:
Thu Mar 26, 2020 8:29 am
OP,

Reading most of your responses you use some very powerful words. Chaos, insanity, unprecedented, "millions will die", "the world has never seen before", doomsday, etc...and many more concerning scenarios that are out of bounds.

This could be more of a psychological issue with you rather than an investment issue. The psychological issue needs to be fixed first and then you can consider long term investing. Probably seek a counselor. Once you get your steady hand back, you can then come up with a solid plan and stay the course.
So ok: much consumer activity stopped, virtually no small businesses are capitalized to withstand a total stoppage - not just drop - in consumer spending for more than a quarter, we have right now at this moment in the news the largest spike in unemployment in 50 years, countries are passing stimulus bills that are significant shares of GDP in size, virtually none of the world political leadership has experience with a pandemic. And the message is "chill out": nice.

I still have no idea how people are imputing that I'm freaking out. More pop psychology...seems to me some kind of need around here...is it because the idea that no one would question Bogle orthodoxy with a cool head?

User avatar
Wiggums
Posts: 2910
Joined: Thu Jan 31, 2019 8:02 am

Re: Why not stand on the sidelines for a little while?

Post by Wiggums » Thu Mar 26, 2020 9:02 am

I’m buying weekly. I find that by scheduling the purchases, removes me (and my emotions) from the process. I get shares at all prices. This strategy works for me.

Yes, the unemployment rate is higher and it includes three family members. 2nd quarter will be worse, but that does not guarantee that we will makes lower lows in the market.
Last edited by Wiggums on Thu Mar 26, 2020 9:07 am, edited 1 time in total.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 9:06 am

Kenkat wrote:
Thu Mar 26, 2020 8:44 am
Novine wrote:
Thu Mar 26, 2020 1:51 am
Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Clearly what has happened over the past 6 weeks was not priced into the market on Feb. 12. How could it have been? It hadn’t happened yet. It’s easy to say it was so obvious that this thing was going to get bad, but that’s only because we now know what actually happened. It could have happened differently and there would be no conversation happening on this.
The math of an epidemic (coupled with knowledge of the preparedness of various countries' public health systems) creates a unique opportunity to predict the future with a pretty shocking degree of accuracy.

I have no trouble believing that there's some outsized number of traders in Seoul, in an environment where the MERS experience is in recent memory, who have made a killing on this.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 9:11 am

onourway wrote:
Thu Mar 26, 2020 8:51 am
Novine wrote:
Thu Mar 26, 2020 1:51 am

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Numbers are out. Largest on record. Market is up nearly 2%.

Nobody knows 'nothin.
Over time buddy. The question is how does a market actually recover from something like this, and in what timeframe. Nobody knows. If we have persistent 10% unemployment in Q4/Q1 and on it's not going to be good.

My argument is about downside risk, I'm not setting myself up for a series of specific calls on numbers reported.

Unemployment numbers were surely factored in long before now, getting reads on that in advance is something Wall Street has totally nailed.

michaeljc70
Posts: 6637
Joined: Thu Oct 15, 2015 3:53 pm

Re: Why not stand on the sidelines for a little while?

Post by michaeljc70 » Thu Mar 26, 2020 9:19 am

Kenkat wrote:
Thu Mar 26, 2020 8:44 am
Novine wrote:
Thu Mar 26, 2020 1:51 am
Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Clearly what has happened over the past 6 weeks was not priced into the market on Feb. 12. How could it have been? It hadn’t happened yet. It’s easy to say it was so obvious that this thing was going to get bad, but that’s only because we now know what actually happened. It could have happened differently and there would be no conversation happening on this.
+1

Bad is relative. Look at Italy/Spain vs. Germany or the US. Look at NYC/SF vs. Chicago/Miami.

It could get much worse. A good treatment could also be found tomorrow.

magicrat
Posts: 973
Joined: Sat Nov 29, 2014 7:04 pm

Re: Why not stand on the sidelines for a little while?

Post by magicrat » Thu Mar 26, 2020 9:20 am

fitterhappier wrote:
Thu Mar 26, 2020 9:11 am
onourway wrote:
Thu Mar 26, 2020 8:51 am
Novine wrote:
Thu Mar 26, 2020 1:51 am

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Numbers are out. Largest on record. Market is up nearly 2%.

Nobody knows 'nothin.
Over time buddy. The question is how does a market actually recover from something like this, and in what timeframe. Nobody knows. If we have persistent 10% unemployment in Q4/Q1 and on it's not going to be good.

My argument is about downside risk, I'm not setting myself up for a series of specific calls on numbers reported.

Unemployment numbers were surely factored in long before now, getting reads on that in advance is something Wall Street has totally nailed.
So have you taken action or not?

User avatar
HomerJ
Posts: 14606
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Thu Mar 26, 2020 9:20 am

fitterhappier wrote:
Thu Mar 26, 2020 9:11 am
onourway wrote:
Thu Mar 26, 2020 8:51 am
Novine wrote:
Thu Mar 26, 2020 1:51 am

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Numbers are out. Largest on record. Market is up nearly 2%.

Nobody knows 'nothin.
Over time buddy. The question is how does a market actually recover from something like this, and in what timeframe. Nobody knows. If we have persistent 10% unemployment in Q4/Q1 and on it's not going to be good.
True enough... But even next year is short-term, and there's an "if" in that statement.

Getting out now may pay off, and it may not.

Since my stock funds are long-term investments, I'll just take the long-term market returns and not worry too much about short-term returns.

But your way absolutely could make you richer than following my way. But maybe not.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

Alex GR
Posts: 152
Joined: Mon Jul 31, 2017 9:17 am

Re: Why not stand on the sidelines for a little while?

Post by Alex GR » Thu Mar 26, 2020 9:21 am

Ok so since this is a market timing thread I'll bite :beer
I'll post here 'cause it sounds like people are getting tired of new market timing/get out/panic selling threads.
The market was up 3.25% as of 10:15am EST this morning, VTI heading towards $130.
(I am guessing it's because unemployment numbers, although HUGE, came in below estimates)
So how about selling VTI @$130 and immediately putting in orders for $120, $115 & $110 ?
There's actually a pretty good chance of hitting these targets considering the long-term effect this thing is likely to cause?
Note that I am not talking about getting out of stocks. Just selling and getting back in.
Now the question is, what if some, or all, of these targets don't hit? What if the market never hits even the 120 mark? Answer: When it becomes clear that it's not going to happen (like VTI shoots back to 160) cancel those orders and buy bonds (BIV or BLV) instead. As an alternative, set a date like Dec 31st before you cancel. If the targets don't hit, wait until next crash to get back in :mrgreen:

I probably don't have the guts to do it and, even though I am new here, I've pretty much been sold on the 'buy and hold/stay the course' principal. But I'll play devil's advocate on behalf of everyone who is capitulating. I bet someone with a decent size stock portfolio could pull this off and make(save) a year worth of salary.
Thoughts?
Last edited by Alex GR on Thu Mar 26, 2020 9:24 am, edited 2 times in total.

Elysium
Posts: 2811
Joined: Mon Apr 02, 2007 6:22 pm

Re: Why not stand on the sidelines for a little while?

Post by Elysium » Thu Mar 26, 2020 9:22 am

Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, hesitation, self-doubt, and an overall need for attention.
Last edited by Elysium on Thu Mar 26, 2020 9:24 am, edited 1 time in total.

User avatar
Kenkat
Posts: 6214
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Why not stand on the sidelines for a little while?

Post by Kenkat » Thu Mar 26, 2020 9:23 am

fitterhappier wrote:
Thu Mar 26, 2020 9:06 am
Kenkat wrote:
Thu Mar 26, 2020 8:44 am
Novine wrote:
Thu Mar 26, 2020 1:51 am
Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Clearly what has happened over the past 6 weeks was not priced into the market on Feb. 12. How could it have been? It hadn’t happened yet. It’s easy to say it was so obvious that this thing was going to get bad, but that’s only because we now know what actually happened. It could have happened differently and there would be no conversation happening on this.
The math of an epidemic (coupled with knowledge of the preparedness of various countries' public health systems) creates a unique opportunity to predict the future with a pretty shocking degree of accuracy.
We will have to see if you are correct. You could be. But as Howard Cosell once said, that’s why they play the game.

Novine
Posts: 1240
Joined: Mon Nov 17, 2008 9:07 pm

Re: Why not stand on the sidelines for a little while?

Post by Novine » Thu Mar 26, 2020 9:25 am

onourway wrote:
Thu Mar 26, 2020 8:51 am
Novine wrote:
Thu Mar 26, 2020 1:51 am

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.
Numbers are out. Largest on record. Market is up nearly 2%.

Nobody knows 'nothin.
RIght. I don't expect that to last. But it is consistent with my final point. What's "logical" and what the market decides to do over the short-term can be two very different. If economic conditions continue on this track, the markets will eventually reflect that.
Last edited by Novine on Thu Mar 26, 2020 9:25 am, edited 2 times in total.

michaeljc70
Posts: 6637
Joined: Thu Oct 15, 2015 3:53 pm

Re: Why not stand on the sidelines for a little while?

Post by michaeljc70 » Thu Mar 26, 2020 9:25 am

Novine wrote:
Thu Mar 26, 2020 1:51 am
fitterhappier - I noted in another discussion that the idea that "the markets" are forward thinking is pretty hard to accept when we look at what happened during the month of February. On February 12, the Dow rang up its highest average ever. This happened in the face of all the news coming out of China, the increasing spread of the coronavirus in the US and the potential that the same economic contraction hitting China could happen here with all the resulting economic problems that would result.

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.

In those ways, I can understand where you are coming from with your skepticism. But here's the other thing that the past 6 weeks should show you. Markets sometimes don't act logically, especially in times of great uncertainty. You think there's a lot more downside and risk in the markets and I fully agree with that view. But the markets don't always follow the most logical path. If the pain goes on long enough, eventually the markets will be forced to bend to economic reality. But they often go in directions that don't appear to make sense and that will confound your attempts to jump back in at the appropriate time. There's plenty of stories of people who got out early in 2008 but sat out for years because they couldn't find the confidence in the markets to jump back in. That's why you are getting a lot of advice from people to stay in even if it feels like this time is really different.
We don't have to guess any more. 3.3 million was the number and the Dow is up over 800.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 9:31 am

Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, hesitation, self-doubt, and an overall need for attention.
This subgenre of posts continues to confuse and sort of fascinate me. You have a real need to paint me as reacting "emotionally", you and others keep using that word. In spite of anything I write. And I mean, what do you think you are, the Commander Data of buy-and-hold?

Is characterizing someone as "reacting emotionally" a catch-all way of disparaging the person and giving yourself an excuse to ignore any of the specifics of the debate, here in Bogle-land?

I'm feeling an emotion...for some reason I want to hit Submit. Boom.

rgs92
Posts: 2597
Joined: Mon Mar 02, 2009 8:00 pm

Re: Why not stand on the sidelines for a little while?

Post by rgs92 » Thu Mar 26, 2020 9:38 am

The subject of stock/bond correlation came up here (in the chart shown earlier). Of course there is not a consistent negative correlation, as when interest rates rise which spooks stocks, so both stocks and bonds fall together. (Like 1980-82, or maybe even late 2018 I think.)

But I did learn something in the recent crisis, that a real panic cause such a risk-off effect that people sell everything but cash. That was new to me. (At least I think that's what happened. Thoughts? Thanks.)

User avatar
Kenkat
Posts: 6214
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Why not stand on the sidelines for a little while?

Post by Kenkat » Thu Mar 26, 2020 9:39 am

Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, and an overall need for attention.
Well, unless he’s correct. I think the odds are against him, but they are not zero.

I am going to stick to my point that the OP can’t predict the future but I also have to eat my own cooking and admit that I can’t either. It could be worse than the market thinks right now, and if that happens, the market will fall further.

I believe buy and hold is playing the odds as best I can in my favor. In the long run, I think it’s the most profitable way to play. But some segment of market investors will time correctly at least some of the time.

It’s like a good run at the blackjack table. You can be up, way up for a period of time but the longer you play, short of something like card counting, the more likely it is that you will lose money. Over the very long term, it is almost inevitable. The difference with buy and hold investing, if you believe in the markets long term, is that you make money just sitting there playing your hand time and time again.

Elysium
Posts: 2811
Joined: Mon Apr 02, 2007 6:22 pm

Re: Why not stand on the sidelines for a little while?

Post by Elysium » Thu Mar 26, 2020 9:40 am

fitterhappier wrote:
Thu Mar 26, 2020 9:31 am
Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, hesitation, self-doubt, and an overall need for attention.
This subgenre of posts continues to confuse and sort of fascinate me. You have a real need to paint me as reacting "emotionally", you and others keep using that word. In spite of anything I write. And I mean, what do you think you are, the Commander Data of buy-and-hold?

Is characterizing someone as "reacting emotionally" a catch-all way of disparaging the person and giving yourself an excuse to ignore any of the specifics of the debate, here in Bogle-land?

I'm feeling an emotion...for some reason I want to hit Submit. Boom.
You proved my point by responding to it :twisted:

If you were a facts and data person what you would have done is gloss over it and respond substantively. Let's talk substantively, have you sold yet or not ? If so how much equities, 100% cash or left something in equities, what dates and prices? let's talk specifics.

Otherwise this thread serves no purpose other than the periodic flogging I mentioned earlier.

RPW25
Posts: 35
Joined: Wed Nov 30, 2016 11:10 am

Re: Why not stand on the sidelines for a little while?

Post by RPW25 » Thu Mar 26, 2020 9:47 am

fitterhappier wrote:
Thu Mar 26, 2020 9:31 am
I'm feeling an emotion...for some reason I want to hit Submit. Boom.

Emotional investing is what makes Bogleheads money. If everybody just stood there and did nothing like us we wouldn't make nearly as much money when stuff like this happens.

Hold Fast

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Thu Mar 26, 2020 9:49 am

fitterhappier wrote:
Thu Mar 26, 2020 2:46 am
Better reeeeally believe that Bogleism works in all circumstances, folks

Image
I have no idea what you mean by "Bogleism".

But high unemployment will probably lead to low stock prices, which should provide a great investment opportunity for those of us who think in terms of decades and have the financial backstops to ride it out.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 9:54 am


You proved my point by responding to it :twisted:

If you were a facts and data person what you would have done is gloss over it and respond substantively. Let's talk substantively, have you sold yet or not ? If so how much equities, 100% cash or left something in equities, what dates and prices? let's talk specifics.

Otherwise this thread serves no purpose other than the periodic flogging I mentioned earlier.
I got into this from the first post with the intent of having a discussion about principle and theory in light of current market conditions. Like 20% of it has been a genuinely interesting discussion, and people have raised points I hadn't considered, and I'm grateful for that. It could be treated it as a pure hypothetical (in fact in hindsight maybe that would have reduced some of this noise).

What I do specifically in terms of trading is therefore neither here nor there, and so I'm ignoring all of those questions. If it's really important to you that I do state what I've actually done, and you think it's discrediting that I don't, then suffice it to say we have different ideas of what we want here. There are plenty of other threads and I invite you to not waste your time on this one.

RPW25
Posts: 35
Joined: Wed Nov 30, 2016 11:10 am

Re: Why not stand on the sidelines for a little while?

Post by RPW25 » Thu Mar 26, 2020 9:55 am

watchnerd wrote:
Thu Mar 26, 2020 9:49 am
But high unemployment will probably lead to low stock prices, which could provide a great investment opportunity for those of us who think in terms of decades and have the financial backstops to ride it out.

THIS!!!


And I fixed it for you... :sharebeer

BigJohn
Posts: 1864
Joined: Wed Apr 02, 2014 11:27 pm

Re: Why not stand on the sidelines for a little while?

Post by BigJohn » Thu Mar 26, 2020 9:56 am

fitterhappier wrote:
Thu Mar 26, 2020 2:08 am
So the bond/equity relationship is at least temporarily broken (to the doxxer types who are digging up my past and posting about my switch from 3-fund to 100% equities, it's not looking super terrible at the moment right now, is it? Are you all rebalancing into down stocks with...down BND sales?)
Broken?? Looks just like I’d expect it to look! No one ever said the correlation was perfect or that bonds never go down. They are providing the stabilization that I desire. And yes, I sold bonds and bought stocks last week to rebalance back to my target AA.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Thu Mar 26, 2020 9:57 am

RPW25 wrote:
Thu Mar 26, 2020 9:55 am
watchnerd wrote:
Thu Mar 26, 2020 9:49 am
But high unemployment will probably lead to low stock prices, which could provide a great investment opportunity for those of us who think in terms of decades and have the financial backstops to ride it out.

THIS!!!


And I fixed it for you... :sharebeer
Okay, although I'm not sure a big distinction between "should" and "could".

They're both uncertain.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

michaeljc70
Posts: 6637
Joined: Thu Oct 15, 2015 3:53 pm

Re: Why not stand on the sidelines for a little while?

Post by michaeljc70 » Thu Mar 26, 2020 9:57 am

fitterhappier wrote:
Thu Mar 26, 2020 2:46 am
Better reeeeally believe that Bogleism works in all circumstances, folks

Image
The actual number was under that and the market is up big today. Did you think that was not priced in?

Elysium
Posts: 2811
Joined: Mon Apr 02, 2007 6:22 pm

Re: Why not stand on the sidelines for a little while?

Post by Elysium » Thu Mar 26, 2020 9:58 am

Kenkat wrote:
Thu Mar 26, 2020 9:39 am
Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, and an overall need for attention.
Well, unless he’s correct. I think the odds are against him, but they are not zero.

I am going to stick to my point that the OP can’t predict the future but I also have to eat my own cooking and admit that I can’t either. It could be worse than the market thinks right now, and if that happens, the market will fall further.

I believe buy and hold is playing the odds as best I can in my favor. In the long run, I think it’s the most profitable way to play. But some segment of market investors will time correctly at least some of the time.

It’s like a good run at the blackjack table. You can be up, way up for a period of time but the longer you play, short of something like card counting, the more likely it is that you will lose money. Over the very long term, it is almost inevitable. The difference with buy and hold investing, if you believe in the markets long term, is that you make money just sitting there playing your hand time and time again.
All of that is true. The reason we accept long term average market returns, or in case of some an attempt to get above market returns through a systemic effort such as tilting, is not because we think some people cannot do successful market timing. But because we know the odds of any one of us doing it successfully over a really long period of time is very tiny compared to taking what is there for granted, plentiful average market returns minus a small cost over our investing lifetime, that also avoids going through periods of greed, fear, panic, and trying to be on top of it all the time.

The average market returns over long periods do take all of these into consideration, and we have accepted that is enough, knowing that means there is no need to second guess. Moreover, we also understand that there is a real possibility long term average market returns could fall very well below expectations and we may be living through unprecedented times in the last 100 years or so when equities in US have provided more than enough to make someone wealthy over time. If that happens, then we will revert to increased savings, and returns from bonds perhaps, combined with lower standards of living, working longer, rely on social security, purchase an annuity, so on...

In the case of OP and many others, the common theme is not being able to accept that long term average returns are acceptable, and all of the other alternatives in the event of long term equity returns not holding up aren't acceptable either. Therefore, they are driven by a need to do something, that they feel they are capable of doing, when in fact doing something could very well be detriment to their well being, or not of course, we have to entertain the possibility that someone could get it right, either by chance or getting their analysis right.

At the end of the day, we aren't ruling out any of those possibilities, we simply look at the odds and accept that probability of long term average market returns from a diversified portfolio are good enough.

RPW25
Posts: 35
Joined: Wed Nov 30, 2016 11:10 am

Re: Why not stand on the sidelines for a little while?

Post by RPW25 » Thu Mar 26, 2020 10:01 am

watchnerd wrote:
Thu Mar 26, 2020 9:57 am
RPW25 wrote:
Thu Mar 26, 2020 9:55 am
watchnerd wrote:
Thu Mar 26, 2020 9:49 am
But high unemployment will probably lead to low stock prices, which could provide a great investment opportunity for those of us who think in terms of decades and have the financial backstops to ride it out.

THIS!!!


And I fixed it for you... :sharebeer
Okay, although I'm not sure a big distinction between "should" and "could".

They're both uncertain.

True story. I was just having a little fun while I was at work. Hopefully I did not offend you. That was certainly not my point.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Thu Mar 26, 2020 10:05 am

RPW25 wrote:
Thu Mar 26, 2020 10:01 am

True story. I was just having a little fun while I was at work. Hopefully I did not offend you. That was certainly not my point.
I'm crying my eyes out....

Luckily, I'm working from home, so nobody can see.

:wink:
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

atdharris
Posts: 349
Joined: Wed Jan 02, 2019 3:18 pm

Re: Why not stand on the sidelines for a little while?

Post by atdharris » Thu Mar 26, 2020 10:10 am

I am not buying on big up days like the last few. Bear markets always see these type of jumps after big sell-offs. We still have no idea the extent of damage this virus will do to the economy. A lot of small businesses will never open again and those employees will remain unemployed even after the economy is re-opened. I think the market may be discounting that

H-Town
Posts: 2752
Joined: Sun Feb 26, 2017 2:08 pm

Re: Why not stand on the sidelines for a little while?

Post by H-Town » Thu Mar 26, 2020 10:11 am

fitterhappier wrote:
Thu Mar 26, 2020 9:31 am
Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, hesitation, self-doubt, and an overall need for attention.
This subgenre of posts continues to confuse and sort of fascinate me. You have a real need to paint me as reacting "emotionally", you and others keep using that word. In spite of anything I write. And I mean, what do you think you are, the Commander Data of buy-and-hold?

Is characterizing someone as "reacting emotionally" a catch-all way of disparaging the person and giving yourself an excuse to ignore any of the specifics of the debate, here in Bogle-land?

I'm feeling an emotion...for some reason I want to hit Submit. Boom.
Well then stop calling names... Commander Data of buy-and-hold, Bogle-land, Bogle-nism, etc.

You remind me of someone I know. Smart but lack of humility and lack of wisdom to know what you don't know.

Elysium
Posts: 2811
Joined: Mon Apr 02, 2007 6:22 pm

Re: Why not stand on the sidelines for a little while?

Post by Elysium » Thu Mar 26, 2020 10:12 am

fitterhappier wrote:
Thu Mar 26, 2020 9:54 am

You proved my point by responding to it :twisted:

If you were a facts and data person what you would have done is gloss over it and respond substantively. Let's talk substantively, have you sold yet or not ? If so how much equities, 100% cash or left something in equities, what dates and prices? let's talk specifics.

Otherwise this thread serves no purpose other than the periodic flogging I mentioned earlier.
I got into this from the first post with the intent of having a discussion about principle and theory in light of current market conditions. Like 20% of it has been a genuinely interesting discussion, and people have raised points I hadn't considered, and I'm grateful for that. It could be treated it as a pure hypothetical (in fact in hindsight maybe that would have reduced some of this noise).

What I do specifically in terms of trading is therefore neither here nor there, and so I'm ignoring all of those questions. If it's really important to you that I do state what I've actually done, and you think it's discrediting that I don't, then suffice it to say we have different ideas of what we want here. There are plenty of other threads and I invite you to not waste your time on this one.
In order for a discussion to be substantive on the forum, it has to follow certain guidelines, such as something actionable, not something purely hypothetical situation based.

With your reply above you are admitting you have really no plan of doing anything, other than just airing out your doubts, so in other words this is all talk and no action. Either you have pulled back from the original thought of going to sidelines because of the last three days of market rally, just like another guy did in a different thread, or you do not have the courage or conviction to post your actions here for obvious reasons of being called out wrong if that happens.

I have more respect for market timers who actually have the courage and conviction to post their real actions, before they do it. So far since February we have had a number of posters claiming to know something they think will happen and hence should do something with their money, but just one poster, just one, who had the courage and character to post his actions live. I disagree with that guy but he has my respect for the honesty.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 10:20 am

H-Town wrote:
Thu Mar 26, 2020 10:11 am
fitterhappier wrote:
Thu Mar 26, 2020 9:31 am
Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, hesitation, self-doubt, and an overall need for attention.
This subgenre of posts continues to confuse and sort of fascinate me. You have a real need to paint me as reacting "emotionally", you and others keep using that word. In spite of anything I write. And I mean, what do you think you are, the Commander Data of buy-and-hold?

Is characterizing someone as "reacting emotionally" a catch-all way of disparaging the person and giving yourself an excuse to ignore any of the specifics of the debate, here in Bogle-land?

I'm feeling an emotion...for some reason I want to hit Submit. Boom.
Well then stop calling names... Commander Data of buy-and-hold, Bogle-land, Bogle-nism, etc.

You remind me of someone I know. Smart but lack of humility and lack of wisdom to know what you don't know.
HTown, I was simply trying to inject some levity and civility back into the conversation after the laundry list of accusations thrown at me in the prior message that you have present right here in your post. Perhaps you can join me in condemning stuff like "showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, hesitation, self-doubt, and an overall need for attention", which I think you'll agree isn't adding anything to the discussion.

User avatar
HomerJ
Posts: 14606
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Thu Mar 26, 2020 10:23 am

Everyone give fitterhappier a break.

He/She seems to be trying to have a conversation.

You should read this again though fitter:
Elysium wrote:
Thu Mar 26, 2020 9:58 am
The reason we accept long term average market returns, or in case of some an attempt to get above market returns through a systemic effort such as tilting, is not because we think some people cannot do successful market timing. But because we know the odds of any one of us doing it successfully over a really long period of time is very tiny compared to taking what is there for granted, plentiful average market returns minus a small cost over our investing lifetime, that also avoids going through periods of greed, fear, panic, and trying to be on top of it all the time.

The average market returns over long periods do take all of these into consideration, and we have accepted that is enough, knowing that means there is no need to second guess. Moreover, we also understand that there is a real possibility long term average market returns could fall very well below expectations and we may be living through unprecedented times in the last 100 years or so when equities in US have provided more than enough to make someone wealthy over time. If that happens, then we will revert to increased savings, and returns from bonds perhaps, combined with lower standards of living, working longer, rely on social security, purchase an annuity, so on...

In the case of OP and many others, the common theme is not being able to accept that long term average returns are acceptable, and all of the other alternatives in the event of long term equity returns not holding up aren't acceptable either. Therefore, they are driven by a need to do something, that they feel they are capable of doing, when in fact doing something could very well be detriment to their well being, or not of course, we have to entertain the possibility that someone could get it right, either by chance or getting their analysis right.

At the end of the day, we aren't ruling out any of those possibilities, we simply look at the odds and accept that probability of long term average market returns from a diversified portfolio are good enough.
Excellent post... Needs to be saved to be reposted again and again.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

LFKB
Posts: 704
Joined: Mon Dec 24, 2012 7:06 pm

Re: Why not stand on the sidelines for a little while?

Post by LFKB » Thu Mar 26, 2020 10:24 am

fitterhappier wrote:
Thu Mar 26, 2020 1:38 am
LFKB wrote:
Wed Mar 25, 2020 11:05 pm
fitterhappier wrote:
Wed Mar 25, 2020 5:47 pm
Elysium wrote:
Wed Mar 25, 2020 4:55 pm

OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Lol you're only a few posts down from where I get outed as late-gen-x, facts guy, go play Ben Shapiro on FB threads and don't clog up my discussion please.
Just an observation, but you seem like the type of person that thinks you’re smarter and better than other people.
...
I just want to point out to the small crew that's trying to take this thread into insult territory (common problem w/ online discussions), that within 2 posts you've gone from attempting to belittle me as not ready for the big bad world by association with a generation I'm not even part of, to now playing victim. You should be on better behavior and should refrain from attacking and insulting people in online forums (about...boring financial matters no less!), but if you just can't resist, at least make the experience less whiplash-inducing.
I didn’t say anything about what generation you’re from. You’re confusing me with someone else. In fact, I’m younger than you.

If you’re going to accuse someone of whiplashing, you should at least get the facts right...

Alex GR
Posts: 152
Joined: Mon Jul 31, 2017 9:17 am

Re: Why not stand on the sidelines for a little while?

Post by Alex GR » Thu Mar 26, 2020 10:25 am

Ok, I did some calculations on selling VOO at the current price and buying back if/when the economic outlook gets worse and there's another dip:

https://ibb.co/02m2YDk
(P.S. Sorry, it didn't let me insert an image for some reason)

Amount I used is $200k. Probably not something I'll attempt but someone who is sure that DOW is going to 10000 (like some of the posters here) could make(save) a pretty decent amount. Thoughts?

User avatar
Kenkat
Posts: 6214
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Why not stand on the sidelines for a little while?

Post by Kenkat » Thu Mar 26, 2020 10:31 am

Elysium wrote:
Thu Mar 26, 2020 9:58 am
Kenkat wrote:
Thu Mar 26, 2020 9:39 am
Elysium wrote:
Thu Mar 26, 2020 9:22 am
Oh Boy, this is going to be one of those classic threads to be pulled out when this is all over and flogged thoroughly as an example of everything that is wrong with emotions based investing. OP is going to be poster child for everything emotional that could stand in your way to become successful investor, showing such classic traits as moving from greed, fear, panic, overconfidence, hubris, and an overall need for attention.
Well, unless he’s correct. I think the odds are against him, but they are not zero.

I am going to stick to my point that the OP can’t predict the future but I also have to eat my own cooking and admit that I can’t either. It could be worse than the market thinks right now, and if that happens, the market will fall further.

I believe buy and hold is playing the odds as best I can in my favor. In the long run, I think it’s the most profitable way to play. But some segment of market investors will time correctly at least some of the time.

It’s like a good run at the blackjack table. You can be up, way up for a period of time but the longer you play, short of something like card counting, the more likely it is that you will lose money. Over the very long term, it is almost inevitable. The difference with buy and hold investing, if you believe in the markets long term, is that you make money just sitting there playing your hand time and time again.
All of that is true. The reason we accept long term average market returns, or in case of some an attempt to get above market returns through a systemic effort such as tilting, is not because we think some people cannot do successful market timing. But because we know the odds of any one of us doing it successfully over a really long period of time is very tiny compared to taking what is there for granted, plentiful average market returns minus a small cost over our investing lifetime, that also avoids going through periods of greed, fear, panic, and trying to be on top of it all the time.

The average market returns over long periods do take all of these into consideration, and we have accepted that is enough, knowing that means there is no need to second guess. Moreover, we also understand that there is a real possibility long term average market returns could fall very well below expectations and we may be living through unprecedented times in the last 100 years or so when equities in US have provided more than enough to make someone wealthy over time. If that happens, then we will revert to increased savings, and returns from bonds perhaps, combined with lower standards of living, working longer, rely on social security, purchase an annuity, so on...

In the case of OP and many others, the common theme is not being able to accept that long term average returns are acceptable, and all of the other alternatives in the event of long term equity returns not holding up aren't acceptable either. Therefore, they are driven by a need to do something, that they feel they are capable of doing, when in fact doing something could very well be detriment to their well being, or not of course, we have to entertain the possibility that someone could get it right, either by chance or getting their analysis right.

At the end of the day, we aren't ruling out any of those possibilities, we simply look at the odds and accept that probability of long term average market returns from a diversified portfolio are good enough.
Agree with you completely. Well stated.

Topic Author
fitterhappier
Posts: 65
Joined: Wed Dec 07, 2016 11:29 pm

Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 10:34 am

HomerJ wrote:
Thu Mar 26, 2020 10:23 am
Everyone give fitterhappier a break.

He/She seems to be trying to have a conversation.

You should read this again though fitter:
I did, HomerJ, and with all due respect I find it to be a soap-boxy post restating buy-and-hold theory that I'm well aware of, and don't think I've shown any signs of not understanding. If you notice it's not even a reply to anything in particular that I wrote, it's just a soliloquy (or at best a conversation/agree-a-thon), and I'm mostly just scrolling through those because I think the real audience for them is the poster themselves.

bugleheadd
Posts: 246
Joined: Fri Nov 29, 2019 11:25 am

Re: Why not stand on the sidelines for a little while?

Post by bugleheadd » Thu Mar 26, 2020 10:36 am

those of you in the sideliens are you buying back i nright now? what if monday was the bottom

Locked