|
Post by Norbert on Nov 5, 2022 13:45:12 GMT
Given strong conviction that the markets were in serious trouble, the obvious trade would have been to short a major index, not to invest in Value stocks. uncleharley is up 23% ytd. I mostly went to cash in January, but don't think that gives me bragging rights. Actually, I'm ashamed that I lacked the guts to go net short given my convictions. ๐
|
|
|
Post by FD1000 on Nov 5, 2022 14:13:16 GMT
Given strong conviction that the markets were in serious trouble, the obvious trade would have been to short a major index, not to invest in Value stocks. uncleharley is up 23% ytd. I mostly went to cash in January, but don't think that gives me bragging rights. Actually, I'm ashamed that I lacked the guts to go net short given my convictions. ๐ I'm glad you learned from me how to sell to cash when markets are risky. I have done it each time since 2018. I'm also glad you didn't short the market, your track record isn't good, see ( link) It's amazing how you take things out of context. The OP is what I have done, which is going to cash. Most investors don't like to sell everything, VALUE is a better option than growth YTD for these investors. Shorting isn't recommended for most because markets go up most times. I'm also a "shame" that I didn't do the obvious, buying Dollar=UUP + shorting bonds, TBX, but these are difficult and unique trades I never experienced since I started investing in 1995. The main reason I didn't do it, because of the high volatility, which is much higher than I like. I only practice what has worked for me for decades, mainly stocks + bonds funds/ETF. I'm not comfortable holding the Dollar, TBX or commodities, these are unique special sectors. I did own VCMDX for several weeks. I'm OK being "only" several % up YTD and positive every day in 2022 which is better than most investors + extremely low volatility. Just for reference, AVALX is up 5+% YTD, it's performance is in the top 2% ( link). I'm OK being "just" in the 2%. I'm also OK with "just" beating the SP500 in the last 1-3-5 years with SD=2.5 and using 90+% bond OEFs...mmm...I guess my system works, to your dismay. uncleharley is up 23% ytd which is amazing, congrats. This is a good video( link) explaining the markets.
|
|
|
Post by Norbert on Nov 5, 2022 16:28:25 GMT
Given strong conviction that the markets were in serious trouble, the obvious trade would have been to short a major index, not to invest in Value stocks. uncleharley is up 23% ytd. I mostly went to cash in January, but don't think that gives me bragging rights. Actually, I'm ashamed that I lacked the guts to go net short given my convictions. ๐ I'm glad you learned from me how to sell to cash when markets are risky.ย I have done it each time since 2018. I'm also glad you didn't short the market, your track record isn't good, see ( link) It's amazing how you take things out of context. The OP is what I have done, which is going to cash. Most investors don't like to sell everything, VALUE is a better option than growth YTD for these investors. Shorting isn't recommended for most because markets go up most times. I'm also a "shame" that I didn't do the obvious, buying Dollar=UUP + shorting bonds, TBX, but these are difficult and unique trades I never experienced since I started investing in 1995. The main reason I didn't do it, because of the high volatility, which is much higher than I like. I only practice what has worked for me for decades, mainly stocks + bonds funds/ETF. I'm not comfortable holding the Dollar, TBX or commodities, these are unique special sectors.ย I did own VCMDX for several weeks. I'm OK being "only" several % up YTD and positive every day in 2022 which is better than most investors + extremely low volatility. Just for reference, AVALX is up 5+% YTD, it's performance is in the top 2% ( link).ย I'm OK being "just" in the 2%.ย I'm also OK with "just" beating the SP500 in the last 1-3-5 years with SD=2.5 and using 90+% bond OEFs...mmm...I guess my system works, to your dismay. uncleharley is up 23% ytd which is amazing, congrats.ย This is a good video( link) explaining the markets. You just don't get it. I'm delighted when others succeed, including you. My only "dismay" is that an intelligent individual such as yourself feels the need to post ad nauseam about his admittedly limited accomplishments. How many times have you mentioned that you went to cash in January? 25? 50? Damn! Next you'll be taking out an ad in the WSJ or NYT? Seriously, guy. Show a little class.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 5, 2022 21:21:20 GMT
Well, selling to cash is one way to have handled this environment. There is nothing wrong or right about that. It's a choice. That's all. If it's been a good choice - wonderful! I think it we really wanted to look back - a lot of individuals, institutions, experts went to cash. I'm sure there are experts on CNBC who said this is what should be done. And plenty who didn't. It's a choice dependent on circumstances. If I had it to do over, I still wouldn't have sold to cash. I am accumulating, buying through all this, and expect it to do what markets have done for the last 80 years - appreciate in value over time. Norbert, Mozart and some others, including FD, smartly decided to be in cash (at this point) (and it seems like y'all don't have to really worry about long term capital gains) to protect principal as you need for retirement. As far as value vs growth vs international vs LC vs MC vs SC vs real estate vs gold vs bonds etc.....Past performance really doesn't say anything other than one can expect to get a certain return with a certain allocation among assets over the long term. Plan to have the cash one needs in the short term and assets that can be converted to cash as needed with the least chance of significant depletion. The concept really is simple. There are just a number of ways to accomplish it. I just was traveling and had a long discussion with a couple who have retired twice - one at 40 and now in early 60s. They have been doing the same thing for 30 years and have a wonderful life. They didn't sell to cash. They just let their portfolio keep working for them. That has been a good choice for them. Getting back to the headlines the OP posts. It really would be helpful if the reason for posting these opinions was stated. Is it agreement, disagreement? Personally, I never believe the short term predictions. Edit - here is an note from JP Morgan Asset Management which pretty much summarizes why even when things don't make sense, some, including myself, stay the course. Frankly at my point in the retirement process, the risk is too great to sell to cash. At another point, I might feel differently. Pretty interesting read - best, worst days - aaiila.org/wp-content/uploads/2020/05/Tuchman-Best-and-Worst-Days.pdf
|
|
|
Post by FD1000 on Nov 5, 2022 22:44:02 GMT
Well, selling to cash is one way to have handled this environment. There is nothing wrong or right about that. It's a choice. That's all. If it's been a good choice - wonderful! I think it we really wanted to look back - a lot of individuals, institutions, experts went to cash. I'm sure there are experts on CNBC who said this is what should be done. And plenty who didn't. It's a choice dependent on circumstances. If I had it to do over, I still wouldn't have sold to cash. I am accumulating, buying through all this, and expect it to do what markets have done for the last 80 years - appreciate in value over time. Norbert, Mozart and some others, including FD, smartly decided to be in cash (at this point) (and it seems like y'all don't have to really worry about long term capital gains) to protect principal as you need for retirement. As far as value vs growth vs international vs LC vs MC vs SC vs real estate vs gold vs bonds etc.....Past performance really doesn't say anything other than one can expect to get a certain return with a certain allocation among assets over the long term. Plan to have the cash one needs in the short term and assets that can be converted to cash as needed with the least chance of significant depletion. The concept really is simple. There are just a number of ways to accomplish it. I just was traveling and had a long discussion with a couple who have retired twice - one at 40 and now in early 60s. They have been doing the same thing for 30 years and have a wonderful life. They didn't sell to cash. They just let their portfolio keep working for them. That has been a good choice for them. Getting back to the headlines the OP posts. It really would be helpful if the reason for posting these opinions was stated. Is it agreement, disagreement? Personally, I never believe the short term predictions. Edit - here is an note from JP Morgan Asset Management which pretty much summarizes why even when things don't make sense, some, including myself, stay the course. Frankly at my point in the retirement process, the risk is too great to sell to cash. At another point, I might feel differently. Pretty interesting read - best, worst days - aaiila.org/wp-content/uploads/2020/05/Tuchman-Best-and-Worst-Days.pdf I have known the above for decades, and IT'S misleading. Missing the worse days is much better than missing the best days. Since you don't want to read my site. I copied it below. Most "experts", articles and books about investing tell you that you should avoid timing because if you miss the best days, your portfolio will trail badly.
But, almost none of them tell you that missing the worse days it actually much better. Sure, timing is difficult, but I have avoided the biggest losses. I lost less than 1% in Q4/2018 when the SP500 fell close to 20%. I made money in March 2020 when the SP500 lost over 30%. Barron's: Timing the Market Pays Off When You Miss the Worst (and Best) Days (www.barrons.com/articles/timing-the-market-pays-off-buy-and-hold-51588186928) My position is not contrarian for the sake of running counter to the received wisdom. It is data-driven and refutes a bull case based on an excessively simplistic narrative exemplified by a piece in the Orange County Register on April 5: โThe annualized return on the S&P 500 Index from January 1, 1987 to December 31, 2019 was 11.28%. Over this 32-year period, if you were out of the market during the ten best performing days, your annual return would have been reduced to 8.85%. If you were out of the market during the 50 best days of this 11,680-day period, your annual return would have been reduced to 3.40%. Staying in the market yields better long-term results.โ Sound familiar? That may be factual but, at best, it is fallacious and only conveys half the story. So hereโs the full truth, according to data from Ned Davis Research. From 1979 to mid-April of 2020, the S&P 500 Total Return Index gained 11.23% per annum. Sure, if you missed the best 40 days, returns shrunk to 5.21%. How about if you missed the worst 40 days? Nobody ever talks about that, because youโd be accused of market timing. Guess what? Your returns would soar to 18.83% annually. And importantly, if you missed both the best and the worst 40 days, you actually beat the market at 12.39%. You can see another source belowI said the following many times: most should not trade, especially don't do what I do. Several of us talk outside the boards and all have done similar to me. It can be replicated. We also spend very little time managing it. Why should we stop what they are doing? Disclaimer: BTW, I can go with 20/80 to 80/20 using 2 funds and never make one change in the next 20-30 years. To the question of why I post opinions of others. I stated many times before that I read a lot of opinions, which is good FOR ME. Opinions should serve as a good discussion start. I always like to hear an opinion based on facts, charts, and more, even if I don't agree with it. Over the years, I found several nuggets that opened my eyes to new info, helping me shape my system. Regardless, I only act based on my system.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 5, 2022 23:01:19 GMT
Sorry - but I am going with the article that discusses proximity or worst and best days and the difficulty in timing that correctly. And also with this one. www.wellsfargo.com/investment-institute/sr-perils-time-volatile-markets/It's a very interesting read - it charts out returns missing the best and worst at various intervals over 30 years annualized S&P returns. I did not know the best and worst were so tightly clustered.
|
|
|
Post by FD1000 on Nov 5, 2022 23:20:10 GMT
Sorry - but I am going with the article that discusses proximity or worst and best days and the difficulty in timing that correctly. And also with this one. www.wellsfargo.com/investment-institute/sr-perils-time-volatile-markets/It's a very interesting read - it charts out returns missing the best and worst at various intervals over 30 years annualized S&P returns. I did not know the best and worst were so tightly clustered. Someone who missed both the worse+best days still had a better performance than just hold. The chart below proves my point.Here are several items that were not discussed 1) I don't know many that hold the SP500 from day one to death. Retirees definitely don't. 2) Most investors, wait, most mutual funds managed by the best minds lag the SP500. So it's not only "Average Equity Fund Investor" Let's fire all of them starting at Wells Fargo. You don't hold only the SP500 for decades...why? Attachments:
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 5, 2022 23:36:14 GMT
No point proved except maybe theoretical. Why maybe? As the article states - one has to back out any trading costs and tax costs and be able to nail those tightly best and worst days. And if you do all that - you get an extra 1% a year. Big if.
I will definitely be holding a diversified large cap portfolio for decades. I will not be able to nail the best and worst days for the decades I will be invested. I believe the results in the articles. Others don't, that's fine.
|
|
|
Post by richardsok on Nov 6, 2022 0:12:46 GMT
No point proved except maybe theoretical. Why maybe? As the article states - one has to back out any trading costs and tax costs and be able to nail those tightly best and worst days. And if you do all that - you get an extra 1% a year. Big if. I will definitely be holding a diversified large cap portfolio for decades. I will not be able to nail the best and worst days for the decades I will be invested. I believe the results in the articles. Others don't, that's fine. I am doubtful, Sara. It is my belief that the worst market days are often preceded by several lesser down days, or the worst market periods are begun with several bearish days. Such was the case in 1929, 1987, 2008, the Covid Crash and early 2022. (Only the 9/11 crash caught timers completely flat footed.) If true, a technical trader could effectively by-pass the worse times, exactly as FD has done. (I have done it too, but he far better.) Regarding buy-and-hold, a more interesting test would be to compare it to a test of SPY with a 40-day moving average line and a 20-day moving average (for example). What would be the result if the investor sold 100% on every bearish crossover and bought 100% on every bullish crossover and how would it compare to buy and hold? I have never seen it done. I just set up such a chart on yahoo and I count exactly seven crossover events in the last 12 months, so it shouldn't be too burdensome for the investor who dislikes frequent trading. And by merely eye-balling the results, one can immediately see that the investor would have had a losing 2022, but with losses FAR less than buying and holding throughout the market carnage. To do a ten year back test is beyond my skill set -- but I suspect a 20X40 B/S discipline would out-do buy and hold and something like 10 x 20 would perform even better.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 0:52:39 GMT
richardsok, You may be doubtful. I understand. But, I am also very doubtful. Did you look at the chart of clustered worst and best days? I don't think they are made up. If someone wants to publish their successful market timing results and have them verified independently, I would think that valuable to the investing community. How many of the most successful investors in the world are market timers? I think Peter Lynch might have asked that question. Those studies I posted are published, and I take it, reflect peer verified results. Now, if someone gets a year right as far as timing, that could be. Then I think one needs to compare results over the long term and what the difference might be. Apologies, I find it very doubtful that market timers will have better results than those practicing time in the market with a diversified portfolio over the long term. And if it is occurring, it should be published and verified so others can have confidence in a long term strategy that numerous studies have shown is an outlier at best.
|
|
|
Post by uncleharley on Nov 6, 2022 1:26:54 GMT
It may be possible that the best method depends on market conditions, the security you are using, and what indicators one is using. Time frames will also have an effect on which method or combination of methods would work best for an individual. Most of my posts on this board have something to do with market timing, yet most of my income comes from SS, an annuity, and some other hierloom stuff that I have no control over. My thought on the subject is that if something works for an individual, they should use it. If or when that something stops working, they should try something else. Being flexible might be the most important approach.
|
|
|
Post by bizman on Nov 6, 2022 2:24:51 GMT
richardsok , You may be doubtful. I understand. But, I am also very doubtful. Did you look at the chart of clustered worst and best days? I don't think they are made up. If someone wants to publish their successful market timing results and have them verified independently, I would think that valuable to the investing community. How many of the most successful investors in the world are market timers? I think Peter Lynch might have asked that question. Those studies I posted are published, and I take it, reflect peer verified results. Now, if someone gets a year right as far as timing, that could be. Then I think one needs to compare results over the long term and what the difference might be. Apologies, I find it very doubtful that market timers will have better results than those practicing time in the market with a diversified portfolio over the long term. And if it is occurring, it should be published and verified so others can have confidence in a long term strategy that numerous studies have shown is an outlier at best. I share your doubts, Sara. Though it sounds like uncleharley , and richardsok , among others may have cracked the code, I don't think I could reasonably expect to replicate their experience. Especially after having read this post from Dr. Brett Steenbarger, PhD, trading coach extraordinaire and purveyor of the Traderfeed blog. He references the results of a fifteen year study by Barber, Lee, Liu, and Odean that concluded that less than 1% of day traders are able to outperform consistently. Money quote: "In the average year, 360,000 individuals engage in day trading. While about 13% earn profits net of fees in the typical year, the results of our analysis suggest that less than 1% of day traders (less than 1,000 out of 360,000) are able to outperform consistently." (p. 15). This one goes in my too hard pile.
|
|
|
Post by Norbert on Nov 6, 2022 6:57:12 GMT
I think there's a big difference between day trading and occasional asset allocation modifications.
The early 2020 Covid panic offered us some very attractive valuations, better than during 2022. Plus, the government announced plans to supply liquidity to the economy. Surely that was a reasonable moment to increase one's equity allocation?
Conversely, in January 2022, the opposite happened: very stretched valuations (justified by zero rates) combined with Fed recognition of inflation and the announced intention to raise rates. Surely a moment to cut exposure to risky assets?
I agree with Uh that investing situations vary. Some present a clear argument for a change of asset allocation, most do not. Years will pass when no changes can be justified; when we simply run with an asset allocation suited to our personal goals, risk preferences, and long-term plan.
Sometimes, however, opportunity knocks.
My personal experience has been that long-term patience combined with an eye for outstanding opportunities (asset mispricing) can lead to real wealth creation. It's obvious in real estate, but also true for securities.
N.
|
|
|
Post by richardsok on Nov 6, 2022 10:25:23 GMT
It may be possible that the best method depends on market conditions, the security you are using, and what indicators one is using. Time frames will also have an effect on which method or combination of methods would work best for an individual. Most of my posts on this board have something to do with market timing, yet most of my income comes from SS, an annuity, and some other hierloom stuff that I have no control over. My thought on the subject is that if something works for an individual, they should use it. If or when that something stops working, they should try something else. Being flexible might be the most important approach. Sara sent me scurrying back to a long, close look at my SPY charts. It appears to me, for all of 2020 the determining performance question was "Did you get out in time before the full COVID crash, and (if not) did you stay 100% invested for all of 2021?
True to my theory that market crashes are almost always presaged by several bear days or weeks, that was the case with the COVID crash. But was there enough of a preliminary drop to warn the technical trader? If he buys and sells on longer-term signals, the answer was "no". The signals would not have tripped before the fit hit the shan and the timing trader would have been slammed along with everyone else. Timing worked well in 2020, right up until the week it didn't -- and then it REALLY went wrong. From a T/A perspective all of 2021 was too good to ever hope for. 2022 has been far more volatile than 2021 or 2019 -- much more difficult to trade on signals. By simply exiting and staying out, FD handled 2022 beautifully. As for you, harley, well I still can't figure out how you pulled off such a successful year. Maybe brains had something to do with it. I agree that market timing/technical signals depend on WHAT you're trading -- I've believed that for a long time. What is harder for me to accept is that it may also depend on WHEN you are applying technical signals. It appears high-volatility patches may throw a real spanner into the theory unless you deal exclusively with the lowest volatile equities you can find or perhaps if you trade frequently on shorter term technicals..... something many people refuse to do.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 12:42:56 GMT
Well - maybe I am not being very clear. A lot of people handled 2022 by getting out of cash - a lot. Several I know personally. Yes, that has produced better returns this year. There is no argument/debate there. None. So, let's put that aside.
Look at the returns in the articles I posted of missing the best and worst days. Volatility, from the articles, does indeed make this a lot harder.
As you might recall one of the arguments from the OP is that sure you might miss the best days being out, but you also miss the worse days - as rebuttal to the argument that being out of the market and missing the best days is bad for one's financial health. From the charts you maybe get a whopping 1% more in annual return, not including taxes or any other fees, if you manage to be out the 50 best and worse days over a 30 year period - 1992 - 2022. It is really hard to miss the worse without missing the best.
So, yes, there are years, someone might get it right - an occasional re-allocation as Norbert puts it. Frankly - I think going to cash is not having an allocation - you are out of the market - losing the compounding for future recovery - but the total return for this year will spank the S&P.
I just don't see it as a "great move." Sorry. I do see it as a valid option given one's circumstances. And I do not believe it will contribute to a long term strategy that will be any more successful than mine in the long term.
If others do, awesome. I haven't seen any peer reviewed studies showing that getting a year here and there better than the S&P by being OUT of the market yields better long term returns.
As far as using DMA techniques - one can read all the different opinions online. Whether one doing this will have better results over a 30 year period - and that is the period if not more most of us deal with - is doubtful to me. I like studies and peer reviewed at that. Or even top investors that use such and are successful.
|
|
|
Post by FD1000 on Nov 6, 2022 12:56:51 GMT
Several points I found over the years and what worked for me: It is all on my site. You get 90% of my ( trading system) + how to time the market ( link). 1) Trading: I don't believe in daily-weekly trading, many papers proved it. I believe in market based trading. The market defines it: think categories and how long to hold. If you are convinced that trading doesn't work, there is no chance you will ever do it. That's not bad, because mostly holding with min trading works too. Trading isn't easy, you must be passionate about it. The biggest problem is that holding is easy for years (1995-2000 + 2010-2021) and then you have much tougher years. You have to practice it, you can't start trading one day. You have to be honest with yourself about your progress. 2) T/A: I could not find conclusive T/A tools that I like. I was looking for only 3 maybe 4 trades annually. If you select ST indicators, you make too many trades. If you select longer indicators, you miss the bigger decline(at least 10%), and by the time you're ready to sell, it's too late. I use T/A in their simplest form: a) What categories in general are in uptrend b) compare funds on a chart = momo 3) A good simple ST indicator is three line break SPY ( chart). I used it mainly to enter the trade, after a bigger decline. 3) I always like to own wider range funds with lower risk/SD. They work longer term. The idea is to hold longer if you can and trade 2-3 times annually. 4) Flexibility: you must always learn. Markets are not equal. I never held a commodities fund more than a few months. Even if I held one, it wasn't more than 10-15%. I think it's UH specialty. Congrats. I was never depended on this category because my research shows that US LC are the best risk/reward over time + high tech has been leading for decades. 5) Valuations and many other indicators are not good predictors ST, read my ( link). That means you can miss a lot of performance + would not catch the real decline. Let's look at PE (or PE10). You would miss a huge performance of 1997-2000 + the big rebound of 2009 + the big rebound of 2021. You may miss many other years depending on your PE number. 6) Big picture and unique situations are a key to identify HUGE problems. Norbert defined it correctly. Sometimes is pretty easy to see it, but if you don't practice the above, chances are, you would miss it. It's less important for accumulators, but more important for investors close to retirement and beyond. Examples: the 2008 MBS fiasco + 2022 problems (inflation, war, Hawkish Fed) were slow movers. It took weeks, even months. 2020-very quick but extremely unique, how many times have you seen global virus that affect the world? 2018-Fed hikes rates several times, harder to identify Why did I catch 2018+2020 because I practiced it for years. Why did I miss the easy 2008? because I didn't believe in trading, I didn't have a system, nor I practice it? But 2008, my only losing year, was an eye-opener. I realized that owning better categories didn't protect me enough. I lost 25% (about 90/10) instead of 37-45%(US-global stocks). 25% was a good performance but it's still a huge loss. I had a nice size portfolio, it really hurt, it took me years of work, sweat, frugality and consistency to get there. I never wanted to experience it again, but I still wanted to invest. I started looking and searching for years for a solution. First things were T/A: 50/200 MA + 10 month MA(Faber) looked good in 2000-2010 but going forward were pretty bad. Finding my system took years, investing was always my hobby and passion, I always searched for "simple/easier" solutions. A very smart computer science prof in university told me that great solutions must be simple and can be explained on one side of a page. 7) After the big picture, I use more specific indicators, read about it at my site. Here is the bottom line: it's pretty easy to buy and hold a very long time, chances are you beat most investors and most funds. You still must hold fewer funds and hardly trade. You will experience all the market's ups/downs. Just don't look at your portfolio. I can't stand losing $100K in days. Trading may work for you, are you passionate enough finding it? It's not an easy task. You can have a shortcut, read my site, only a few did, and practice it. Lastly, I don't promote my system, I linked to my site because it's already written, and I don't want to write is again.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 13:24:29 GMT
Moving large blocks of assets to time current high VIX market is too risky for amateurs. Isn't that the reason why you are in cash?
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 13:47:21 GMT
Since the studies on missing the worse days and how dang hard that is to do without also missing the best days over the long term haven't been addressed, I hope we can stop with the claims that someone can consistently do this (selling out and buying in) and have better results than a buy and hold strategy over the long term.
If someone wants to do that - sell out/buy in - no problem - a very valid choice. All the power to you and best wishes for success. But please don't tell me how much more successful that will be than staying in the market for the long term.
|
|
|
Post by uncleharley on Nov 6, 2022 14:19:06 GMT
Fwiw, my thought is that any investment plan needs to be flexible. Flexibility has to include trading. My experiance indicates that using market timing techniques will increase ones returns when implemented during a trade. I love to buy with the intent to hold, however it has been my experiance that every investment has a limited life expectancey and it is better to sell and move on than to hold an investment that has gone sour. Day trading is another subject which has limited but useful uses. My observations indicate that successful day trading is usually accomplished by trading options as hedges against expected declines in prices of securities that one holds and does not want to sell usually because of liquidity problems. I doubt that such a situation applies to the posters on this board. As I have said before, It works for me on the stuff that I do. I am not a bond trader.
EDIT; Also I do not invest in OEF's.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 14:28:33 GMT
From the OP: Here is the bottom line: it's pretty easy to buy and hold a very long time, chances are you beat most investors and most funds. You still must hold fewer funds and hardly trade. You will experience all the market's ups/downs. Just don't look at your portfolio. I can't stand losing $100K in days.
I disagree - it is hard to buy and hold "a very long time" and not common. This is why most investors lag the S&P by nearly 2% on average annually. Why? Humans are human. They feel overconfident they can predict the future and rely on past results.
As far as "losing" - that concept in the context of equating actual loss to portfolio valuation fluctuations is an example of how psychology affects investment behavior.
|
|
|
Post by Chahta on Nov 6, 2022 14:34:58 GMT
uncleharley , I partially agree. Trading is the hardest part of investing and only a very small number can claim success at it. You sound like a lucky (to have that skill) dude.
|
|
|
Post by Chahta on Nov 6, 2022 14:38:51 GMT
Given strong conviction that the markets were in serious trouble, the obvious trade would have been to short a major index, not to invest in Value stocks. uncleharley is up 23% ytd. I mostly went to cash in January, but don't think that gives me bragging rights. Actually, I'm ashamed that I lacked the guts to go net short given my convictions. ๐ Because 99.9999% of us feel that way....and that keeps us from bad failure.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 14:42:44 GMT
Fwiw, my thought is that any investment plan needs to be flexible. Flexibility has to include trading. My experiance indicates that using market timing techniques will increase ones returns when implemented during a trade. I love to buy with the intent to hold, however it has been my experiance that every investment has a limited life expectancey and it is better to sell and move on than to hold an investment that has gone sour. Day trading is another subject which has limited but useful uses. My observations indicate that successful day trading is usually accomplished by trading options as hedges against expected declines in prices of securities that one holds and does not want to sell usually because of liquidity problems. I doubt that such a situation applies to the posters on this board. As I have said before, It works for me on the stuff that I do. I am not a bond trader. And that is the strategy you follow - being "flexible". You are extrapolating long term success - which I assume means beating some benchmark - from your personal experience. While I am certain this can occur for limited periods, I would think it much more unlikely over the long term given to have market beating returns trading in and out of the market. I want to see the studies. As far as going sour - how does one know when the S&P goes "sour?" I don't believe in the long term it does or will and there is a wealth of studies that support that. If you have a diversified portfolio of large caps - returns will approach the S&P for that basket. I think we all agree if an investment truly goes sour you need to ditch it. Everyone will have a different idea of "sour." If someone is using a method that consistently beats the S&P, I would suggest they publish it and have it reviewed. There are many in the investment world who would be interested. Many. Some have. Warren Buffet has been one over the long term who has beat the S&P. Peter Lynch was one. Where it the famous trader who makes it in the top 10 investors of all time? Again - I hope we have dispensed with this argument that we can somehow figure out how to miss the 50 worse days out of 30 years without also missing the 50 best.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 14:57:03 GMT
Anyone trading the results of the mid-term election? If so, what and how are you doing it? I expect there will be a one of two day market reversal after the initial market reaction.
|
|
|
Post by FD1000 on Nov 6, 2022 15:24:58 GMT
Since the studies on missing the worse days and how dang hard that is to do without also missing the best days over the long term haven't been addressed, I hope we can stop with the claims that someone can consistently do this (selling out and buying in) and have better results than a buy and hold strategy over the long term. If someone wants to do that - sell out/buy in - no problem - a very valid choice. All the power to you and best wishes for success. But please don't tell me how much more successful that will be than staying in the market for the long term. Again, you quote the studies, I know my record. You don't have to believe it. I'm OK with that. I don't have to be correct every time, I just have to be correct most times. I can tell you that I sold to mostly cash 5 times since 2018. 3 were correct, in 2 of them (2018+2020) I was out for 3-4 weeks, YTD=mostly MM. In all 3 times I still traded successful ST trades beyond the scope of this thread. I missed twice, I was out for 3-4 days each time, because risk was down pretty fast and I bought back. I'm OK missing days. Another point not discussed in these papers. I missed a lot more worse days than the best days because markets go down faster than up in most cases. It's just a fact. These papers don't discuss what are best,worse markets. The facts show I was only was out more than 3 weeks during meaningful 10%+ declines. You need to be able to know when to hold and when to fold, and why I was out only days when I was wrong. I only practice selling to cash about 9 years, I guess I need to wait another 21 years to prove my point. Second point is being retired, performance is secondary, all I need is to make enough to make it to the end. In my case, with the lowest SD. Until 5 years to retirement, my goals were to match the SP500 with equal lower SD. I achieved that too. My best RELATIVE performance was during 2000-2010 when I made 9% average annually which is about 10% better than the SP500. Third point: beating the SP500 sounds great but history shows otherwise. 1995-2000 was great, 2000-2010 SP500 lost about 10% in 10 years = horrible performance, 2010-21 SP500 did great but growth did better. This is a problem for most investors. While diversification sounds great, it is not. After 10 years of bad performance most don't believe in the SP500 and then it made one of the best runs for 11 years. The best RELATIVE performance happens when the SP500 lags, it still has high PE. High PE does not tell you what happens ST, but a good chance for the next 5-10 years. What will be the next 5-10? That is a very tricky question that cloud many investors, even experts' judgement. Forth points: Fees are negligible, the more money you have, the less they count. I deal with only OEFs. In most cases, I pay nothing. I have an agreement to buy most/all inst shares without fees. Buying ETFs costs peanuts. As I said before, being a good trader isn't easy. I tried many systems that failed, until I found a good one. BTW, papers show that buying single stocks lag the index, but you are doing it. This thread doesn't try to convince you of anything, its intention is to show you can identify high risk. You can select to ignore it or take actions. I live in the extreme, trading big % each time, that also took years. Many can decide to sell only 10-30% in chunks, or nothing. Lastly, the 2 biggest obstacles are still in play, inflation is still high and the Fed is still hawkish. The market will tell us what to do.
|
|
|
Post by Norbert on Nov 6, 2022 16:39:44 GMT
I think that Sara has superior returns over the long term.
Unfortunately, I don't have her conviction or tolerance for "losses". While I was holding a corporate job, I was 100% stocks, but not now.
Focusing on "risk adjusted returns" is a sign of weakness. Sara has confidence in her strategy and I think she'll wind up doing well. Her 10% "loss" this year is peanuts. She's not an indexer, which would be a different story.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 17:03:51 GMT
FD1000, You keep going back to what you do. Good for you. Not personal - applies to anyone - I do not believe extraordinary long term results without proof. Who would? What if I said I had beat the S&P 500 by several percent for the last 10 years with my dividend investing strategy? Would anyone believe me without substantiated proof? I hope not. Again - you have repeatedly stated how much more important it is for one to miss the worse days as opposed to missing the best days as justification for market timing and the superior performance one can attain. That is the only point I am addressing. I think it is pretty clear from the studies I posted, it is extremely difficult to do that in actuality, particularly in volatile markets. Frankly, it is not anything I ever looked into until it was repeatedly claimed. If it can be easily done, I wanted in. I don't see it - sorry. Just as beating the S&P on a long term consistent basis is extraordinary, so would being able to miss the worse without also missing the best over the long term. As we see the return spread is not large if you have perfect execution and don't have to worry about taxes or fees. I would think all of us would want data to back such up. Am I wrong? I did not know the intent of this thread was to identify high risk. I guess short term high risk? If so, this thread is probably is not for investors focused on long term strategies.
|
|
|
Post by retiredat48 on Nov 6, 2022 17:17:23 GMT
At richardsok , et al, who posted: "Regarding buy-and-hold, a more interesting test would be to compare it to a test of SPY with a 40-day moving average line and a 20-day moving average (for example). What would be the result if the investor sold 100% on every bearish crossover and bought 100% on every bullish crossover and how would it compare to buy and hold? I have never seen it done. I just set up such a chart on yahoo and I count exactly seven crossover events in the last 12 months, so it shouldn't be too burdensome for the investor who dislikes frequent trading. And by merely eye-balling the results, one can immediately see that the investor would have had a losing 2022, but with losses FAR less than buying and holding throughout the market carnage. To do a ten year back test is beyond my skill set -- but I suspect a 20X40 B/S discipline would out-do buy and hold and something like 10 x 20 would perform even better." --------------------------------------------------------------- Some brief points: --There have been many, many such studies. I have read over 200 such, regarding momentum and using Moving Averages. On balance, they are quite positive in adding to total returns, if one follows religiously. This even includes time periods when commissions were in play. It is one of the four pillars of my investing style. --An investment house did a STUDY of these 200 studies, concluding yes, using MAs work. They got 209 days as the optimal MA time period. Hence the popularity of using 200 days. --The most infamous study of the stock market was done by E. Fama/K. French. They concluded things like small beats large, value beats growth. But one item they buried for years was that MOMENTUM is a plus, especially in comparing the top decile with the bottom one, in total returns. The buried it because it did not fit their efficient market thesis for which they won "prizes" as authors. They have now formally straightened-the-record. --One needs to factor in behavior patterns...like, if one is hospitalized, how does one follow trading patterns when needed. Computer studies assume one does everything precisely. Yes, I have shown this video before, but here is a video showing a simple long term MA system that clearly works, if one is willing to go all in/all out: linkhttp://www.youtube.com/watch?v=bN9WUIXaRr4------------------------ Disclosure: My investing model does NOT include all in/all out profiles/strategies...about 50% equities is the lowest I will go...long story why. Good day R48
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 17:17:42 GMT
I think that Sara has superior returns over the long term. Unfortunately, I don't have her conviction or tolerance for "losses". While I was holding a corporate job, I was 100% stocks, but not now. Focusing on "risk adjusted returns" is a sign of weakness. Sara has confidence in her strategy and I think she'll wind up doing well. Her 10% "loss" this year is peanuts. She's not an indexer, which would be a different story. I really haven't. I very much approach the returns of the S&P and have considered simplifying as a result. I do get better income thrown off. But as far as total return? Nope. I do like knowing what I own, but that has its drawbacks too. Absolutely - being in the accumulation phase is a different animal. But - again - if we are making superior returns on a long term basis. That's a big deal. I have read that over the long term, the best risk adjusted returns come from holding equities. Is that true or not? If someone wants to trade, preserve capital at this time, buy and hold, have more income, I think we have to accept the pros and cons. I look at richardsok - he's investing in South America. Big risk, big return/loss. Uncle Harley - he's taking big risk, big return/loss. This makes sense. If you sell out of the market, you might miss huge recovery days, you might not get back in. Risk, reward relationship holds. Buy and hold - you might panic and sell, you might draw down and face a sequence of return risk. Within all those you have asset selection issues. You bob between value and growth - you might have put your eggs in one basket. Same with domestic with no international. Diversification is a pillar of investing for a reason. Some folks might get it all right. Edit - it is only this year in the last 12 I have been this far "ahead" of the S&P. Frankly I don't know what to make of that at this point. My outsize position in AAPL could help even that up unfortunatley!
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 6, 2022 17:28:15 GMT
At richardsok , et al, who posted: "Regarding buy-and-hold, a more interesting test would be to compare it to a test of SPY with a 40-day moving average line and a 20-day moving average (for example). What would be the result if the investor sold 100% on every bearish crossover and bought 100% on every bullish crossover and how would it compare to buy and hold? I have never seen it done. I just set up such a chart on yahoo and I count exactly seven crossover events in the last 12 months, so it shouldn't be too burdensome for the investor who dislikes frequent trading. And by merely eye-balling the results, one can immediately see that the investor would have had a losing 2022, but with losses FAR less than buying and holding throughout the market carnage. To do a ten year back test is beyond my skill set -- but I suspect a 20X40 B/S discipline would out-do buy and hold and something like 10 x 20 would perform even better." --------------------------------------------------------------- Some brief points: --There have been many, many such studies. I have read over 200 such, regarding momentum and using Moving Averages. On balance, they are quite positive in adding to total returns, if one follows religiously. This even includes time periods when commissions were in play. It is one of the four pillars of my investing style. --An investment house did a STUDY of these 200 studies, concluding yes, using MAs work. They got 209 days as the optimal MA time period. Hence the popularity of using 200 days. --The most infamous study of the stock market was done by E. Fama/K. French. They concluded things like small beats large, value beats growth. But one item they buried for years was that MOMENTUM is a plus, especially in comparing the top decile with the bottom one, in total returns. The buried it because it did not fit their efficient market thesis for which they won "prizes" as authors. They have now formally straightened-the-record. --One needs to factor in behavior patterns...like, if one is hospitalized, how does one follow trading patterns when needed. Computer studies assume one does everything precisely. Yes, I have shown this video before, but here is a video showing a simple long term MA system that clearly works, if one is willing to go all in/all out: linkhttp://www.youtube.com/watch?v=bN9WUIXaRr4------------------------ Disclosure: My investing model does NOT include all in/all out profiles/strategies...about 50% equities is the lowest I will go...long story why. Good day R48 R48 - who is the great investor who has done this? Let's talk 30 years which is what most of our holding periods are. As far as methods - I have no doubt a back tested strategy can be shown to work and have superior results. FD has continually shown us that. Again - this is not personal - if you, FD, whomever says they have had superior results using some momentum, MA system, I have no reason to disbelieve. But taking it on board for personal use without substantiated results or at least one well known great investor using it, gives me great pause. That's all. As I said - all the power to those that do this and wishes for great success. Edit - here is an article that puts forth one analysis of a 200 day moving average strategy vs buy and hold based on 30 years. Not sure how valid it is or if there are other 30 year studies that contradict it. smarts.thestreet.com/all-smarts/timing-the-market-is-riskier-than-you-think
|
|