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Post by mozart522 on Jun 14, 2022 12:04:11 GMT
Timing the market vs time in the market. Fine line between the first and making an allocation decision. Everyone here has different timelines, risk tolerance, income needs. If I were older, didn't work, had less guaranteed income, I would allocate differently. But I would be in the market. R48 - the Hall of Fame - is that tongue in cheek? Making some money on a trade isn't really what is called timing the market in my view. Timing is pulling one's principal out and in based on what the investor thinks of market conditions. I don't believe anyone does this well consistently. Does it put them in the poor house? Not saying that, but is it going to generate the best return over the long run? Only if your perfect. Norbert - going to cash due to the writing on the wall isn't what I'm talking about - particularly for a retiree. My guess is you don't think you can jump in and out and come out so much better than the market average. You are protecting what you have and accepted that you can lose out on potential future upside...or downside. So - say I have 1 million dollars. It became 1.4M as of Jan 1, 2022. I sell Jan 1. Pay my taxes. Now that 1.4M if left in the market would be 1.12M using round numbers. Let's say 1M was in taxable - so I paid $150K (not sure if I would pay 20%). So if in cash I have 1.25M. A 130K difference. Compounding is gone, buying low is gone. Now I need to make sure I get back in at the right time in a time of economic uncertainty that could boil and roil for years....or months...or days. This is why I say I would throw up from the anxiety. That money is my life. Hats off to those who do it consistently. Edit - if I got my numbers wrong - apologies - it's early. Agree. I went to cash early, but I have 100% tax advantaged accounts, so I can do so without giving up principal. Do not agree with I cmay lose out on potential furure upside, just down side. How much down side? Depends on when I get back in. But it will be long before VOO moves up the 20% it is down now YTD or VUG moves up the 32% it is down. Agree that this only makes sense maybe once a decade when things become somewhat clear; 2008, 2022. And I don't have many of those left:) As I said, I admire B&H investors, but at my age, I won't sit and let a lifetime of accumulation go down the drain. Stay the course will work well for those still working if history plays out. Good luck. |
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Post by mnfish on Jun 14, 2022 12:19:04 GMT
@waffle, "And if my Aunt had gonads she'd be my Uncle"...ElLobo"
Speaking of gonads, we'll see if Powell has any after the last CPI report.
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Post by FD1000 on Jun 14, 2022 12:27:38 GMT
Sara: I have 1.4, sell, and pay taxes
FD: most have their money in deferred accounts. Timing for me has minimal tax effect. Your argument fell apart. I also posted what to do, no excuses. I have to admit, since 2018, I was out 5 times. 3 times I nailed it, the other 2 times, I was out 3-4 days each time. Looks to me as a good compromise.
This meltdown was the easiest to see, months of slow moving deterioration.
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Post by fishingrod on Jun 14, 2022 12:52:21 GMT
How long will someone sit out and lose all the compounding from stocks. 1 week, 2, 3, 1 month, 2 months, 3, 4, 5, 6, ........................ If one has an allocation one can tolerate, one doesn't care if stocks go down. In fact they welcome it. The stocks, if quality, will survive. I know, be careful for what I wish for. Are people just going to Treasuries now that they learned about them?
I also don't believe ANYONE can consistently time the market. Yes a person can make some good trades around the edges of their portfolio or even make large moves that work out really well, every once in a while.
And yes I know that there are charts of being out of the market on the worst down days and vice versa. They are just charts.
NO ONE has done what those charts portray.
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Post by mozart522 on Jun 14, 2022 13:02:22 GMT
fishingrod, How much compounding have investors gotten in the last 5 months; 15% NAV loss and 1% dividend gain? Someone who is mainly in dividend paying, high quality, individual stocks that are distributing adequate income or more can take the position that they don't care if stocks go down. Not a bad way to go.
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Post by fishingrod on Jun 14, 2022 13:10:08 GMT
fishingrod , How much compounding have investors gotten in the last 5 months; 15% NAV loss and 1% dividend gain? Someone who is mainly in dividend paying, high quality, individual stocks that are distributing adequate income or more can take the position that they don't care if stocks go down. Not a bad way to go. If someone bought way back when and has 200% gain even now, would they be concerned if it has gone down 32%? Looking to buy more maybe?
The compounding they are getting is at lower prices, so that is good.
I would have to get back to you in about two to three years to see the compounding effect.
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Post by steadyeddy on Jun 14, 2022 13:21:03 GMT
My take: It’s basically investors vs traders. Investors buy and strategically allocate and at times reallocate to different assets. Traders use shorter term (1 year or less) time frames for buying/selling assets. I would surmise there are no financial advisors that advocate trading because 99.9% of us can’t. I do acknowledge there are successful traders. Most portfolios are to provide money to use at some point. What works is a personal choice for each. Financial advisors won't advocate trading since they charge fees on AUM... I think. |
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Post by Deleted on Jun 14, 2022 13:26:26 GMT
I am interested in treasury bonds for my taxable account. I expect to buy new issues this fall in a ladder with a rollover option. My Roth is and has been fully invested in fixed income products.
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Post by steadyeddy on Jun 14, 2022 13:29:12 GMT
@waffle , "And if my Aunt had gonads she'd be my Uncle"...ElLobo" Speaking of gonads, we'll see if Powell has any after the last CPI report. I think Uncle Powell will do 50bps tomorrow and suggest higher hike next time.. he boxed himself into a corner last month by saying 75bps is not being considered. Things got worse in a month but it is a credibility issue too.. |
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Post by FD1000 on Jun 14, 2022 13:39:50 GMT
How long will someone sit out and lose all the compounding from stocks. 1 week, 2, 3, 1 month, 2 months, 3, 4, 5, 6, ........................ If one has an allocation one can tolerate, one doesn't care if stocks go down. In fact they welcome it. The stocks, if quality, will survive. I know, be careful for what I wish for. Are people just going to Treasuries now that they learned about them? The usual, you must have a plan and follow it. Until 2022, I was out 3-4 weeks in 2013, 2018, 2020. In 2022 months. I will be out until risk goess down, I need to see stabilization and then uptrend. The first several weeks after entering can be tricky since this meltdown and recovery is a slow process. |
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Post by fishingrod on Jun 14, 2022 13:53:36 GMT
How long will someone sit out and lose all the compounding from stocks. 1 week, 2, 3, 1 month, 2 months, 3, 4, 5, 6, ........................ If one has an allocation one can tolerate, one doesn't care if stocks go down. In fact they welcome it. The stocks, if quality, will survive. I know, be careful for what I wish for. Are people just going to Treasuries now that they learned about them? The usual, you must have a plan and follow it. Until 2022, I was out 3-4 weeks in 2013, 2018, 2020. In 2022 months. I will be out until risk goess down, I need to see stabilization and then uptrend. The first several weeks after entering can be tricky since this meltdown and recovery is a slow process.
So you can't identify any fund in any asset class that you would have enough 'comfort' in to put money in at this time?
Or is it individual Treasuries?
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Post by Deleted on Jun 14, 2022 13:53:39 GMT
steadyeddy, Schwab's Intelligent Portfolios is the center of a judgment for which Schwab has agreed to pay former investors for portions of cash from bank going to Schwab which was not properly disclosed. You and I were likely affected.
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Post by Deleted on Jun 14, 2022 14:40:38 GMT
fishingrod , How much compounding have investors gotten in the last 5 months; 15% NAV loss and 1% dividend gain? Someone who is mainly in dividend paying, high quality, individual stocks that are distributing adequate income or more can take the position that they don't care if stocks go down. Not a bad way to go. If someone bought way back when and has 200% gain even now, would they be concerned if it has gone down 32%? Looking to buy more maybe?
The compounding they are getting is at lower prices, so that is good.
I would have to get back to you in about two to three years to see the compounding effect.
I think we need to keep in mind that what is going on is what is expected. Multiple contraction. High P/Es have been a no-no for some time. Earnings are doing well. The market p/e is reasonable, particularly without tech. In my mind, panic is going on. Bonds aren't good and that was seen the minute we knew inflation was in the pipeline. Look for income in alternatives. Don't look for disasters that aren't here yet. So what if we have a recession next year? Are you going to just sit and let inflation chomp away for the next year with the idea that real assets will see another 2008 situation? |
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Post by Deleted on Jun 14, 2022 14:47:41 GMT
Sara: I have 1.4, sell, and pay taxes FD: most have their money in deferred accounts. Timing for me has minimal tax effect. Your argument fell apart. I also posted what to do, no excuses. I have to admit, since 2018, I was out 5 times. 3 times I nailed it, the other 2 times, I was out 3-4 days each time. Looks to me as a good compromise. This meltdown was the easiest to see, months of slow moving deterioration. You have stated several times more have money in deferred accounts than taxable. Why do you think that? I did a quick google and immediately came up with the opposite. So this meltdown was the easiest to see - what about the rest of the year? Is that easy to see? As far as posting what to do - do you really want to claim that your advice should be followed for fellow posters' major financial life changing decisions? |
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Post by Deleted on Jun 14, 2022 14:50:50 GMT
My take: It’s basically investors vs traders. Investors buy and strategically allocate and at times reallocate to different assets. Traders use shorter term (1 year or less) time frames for buying/selling assets. I would surmise there are no financial advisors that advocate trading because 99.9% of us can’t. I do acknowledge there are successful traders. Most portfolios are to provide money to use at some point. What works is a personal choice for each. Financial advisors won't advocate trading since they charge fees on AUM... I think. Would you advocate trading as the primary retirement strategy? I don't think that advice is primarily based to get more in fees. |
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Post by Deleted on Jun 14, 2022 14:57:04 GMT
Timing the market vs time in the market. Fine line between the first and making an allocation decision. Everyone here has different timelines, risk tolerance, income needs. If I were older, didn't work, had less guaranteed income, I would allocate differently. But I would be in the market. R48 - the Hall of Fame - is that tongue in cheek? Making some money on a trade isn't really what is called timing the market in my view. Timing is pulling one's principal out and in based on what the investor thinks of market conditions. I don't believe anyone does this well consistently. Does it put them in the poor house? Not saying that, but is it going to generate the best return over the long run? Only if your perfect. Norbert - going to cash due to the writing on the wall isn't what I'm talking about - particularly for a retiree. My guess is you don't think you can jump in and out and come out so much better than the market average. You are protecting what you have and accepted that you can lose out on potential future upside...or downside. So - say I have 1 million dollars. It became 1.4M as of Jan 1, 2022. I sell Jan 1. Pay my taxes. Now that 1.4M if left in the market would be 1.12M using round numbers. Let's say 1M was in taxable - so I paid $150K (not sure if I would pay 20%). So if in cash I have 1.25M. A 130K difference. Compounding is gone, buying low is gone. Now I need to make sure I get back in at the right time in a time of economic uncertainty that could boil and roil for years....or months...or days. This is why I say I would throw up from the anxiety. That money is my life. Hats off to those who do it consistently. Edit - if I got my numbers wrong - apologies - it's early. Agree. I went to cash early, but I have 100% tax advantaged accounts, so I can do so without giving up principal. Do not agree with I cmay lose out on potential furure upside, just down side. How much down side? Depends on when I get back in. But it will be long before VOO moves up the 20% it is down now YTD or VUG moves up the 32% it is down. Agree that this only makes sense maybe once a decade when things become somewhat clear; 2008, 2022. And I don't have many of those left:) As I said, I admire B&H investors, but at my age, I won't sit and let a lifetime of accumulation go down the drain. Stay the course will work well for those still working if history plays out. Good luck. Far be it for me to suggest what a retiree should do, particularly when I don't know their particulars. No - I would not let a lifetime of accumulation go down the drain. If that is what is going to happen to the rest of us though, best to batten your hatches, as we will be hefting pitch forks and scythes. Madame Defarge comes to mind. Seriously - I've seen the oft trotted out stats - the best gains are in close proximity to the worse losses. You can lose out on upside. From what I am reading here, is many were beyond the bounds of their risk tolerance. Good to find these things out. I am not happy. Believe me. But logically, I know what I need to do and what my worse case scenario is. I don't worry, but I don't like seeing my paper losses. I do like seeing my income go up. |
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Post by mozart522 on Jun 14, 2022 14:58:03 GMT
fishingrod , How much compounding have investors gotten in the last 5 months; 15% NAV loss and 1% dividend gain? Someone who is mainly in dividend paying, high quality, individual stocks that are distributing adequate income or more can take the position that they don't care if stocks go down. Not a bad way to go. If someone bought way back when and has 200% gain even now, would they be concerned if it has gone down 32%? Looking to buy more maybe?
The compounding they are getting is at lower prices, so that is good.
I would have to get back to you in about two to three years to see the compounding effect.
Ok, I agree with that. I was reacting to "How long will someone sit out and lose all the compounding from stocks. 1 week, 2, 3, 1 month, 2 months, 3, 4, 5, 6," I understood this as a short term proposition. Not going to lose much compounding in even 6 months compared to buying back at 15% lower prices. I generally don't hold 200% gains because that would skew my AA. I would either rebalance or move on to something else. |
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Post by mozart522 on Jun 14, 2022 15:32:39 GMT
Agree. I went to cash early, but I have 100% tax advantaged accounts, so I can do so without giving up principal. Do not agree with I cmay lose out on potential furure upside, just down side. How much down side? Depends on when I get back in. But it will be long before VOO moves up the 20% it is down now YTD or VUG moves up the 32% it is down. Agree that this only makes sense maybe once a decade when things become somewhat clear; 2008, 2022. And I don't have many of those left:) As I said, I admire B&H investors, but at my age, I won't sit and let a lifetime of accumulation go down the drain. Stay the course will work well for those still working if history plays out. Good luck. Far be it for me to suggest what a retiree should do, particularly when I don't know their particulars. No - I would not let a lifetime of accumulation go down the drain. If that is what is going to happen to the rest of us though, best to batten your hatches, as we will be hefting pitch forks and scythes. Madame Defarge comes to mind.
Seriously - I've seen the oft trotted out stats - the best gains are in close proximity to the worse losses. You can lose out on upside. From what I am reading here, is many were beyond the bounds of their risk tolerance. Good to find these things out. I am not happy. Believe me. But logically, I know what I need to do and what my worse case scenario is. I don't worry, but I don't like seeing my paper losses. I do like seeing my income go up. I don't expect to get the "best gains". I could reconstruct my portfolio tomorrow and be far ahead (more value, more shares) than I would have been if I hadn't sold. Even if it falls further. And I may just do that after the July or Sept hike or if the next inflation numbers show a real drop. Four of five clicks of the mouse and I'm done with equities. Bonds funds may take longer, but I can sit in ST treasuries for some time. I'm comfortable with this, not everyone would be. I just hope everyone here is comfortable with what they are doing. I support everyone doing what they feel is best for them based on their situation and investing strategy. |
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Post by win1177 on Jun 14, 2022 15:34:18 GMT
Interesting discussion. I am NOT selling much of anything since the majority of our assets are in taxable accounts, with very large unrealized gains. May harvest a few losses for tax reasons, that’s it. Many of these are long term holds of dividend growth stocks, bought at much lower prices, which continue to raise their dividends every year. Yes, the selloffs in their quoted prices bother me a little, but I’ll just hold them for their income. If they sell off “enough”, I may even add a little. Holding essentially NO bonds, but watching rates rise and hoping to eventually add up to about 10-15% bonds.
Our dividend income, plus my pension are more than enough to support us, so we’re fine. I will eventually start SS, but waiting for now. Wife still working, so we have additional income from her. Yes, our accounts are down from their “peak” months ago, but we’re fine and not stressing about it. SELL? Only if one of our holdings has a major “change” in the business.
Win
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Post by Norbert on Jun 14, 2022 15:57:16 GMT
@slooow
"My guess is you don't think you can jump in and out and come out so much better than the market average. You are protecting what you have and accepted that you can lose out on potential future upside...or downside."
True, I doubt that I can outperform the market over the medium- to long-term. But, I do think I can avoid much of the volatility of the market indexes while getting close to achieving market returns. It's accurate to say that I'll sacrifice some future market upside to avoid the ravages of a nasty bear market.
To be clear, I am persuaded that there are times to be in the market and times to step aside.
The post Covid crash 2020 rally was a great time to be overweight risky assets, as the government and central banks were throwing money at us. Markets love that. 2022 is the opposite. Inflation is forcing the liquidity party to end. I think it's a dangerous period, though will probably offer excellent buying opportunity at some point.
It's in this context that I believe in "market timing". Right now I'm feeling pretty sanguine about my 2020 and 2022 performance, but who knows? The markets could bounce by year end and I will feel like a jerk if I sit it out. You, however, will look like a genius.
N.
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Post by Deleted on Jun 14, 2022 15:57:50 GMT
Interesting discussion. I am NOT selling much of anything since the majority of our assets are in taxable accounts, with very large unrealized gains. May harvest a few losses for tax reasons, that’s it. Many of these are long term holds of dividend growth stocks, bought at much lower prices, which continue to raise their dividends every year. Yes, the selloffs in their quoted prices bother me a little, but I’ll just hold them for their income. If they sell off “enough”, I may even add a little. Holding essentially NO bonds, but watching rates rise and hoping to eventually add up to about 10-15% bonds. Our dividend income, plus my pension are more than enough to support us, so we’re fine. I will eventually start SS, but waiting for now. Wife still working, so we have additional income from her. Yes, our accounts are down from their “peak” months ago, but we’re fine and not stressing about it. SELL? Only if one of our holdings has a major “change” in the business. Win On same page as always. Continue to buy a little. Still looking forward to the post-mortem once we are through this to compare any lessons learned. |
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Post by archer on Jun 14, 2022 16:07:52 GMT
I find the main difficulty with trading or market timing is that corrections and bear markets occur rapidly, and recoveries are much slower and erratic. 2020 was the quickest recovery I have seen which took twice as long as the fall and had 3 fumbles along the way. This year the decline is slower with the bulls making a few interceptions. We can look at the larger economic picture and assess whether to be in the market or not, but both bulls and bears always can always make a case to support their species view, and often regardless of conditions the market responds counterintuitively. My hat's (or helmet's) off to the few who can get it right.
At the same time, B&H strategy looks good over the past 10 yrs or 100 yrs, but also important when it comes to practical application for the retiree, are the long flat periods which have occurred over the long run.
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Post by Deleted on Jun 14, 2022 16:08:10 GMT
@slooow "My guess is you don't think you can jump in and out and come out so much better than the market average. You are protecting what you have and accepted that you can lose out on potential future upside...or downside." True, I doubt that I can outperform the market over the medium- to long-term. But, I do think I can avoid much of the volatility of the market indexes while getting close to achieving market returns. It's accurate to say that I'll sacrifice some future market upside to avoid the ravages of a nasty bear market. To be clear, I am persuaded that there are times to be in the market and times to step aside. The post Covid crash 2020 rally was a great time to be overweight risky assets, as the government and central banks were throwing money at us. Markets love that. 2022 is the opposite. Inflation is forcing the liquidity party to end. I think it's a dangerous period, though will probably offer excellent buying opportunity at some point. It's in this context that I believe in "market timing". Right I'm feeling pretty sanguine about my 2020 and 2022 performance, but who knows? The markets could bounce by year end and I will feel like a jerk. You will look like a genius. N. Like Win - I would be hammered on cap gains if I sold. My income stream is solid and a good amount. Win and I have both set up primarily income from dividend strategies over the years. No genius or dunce about it. I am committed and locked in with years to go. I hold more cash than I ever have in the form of a guaranteed principal bond fund. If 2008 happens - a lot of that will go into an S&P fund and an EAFE fund. People are freaked by 2008. I don't see a need to step aside if your allocation reflected your risk tolerance but respect to each his own. You could be the genius. To me - earnings are still okay and unemployment low. To me this has been a great lesson in risk tolerance. Fingers double crossed. |
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Post by Norbert on Jun 14, 2022 16:17:54 GMT
@slooow
True, the taxable vs. non-taxable account issue is fundamental.
Yes, people still afraid of 2008? Or, too complacent after years of easy money?
Ha! I love these bull vs. bear debates! It will be fun to look back at this with the advantage of hindsight.
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Post by uncleharley on Jun 14, 2022 17:17:08 GMT
O K. I have read most of the posts on this thread and I conclude that now that the S&P is officially in a bear market, no one has or is going to change their tactics towards investing. I have a significant part of my port invested in UTG which is currently in a falling knife or waterfall pattern. I am not going to buy more at this time just to prove that I am not going to change either.
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Post by Deleted on Jun 14, 2022 18:06:18 GMT
Sidebar - UH - what is the yield on UTG now? Are you going to hold?
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Post by uncleharley on Jun 14, 2022 18:29:39 GMT
7.2% as of an hr ago. Yes, I am holding. I have some short positions to offset the capital losses on it and a couple other positions.
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Post by FD1000 on Jun 14, 2022 18:32:26 GMT
@slooow "My guess is you don't think you can jump in and out and come out so much better than the market average. You are protecting what you have and accepted that you can lose out on potential future upside...or downside." True, I doubt that I can outperform the market over the medium- to long-term. But, I do think I can avoid much of the volatility of the market indexes while getting close to achieving market returns. It's accurate to say that I'll sacrifice some future market upside to avoid the ravages of a nasty bear market. To be clear, I am persuaded that there are times to be in the market and times to step aside. The post Covid crash 2020 rally was a great time to be overweight risky assets, as the government and central banks were throwing money at us. Markets love that. 2022 is the opposite. Inflation is forcing the liquidity party to end. I think it's a dangerous period, though will probably offer excellent buying opportunity at some point. It's in this context that I believe in "market timing". Right now I'm feeling pretty sanguine about my 2020 and 2022 performance, but who knows? The markets could bounce by year end and I will feel like a jerk if I sit it out. You, however, will look like a genius. N. +1. When I was younger, my style was to stay invested, just change funds, that worked pretty well with no losing year since the beginning, except 2008. But I realized that 25% is huge %. It took me several more years to search, run scenarios to realized, I can identify potential bear markets. Everywhere I read, they all say, you can't but so far it has been working for close to 10 years. The idea is to change your mindset and look for clues and then you realize, well, it's not a brain surgery. I laid out the foundation in my first post, but I bet that most didn't pay attention, as they do with most posts. 2 simple ideas 1) Are current markets unique? 2) Pay attention when both stocks+bonds don't work. They also said: momentum doesn't work but diversification does. My record says otherwise. If you don't try, you will never find it. Can you learn how to swim reading a book? No, you actually have to swim. I also think most fund managers or anybody who manages money will not encourage selling, the AUM will shrink. They also have to be invested. Imagine Black rock head of investments shows up on TV and says "our research says, markets have high risk now, sell, we will tell you later when to buy" OR "we are selling a huge % of the portfolio". ========== To all these who say, I already made 200% so why should I care. Risk-adjusted investors do care. This is exactly the time, these investors catch up and maybe pass. 25% loss on 200% and total return goes to 150%. 50% down and you go back to just 100%. Now you must make 100% to get to even. This is why I posted about ( it). ========== Sara, maybe I sould explained more about taxable and deferred, most of the prof (STEM jobs) which are the huge % of the upper middle class, have most of their money in deferred accounts. They have been saving for decades, every month. Rich people don't have a problem. Less fortunate don't have enough. Most of the issues we are discussing are for the the middle. Sure, Bezos+Musk distort the picture. |
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Post by Deleted on Jun 14, 2022 20:46:43 GMT
FD - my guess is many of those upper middle class deferred account holders also have taxable investments. Many have no access to deferred accounts and only have taxable accounts. IRAs you can't put much in. Some have none. Tax consequences need to always be considered when providing investment options/opinions.
UH - I now have a small stake in UTG.
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Post by retiredat48 on Jun 14, 2022 21:44:31 GMT
My investment portfolio is about 98% tax deferred IRAs,including cash positions. Any market timing or hedging actions are thus non taxable events.
I own three houses (real estate)
My taxable account holdings are a large negative position due holding two large HELOCS (one three percent fixed, and one Prime minus 3/4%).
I plan to never pay back the helocs. Want to be a net borrower in inflationary times. That is the correct side of the equation to be on, with inflation.
R48
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