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Post by Deleted on Jun 17, 2022 14:10:17 GMT
As previously reported, I recently raised my cash allocation, so this post may appear a bit hypocritical on my part but honestly, I'm chomping at the bit to get that money back in the market and have set numerous limit orders on ETFs to do so. I recently saw mentioned on Wealthtrack performance results from missing the best days in the market. I googled it and found this: www.wellsfargo.com/investment-institute/sr-perils-time-volatile-markets#:~:text=Over%20the%20past%2030%20years,2.2%25%20over%20that%20same%20period. "Our research suggests that missing a handful of the best days over longer time periods drastically reduces the average annual return an investor could gain by simply holding on to their equity investments during market sell-offs. Over the past 30 years, missing the best 30 days (based on S&P 500 Index returns from September 16, 1991 through September 15, 2021) took the annual average return from 8.5% per year down to just above the average inflation rate of 2.2% "
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Post by racqueteer on Jun 17, 2022 14:47:11 GMT
For balance, though, you ALSO need to look at the results of missing the WORST days in the market. My philosophy has always been to shoot for beating a standard 60-40 allocation in both directions. Imo, the real money is made during a BEAR->BULL cycle; which is why I've been frustrated by the Fed propping up the market by keeping its thumb on the scale. We're FINALLY getting a market which makes some sense!
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Post by retiredat48 on Jun 17, 2022 15:45:45 GMT
@django,…hi
There have been other DETAILED studies refuting that article conclusion…but I don’t have a reference link. It has to do with the math, and that missing such up days also meant (like Raq posted), missing some huge down days…You couldn’t do one without the other.
R48
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Post by Deleted on Jun 17, 2022 16:00:08 GMT
The article does mention missing the best and the worst days, and that they are usually clustered together so it's very hard to just avoid just the worst. Still, the results which included both the best and the worst days favored doing nothing, although not by nearly as much as in the paragraph I previously quoted.
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Post by steelpony10 on Jun 18, 2022 1:34:14 GMT
@django ,
I saw years ago compounding was 40% of TR which depends on being in the market because you never know when market gains might occur and when you might pick up less expensive shares or invest for more income during bad markets.
Cash has little or no return. If this present situation goes on for awhile you might be forced to spend that cash quicker due to higher inflation leaving less to “time” back in compounding losses even more.
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Post by Mustang on Jun 18, 2022 2:50:11 GMT
As a buy and hold investor I haven't lost a single cent. I haven't sold anything. I'm still buying every month (just bought a little today) and I have more shares now than I did on January 1st. I'm in this for the long term and won't be selling for a few more years. If this is anything like 73-74 then the market will be down a couple of years then have a strong recovery. It all depends upon what the government does.
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Post by roi2020 on Jun 18, 2022 3:19:38 GMT
The worst days in the market often occur in close proximity to some of the market's best days. Getting the timing right is very difficult. I don't even try...
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Post by FD1000 on Jun 21, 2022 12:50:05 GMT
To make it easy, I rewrote how to time the market ( here). It discusses why missing the worse days is much better than the best + much more. It's doable, several of us, have done it, for years. You can't swim reading a book, you actually have to do it. The funny thing is when I get private messages from a poster saying "Did you see that? It's doing this and that". Sometimes it's earlier than I. They have read my posts, and gather the right info what to look for and now can do it too.
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galeno
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Post by galeno on Jun 21, 2022 15:50:38 GMT
0.5 x 0.5 = 0.25 = bad odds.
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Post by racqueteer on Jun 21, 2022 16:41:47 GMT
0.5 x 0.5 = 0.25 = bad odds. Yes, throwing darts while blindfolded is not recommended. I doubt, however, that this is what everyone is doing. As always, use some intelligence and put the odds in your favor.
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galeno
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Post by galeno on Jun 21, 2022 20:40:15 GMT
Throwing darts, especially at mid-cap stocks, is usually a better strategy than most stock picking strategies.
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Post by racqueteer on Jun 21, 2022 21:20:12 GMT
Throwing darts, especially at mid-cap stocks, is usually a better strategy than most stock picking strategies. I’d be interested in seeing the data on that.
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Post by fishingrod on Jun 21, 2022 22:19:22 GMT
"In January 1999, a chimpanzee actress named Raven (the star of Babe, Pig in the City) threw 10 darts at a dartboard of 133 internet related companies. Within six trading days one of her picks was up a whopping 95%! By the year’s end, according to George Fisher, author of The Streetsmart Guide to Overlooked Stocks, Raven’s portfolio of ten randomly-selected stocks had outperformed more than 6,000 internet and technology money managers earning an astonishing 213% return." prosperitythinkers.com/personal-finance/three-monkeys-and-cat-pick-stocks/
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Post by racqueteer on Jun 21, 2022 23:53:38 GMT
Well, fishingrod, that’s an entertaining anecdote, but in fairness, I’m not sure that in any way supports geleno’s statement. One has to wonder, though, if Raven was right or left handed (or ambidextrous)?Or if, indeed, such a level of success is limited to primates? Certainly, the odds are stacked against invertebrates!
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Post by richardsok on Jun 22, 2022 0:29:33 GMT
django -- Missing/accepting bad days or good ones, you're assuming ownership of high volatility stocks with unpredictable big moves baked into the patterns.
But you might consider trading your biggest positions in low-volatility assets like MUB, BRK-B or MMT, to name three, where really violent one-day moves are quite rare, and applying technical signals minimizes emotional urges. This, in theory, should enable you to own far more up days than down days.
Unforeseeable disaster days like 9/11 are quite uncommon.
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Post by Deleted on Nov 12, 2022 14:26:58 GMT
I wasn't quite sure where to put this comment, but am trying to use existing threads to cut down on the number of them. This week's Wealthtrack features Charley Ellis and is a good review of the premise for an investor's portfolio management. He is a big believer in indexing and makes some compelling arguments for it. This is why I chose this thread - one of his premises is the well known saw that most (and I do mean most per Charley) can't figure out when to be in and out of the market. Those of you who consistently beat the market should present your results to the investing houses and be rewarded with an amazing salary and bonuses! My journey was based on Josh Peters methodology and was to generate a reliable growing income stream. He was able to do this and beat (documented by the way) the S&P for some number of years. When he went to an investing house as a fund manager, he did not do well. It's hard folks! So much so, I have considered moving to the idea of the BHs and made my first venture this year, buying a small stake (less than 1% of my portfolio). I still need some convincing and I do like knowing what I own. I will probably get to a mix. Enough of my portfolio. Ellis made some great points that I 100% agree with. Let's visit that term "perm bull" which I think is ridiculous. Anyone who believes that stocks over the long term are the better investment would meet this definition I guess. That would be Ellis then. He thinks THE most important investing question to answer is when do you need the money? If it is 2-3 years, then invest in t-bills, 5-7 years, then bonds. Anything past that - equities. Very familiar advice. This isn't based on age - it is when you need the money and also depends on knowing yourself - in other words - how to sleep well at night. He is 100% in equities as he is now investing for his grandchildren. Of course, he points out he is still earning a very very nice income for consulting work (not sure what that would be if one believes in limited ability to exploit inefficiencies). None of this is new of course, but a good reminder for some. His summation on how markets have changed since the 60s (he's 85) is interesting, with his conclusion that it has increasingly become difficult to exploit inefficiencies is as well. So why bother? He does address the question of long periods of not recovering stock market losses. His answer was the periods to claim this are cherry picked and if you move the years around by 2 to 3 years - not so bad. Also, that there are times in those languishing periods where returns were made. Not particularly comforting (which is why I like the steady income stream strategy by the way.). His book is touted in the program. wealthtrack.comBy the way - re-reading this thread - does anyone think they can nail the worst days of the market and also hit the best on a consistent basis? They seem to be tightly clustered. Didn't know that thread also currently existed!
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Post by uncleharley on Nov 12, 2022 14:47:02 GMT
"does anyone think they can nail the worst days of the market and also hit the best on a consistent basis?" I can't. But by applying the results of technical signals from the broader market indexes to specific securities that I am interested in, I can have considerably better returns than an index fund.
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Post by Deleted on Nov 12, 2022 14:59:34 GMT
"does anyone think they can nail the worst days of the market and also hit the best on a consistent basis?" I can't. But by applying the results of technical signals from the broader market indexes to specific securities that I am interested in, I can have considerably better returns than an index fund. For how long - years? I was actually thinking of the ability to earn 30% this year. It is remarkable and to be admired. If you matched last year market returns as well, amazing. Most of my net worth is in the market, so I can't imagine trading/shorting. May I ask what percent of your net worth is used for trading? Also, do you have an agreement with Fidelity? When I sell anything, other than Fidelity managed funds, it takes at least 2 days to access the funds. The only reason I ask, is I would encourage you to market your abilities and to even further increase your returns! Pun intended!
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Post by win1177 on Nov 12, 2022 15:00:19 GMT
I wasn't quite sure where to put this comment, but am trying to use existing threads to cut down on the number of them. This week's Wealthtrack features Charley Ellis and is a good review of the premise for an investor's portfolio management. He is a big believer in indexing and makes some compelling arguments for it. This is why I chose this thread - one of his premises is the well known saw that most (and I do mean most per Charley) can't figure out when to be in and out of the market. Those of you who consistently beat the market should present your results to the investing houses and be rewarded with an amazing salary and bonuses! My journey was based on Josh Peters methodology and was to generate a reliable growing income stream. He was able to do this and beat (documented by the way) the S&P for some number of years. When he went to an investing house as a fund manager, he did not do well. It's hard folks! So much so, I have considered moving to the idea of the BHs and made my first venture this year, buying a small stake (less than 1% of my portfolio). I still need some convincing and I do like knowing what I own. I will probably get to a mix. Enough of my portfolio. Ellis made some great points that I 100% agree with. Let's visit that term "perm bull" which I think is ridiculous. Anyone who believes that stocks over the long term are the better investment would meet this definition I guess. That would be Ellis then. He thinks THE most important investing question to answer is when do you need the money? If it is 2-3 years, then invest in t-bills, 5-7 years, then bonds. Anything past that - equities. Very familiar advice. This isn't based on age - it is when you need the money and also depends on knowing yourself - in other words - how to sleep well at night. He is 100% in equities as he is now investing for his grandchildren. Of course, he points out he is still earning a very very nice income for consulting work (not sure what that would be if one believes in limited ability to exploit inefficiencies). None of this is new of course, but a good reminder for some. His summation on how markets have changed since the 60s (he's 85) is interesting, with his conclusion that it has increasingly become difficult to exploit inefficiencies is as well. So why bother? He does address the question of long periods of not recovering stock market losses. His answer was the periods to claim this are cherry picked and if you move the years around by 2 to 3 years - not so bad. Also, that there are times in those languishing periods where returns were made. Not particularly comforting (which is why I like the steady income stream strategy by the way.). His book is touted in the program. wealthtrack.comBy the way - re-reading this thread - does anyone think they can nail the worst days of the market and also hit the best on a consistent basis? They seem to be tightly clustered. Didn't know that thread also currently existed! Sara, You and I seem very similar in our investment approaches. I’m have also been a dividend growth investor for years, and used mainly individual stocks (wide moat DG stocks) as the core of our portfolio. BUT, I am slowly transitioning to more of an index approach, similar to the Bogleheads. Part of this is in case something happens to me, my wife can manage things easier. Also, it will be easier to run as I grow older. I think it is VERY hard to consistent “beat” the market long term, and especially “time” the market. My record over the long run has been good, but it has required A LOT of attention, reading, etc., and I question whether it may have been easier to just set an allocation, save/ invest aggressively, and spend less time at it. I am now putting more into index funds, mainly dividend growth funds (Vanguard), and letting them run. Still hanging on to many of our individual stocks, but new money is being directed towards index funds more and more. Win
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Post by Deleted on Nov 12, 2022 15:05:02 GMT
win1177, Same-same as usual. I haven't been putting new money in though - yet. Still have most dividend on re-investment. Essentially re-balancing my "index" is time consuming. I recently decreased exposure to MMM (swapped with energy) and it was time intensive.
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Post by Fearchar on Nov 12, 2022 15:59:23 GMT
does anyone think they can nail the worst days of the market and also hit the best on a consistent basis? Of course not; but isn't that a straw man argument? A year ago, when real interest rates were negative, intelligent investors should have realized the implications. Of course there were plenty that didn't, but that doesn't mean we should collectively give up all hope.
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Post by richardsok on Nov 12, 2022 16:02:38 GMT
"does anyone think they can nail the worst days of the market and also hit the best on a consistent basis?" I can't. But by applying the results of technical signals from the broader market indexes to specific securities that I am interested in, I can have considerably better returns than an index fund. +1
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Post by mozart522 on Nov 12, 2022 16:26:05 GMT
win1177, "I think it is VERY hard to consistent “beat” the market long term, and especially “time” the market." I agree, generally. First, how someone thinks about this may well depend on where they are in their investing journey. You and Sara are still working and are able to continue to invest new money on a regular basis. Continuing to invest in higher expected return vehicles may the most sense as you will be gaining shares at lower prices and eventually be far better off. However, it isn't so simple for retired folks with no investible income coming in. So while I don't generally like market timing, like 2008, this is a period when going to cash, T-bills and a small recent bond stake makes sense to me. I don't need to make a lot of money, but I don't want to watch my portfolio go down 30% either. We all gamble to an extent with investments and I'm betting on a recession and lower equity prices than today in the next year or so. At 77, I'll likely never go above 40% of equities and think bonds are where the easy money is to be made starting pre-recession. Horses for courses.
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Post by Deleted on Nov 12, 2022 16:26:16 GMT
Index funds don't do well in bear markets for whatever the index funds are indexing. They do well in bull markets.
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Deleted
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Post by Deleted on Nov 12, 2022 16:27:06 GMT
Folks - don't misread what I am saying - I am saying over time. This also wasn't a question whether you can consistently beat the S&P. One argument for getting out of the market was that missing the worse days affects your returns far more than hitting the best days. If you are able to do both - miss the worst and hit the best consistently - you are incredibly wealthy. This is VERY difficult to do. Why? One reason is the proximity of worse to best days. If you are able to miss the 50 worse days over the last 30 years and also end up missing the 50 best days - you earn 100 bps over the market return annually, before factoring in taxes and transaction costs. That is with perfect execution. If technicals are allowing someone to trade over the years and consistently beat the S&P, great. I published the results of 200 DMA strategies vs buy and hold. Fearchar , Not sure what you are saying? That one should still try and miss the worse days? Nothing wrong in trying I guess. As far as consistently beating the S&P - If someone has built a better mousetrap - I sure wish we would do a strategy competition so we can start verifying. To me, this is a big deal. I have enough time left in my investing career to take on a new strategy and get intrigued when I see extraordinary results. It is admirable.
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Deleted
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Post by Deleted on Nov 12, 2022 16:31:05 GMT
win1177 , "I think it is VERY hard to consistent “beat” the market long term, and especially “time” the market." I agree, generally. First, how someone thinks about this may well depend on where they are in their investing journey. You and Sara are still working and are able to continue to invest new money on a regular basis. Continuing to invest in higher expected return vehicles may the most sense as you will be gaining shares at lower prices and eventually be far better off. However, it isn't so simple for retired folks with no investible income coming in. So while I don't generally like market timing, like 2008, this is a period when going to cash, T-bills and a small recent bond stake makes sense to me. I don't need to make a lot of money, but I don't want to watch my portfolio go down 30% either. We all gamble to an extent with investments and I'm betting on a recession and lower equity prices than today in the next year or so. At 77, I'll likely never go above 40% of equities and think bonds are where the easy money is to be made starting pre-recession. Horses for courses. Great point - where you are in the journey. Couldn't agree more - so much so, I am reallocating this January to a heavier weighting in equities. If you didn't see the Ellis Wealthtrack video I posted, it is worth a listen - although you already know it. Age so much doesn't matter to allocation, but working sure does.
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Post by Deleted on Nov 12, 2022 16:34:26 GMT
Index funds don't do well in bear markets for whatever the index funds are indexing. They do well in bull markets. I don't know if they do or not, but will take your word for it. What bothered me was the heavy concentration of companies with high multiples. Still bothers me and am considering indexes weighted by earnings. Gets back to timeframe - when does the bull go to bear and vice versa. Like now? All kinds of articles, technicals, opines on whether the bear has ended or not. No one knows. No one.
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Deleted
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Post by Deleted on Nov 12, 2022 16:36:07 GMT
Over time is meaningless. What time, whose time? All the studies of time periods using different portfolio allocations, don't apply to the specifics of what we are actually doing with our investments.
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Deleted
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Post by Deleted on Nov 12, 2022 16:38:17 GMT
Over time is meaningless. What time, whose time? All the studies of time periods using different portfolio allocations, don't apply to the specifics of what we are actually doing with our investments. Time you are holding equities - your holding period.
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Post by ECE Prof on Nov 12, 2022 16:41:40 GMT
Index funds don't do well in bear markets for whatever the index funds are indexing. They do well in bull markets. I don't know if they do or not, but will take your word for it. What bothered me was the heavy concentration of companies with high multiples. Still bothers me and am considering indexes weighted by earnings. Gets back to timeframe - when does the bull go to bear and vice versa. Like now? All kinds of articles, technicals, opines on whether the bear has ended or not. No one knows. No one. Exactly Sara.
I was losing cash because of what you have described in VOO, SPY, and VTI. It happened again and again in October. I lost big money in QQQ and VGT before September. That was ok because of the nature of those ETFs. But VOO, SPY, and VTI were not spared either because of the indices were highly influenced by the Tech stocks.
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