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Post by rhythmmethod on Sept 22, 2021 21:35:06 GMT
Groupthink - There was some recent gnashing of teeth, gloomy headlines, and lots of chatter of impending gloom. It is always just around the corner. Is it not? I have no prediction going forward that we are back "on board" as a previous poster would say. Myself, I was BTD the past few weeks but now kinda feeling like I shoulda done more. So, I started thinking about when BTD proved a bad decision, given, let's say 9-15 months. A realistic short time span in the market, I think. I frankly couldn't remember a time. As you all know I don't go much for charts and such (my deficit, I'm sure). My question, again, for the guys and gals that backtest, know about candles, neckties and such - is when WAS the last time BTD was a bad choice for the given time span (9-15 months)? Surely, I don't need to go back to 1929. TIA, RM
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Post by uncleharley on Sept 22, 2021 22:37:45 GMT
Buying the dip is probably always a good idea in hindsight. The problem that arises in real time is picking the bottom. An accepted method of trading the swings in the market is to let the bottom form and begin to move up. Then buy. If the only reason for buying something is because the price came down, I believe you will own a lot of unwanted junk.
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Post by Chahta on Sept 22, 2021 22:37:49 GMT
Can’t answer directly but BTD works as long as markets keep going up. I’m more of an opportunistic guy that wants a bargain so it’s hard for me to BTD unless it’s major like the PTY dip was. Having said that please look at StockCharts and learn about MACD and RSI which gives you an idea of over-bought or sold and to me if securities are cheap or expensive. Doesn’t take a lot of time. I’m no expert but learning. The blue circle above shows when we bought PTY on the dip. The black line crosses the red line and dips severely then goes back up. Helps me to see if I am buying higher or lower. I believe this to be the lowest level of TA. I have learned much from you all.
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Post by ignatz on Sept 22, 2021 22:45:19 GMT
Hmmm.... Do you mean "when was it last a bad time to buy the SP on the dip and NOT sell for at least 9 months"?
Or something else?
The SP and the average stock "dip" many times a day...tick by tick.
Dip by a tenth of a percent? Dip by 1 percent?
Clarify?
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Post by Norbert on Sept 22, 2021 23:06:12 GMT
Looking at VTSMX ...
Buying the dip late 2000 meant that we had to wait until 2006 to have made any money.
Buying the dip early 2008 meant experiencing a very nasty selloff. If we held on, we would have been in the green 2010-2011.
So much for the past. We don't have to look far to see that BTD can be a challenging affair.
Regarding the future, it's a brand new world with ZIRP, QE, and massive fiscal deficits. Anything can happen.
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Post by rhythmmethod on Sept 22, 2021 23:11:04 GMT
Hmmm.... Do you mean "when was it last a bad time to buy the SP on the dip and NOT sell for at least 9 months"?
Or something else?
The SP and the average stock "dip" many times a day...tick by tick.
Dip by a tenth of a percent? Dip by 1 percent?
Clarify? Not to be flippant, though I'm sure it turned out to be so. I hope this provides some clarity... If one is a long-term investor, not speculator. Looking to buy products one expects to hold for a long time. These products combine income and growth. One keeps some cash on hand as part of their allocation, which for example might be 45 - 45 - 10 (cash) roughly. There is a dip (let's say 1.5% minimum), correction, bear, swan, or some other scary animal. One buys then, often buying a little at a time for days/weeks/months, either using their cash or selling 'not as bad' losers as steelpony10 might say. When was the last time that a profit was not made on those referenced purchases over a time to include 9-15 months?
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Post by rhythmmethod on Sept 22, 2021 23:17:57 GMT
Buying the dip is probably always a good idea in hindsight. The problem that arises in real time is picking the bottom. An accepted method of trading the swings in the market is to let the bottom form and begin to move up. Then buy. If the only reason for buying something is because the price came down, I believe you will own a lot of unwanted junk. I feel like Jack Nicholson in "One Flew Over the Cuckoos Nest"! NO, one doesn't need to pick the bottom! One needs to buy cheaper than a desirable product is (think MSFT, AAPL, AMZN, PTY and funds that own them). I propose that one doesn't buy junk, wanted or unwanted. BTW my small flogging with BABA is for personal degradation entertainment and not an investment.
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Post by steelpony10 on Sept 22, 2021 23:24:47 GMT
rhythmmethod , Buying the dip is a distant cousin of dollar cost averaging for investors afflicted with market timing disease. You said yourself it was too short of a time for results. Chahta has it correct if you want to get into charts which is good. I just find most opportunities easily recognizable at this point. The wall of woe is always there forever and ever. Ignore the chatter forever and ever. The dip in PTY was a legitimate dip due to a distribution adjustment. As usual you had an overreaction which provided an opportunity. This past weeks China drama and what the Fed was going to say was a non business dip offering another opportunity. Notice the big blowoff (acceptance) the last day? Classic.The talking heads made you money long term. If the Fed gave some bad news that would be another business related opportunity. The real tests come during corrections and the unknowns. Huge opportunities. Can the management handle the situation? Good managements will through thick and thin.
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Post by rhythmmethod on Sept 22, 2021 23:28:58 GMT
Looking at VTSMX ... Buying the dip late 2000 meant that we had to wait until 2006 to have made any money. Buying the dip early 2008 meant experiencing a very nasty selloff. If we held on, we would have been in the green 2010-2011. So much for the past. We don't have to look far to see that BTD can be a challenging affair. Regarding the future, it's a brand new world with ZIRP, QE, and massive fiscal deficits. Anything can happen. THANKS! Finally, an answer! I wasn't doing much marketing in 2000 with the exception of being on the front edge of the cannabis trade. 2008, I remember well. If one had resources and bot some in early 2008 and continued to buy for another 9-12 months, I think they would have done well. That's actually what I did. Agreed anything can happen for the future good or bad. 2008 was my first meltdown where I just started to manage my own portfolio and was my reference. Thanks, N.
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Post by rhythmmethod on Sept 22, 2021 23:35:28 GMT
Also, to add. Good stuff here, IMO This is helpful BB thread. Thanks!
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Post by ignatz on Sept 22, 2021 23:40:43 GMT
Lessee if I can paste this in. Nearly 23 years of the SP, showing percentage moves. Maybe you can glean something from it. I'd guess the predictive value of this chart is effectively zero.
This shows the wicked headwind market timers are fighting every day. Rip Van Winkle will pound most of them into submission.
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Post by Chahta on Sept 22, 2021 23:41:01 GMT
Looking at VTSMX ... Buying the dip late 2000 meant that we had to wait until 2006 to have made any money. Buying the dip early 2008 meant experiencing a very nasty selloff. If we held on, we would have been in the green 2010-2011. So much for the past. We don't have to look far to see that BTD can be a challenging affair. Regarding the future, it's a brand new world with ZIRP, QE, and massive fiscal deficits. Anything can happen. Like I say….I want to be opportunistic.
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Post by FD1000 on Sept 22, 2021 23:52:07 GMT
Random thoughts: * I always start at the beginning because it all depends on... * What are your goals and style? * Are you a trader/timer? Did it work well in the past? * avoiding losses is much better than buying the deep. You must know and act on real ones, vs mostly just a "normal" deep. * Are you going to buy every "deep"? only 10% deep? 20-50% deep? * Are you going to use charts? %? others? * what % of your portfolio is involved? size matters in some cases. * Is cash involved? are you in cash? why? * What are you trading? well know index such as the SP500? stock, CEF? they are different IMO I have written about that over the years many times. Your "simple" question isn't simple at all. I believe in a complete system. I don't want to bore anyone, so I leave you with that. Just for fun, I will post about one of the indicators I use. Hint: I never base anything on one indicator. Three line break indicator, buy when the bar is green, sell when it’s red ( link). What color is it now? red=stop, when you see first green=start driving. Attachments:
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Post by Chahta on Sept 23, 2021 0:06:59 GMT
In setting positions in my portfolio I like to establish my AA quickly. Maybe if I get more chances I can buy back in again. But I want good prices. I own all the PTY I plan to own (other than distributions) unless it visits well below $18. I use Portfolio Manager and I hate to see red numbers in any column.
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Post by rhythmmethod on Sept 23, 2021 0:40:48 GMT
Lessee if I can paste this in. Nearly 23 years of the SP, showing percentage moves. Maybe you can glean something from it. I'd guess the predictive value of this chart is effectively zero.
This shows the wicked headwind market timers are fighting every day. Rip Van Winkle will pound most of them into submission.
Yes, thanks. Actually I do glean something from it. 1. Set an allocation. I picked 45-45-10 for kicks. 2. Hold a "core", "core plus" and explore as defined allocation. 3. Remember to rebalance on the UPSIDE as well. chang seems to be doing that now. I did it earlier - bad timer, but I still made $. 4. Keep 24 months in cash or cash-like to use if needed for living. As of now I could use it or not. 5. Buy on dips with reserves. Buy the best quality you can find in growth and income. Be prepared to slowly continue to do so for up to 24 months. 6. Hope for the best and enjoy/be grateful for the fact this is what you must concern yourself with. Obviously not a recommendation for anyone. Just thinking out loud here.
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Post by Chahta on Sept 23, 2021 0:49:25 GMT
Unless you are living off your port I would not keep that much cash unless it’s in UST/ST bonds and could be used for explore positions.
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Post by richardsok on Sept 23, 2021 0:54:16 GMT
I'm first to agree Buy-The-Dip habits have worked splendidly recent years. Market drops have been brief because future profits were almost always promising and because the Fed and other government agencies felt they could control inflation while still flooding rivers of liquidity into the economy whenever needed.
The recent history of BTD thinking didn't occur in a vacuum, however; no matter how bad the economic calamity, there were economic policies in place to help recovery and rally equities.
A question: how confident can we be that benign supportive policies will always nurse equities upward? I suggest the soothing lullabyes cooing "inflation is transitory" may be lies. And we believe those lies because we WANT to believe them. They fit in with our political biases and our yearning for an ever-upward market. Perhaps future historians will shake their heads in astonishment when they discover that in a time of full employment, skyrocketing housing and food prices, rising wages -- even climbing USED CAR prices(!) -- efforts were in play to lock in an ADDED $3.5Trillion of spending and entitlements.
The timing of this thread is interesting; we discuss BTD on the precise day it appears massive Chinese debt defaults will not crash the market after all. Suddenly BTD looks viable again....after the COB of exactly one good day.
Will BTD work this time? Probably. And it will continue to work until one terrible week it won't. Before COB today I bought a first bucket of VOOG and smaller buys of PDO, PFN and IFN as my earliest technical signals seem to breathe again. If tomorrow is bullish I'll buy some more -- but I have zero confidence in a continued bull market ahead. I will buy but I have no faith in long term holdings anymore, except for those preferreds I bought "way back when" that are still throwing off 10-11-12% yield on cost. (And the ASA I own which is too late to sell.)
For the rest, I'll dump it in a heartbeat the moment I must.
It's a perilous world out there. We face risks never before thought of.
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Post by ignatz on Sept 23, 2021 1:03:38 GMT
You might try to rig up an Excel spreadsheet to answer this question:
At what point in a dip do I buy?
Per the above chart, some 1% dips become 5, some 10, and some 20 plus.
When you buy will obviously affect your results. I bought the dip too early in the 2008/2009 debacle, but in retrospect I doubt if that "too early" amounted to even .5% in my CAGR from then to now.
My guess is that you would be very hard pressed to develop a rule that would help you decide at what point to BTD with any accuracy.
The inability to develop successful rules doesn't stop investors from fiddling....unfortunately. I suppose that's part of why most people don't get market returns. Luckily, all of us here are above average.
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Post by ignatz on Sept 23, 2021 1:20:25 GMT
A question: how confident can we be that benign supportive policies will continue to nurse equities upward? I suggest the soothing lullabyes cooing "inflation is transitory" may be lies. And we believe those lies because we WANT to believe them. They fit in with our political biases and our yearning for an ever-upward market. Perhaps future historians will shake their heads in astonishment when they discover that in a time of full employment, skyrocketing housing and food prices, rising wages -- even climbing USED CAR prices(!) -- efforts were in play to lock in an ADDED $3.5Trillion of spending and entitlements.
It seems to me that the Fed and political class are so wedded to the perceived wealth effect of tens of millions of US portfolios that "supportive policies" will not stop prior to calamity.
The wall of worry is getting steeper, but few want to reduce exposure significantly. Understandable (?), given the long term charts.
I've got the VIX on my watch list for the first time ever. Probably a contrary indicator.
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Post by rhythmmethod on Sept 23, 2021 14:11:07 GMT
A question: how confident can we be that benign supportive policies will continue to nurse equities upward? I suggest the soothing lullabyes cooing "inflation is transitory" may be lies. And we believe those lies because we WANT to believe them. They fit in with our political biases and our yearning for an ever-upward market. Perhaps future historians will shake their heads in astonishment when they discover that in a time of full employment, skyrocketing housing and food prices, rising wages -- even climbing USED CAR prices(!) -- efforts were in play to lock in an ADDED $3.5Trillion of spending and entitlements.
It seems to me that the Fed and political class are so wedded to the perceived wealth effect of tens of millions of US portfolios that "supportive policies" will not stop prior to calamity.
The wall of worry is getting steeper, but few want to reduce exposure significantly. Understandable (?), given the long term charts.
I've got the VIX on my watch list for the first time ever. Probably a contrary indicator.
Observant remarks from both of you. richardsok , I applaud your confidence to exit and re-enter based on your analysis. That won't work for me I don't believe. ignatz , what is your plan? For me, a balanced PF with a good helping of tried and true balanced/allocation...whatever one calls them...funds. Mixed with high quality US equities, some international and yes, even bonds with a small helping of long treasuries, a smattering of FI CEFs, and some cash will allow me to BTD, take profits and otherwise deal with most situations likely to occur. The sky is always capable of falling. But if/when it does; will treasuries be worthless, will cash have little/no spending power, will precious metals unless held physically, be reduced to paper? Then we might be at beans, ammo and in my case home-grown time. Again, in my world what we are talking about is viewed as a "luxurious problem". Thanks and stay well!
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Post by bb2 on Sept 23, 2021 16:51:37 GMT
Here's to a world where the Fed(s) isn't, (aren't), there to save the day. Literally, ONE day.
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Post by ignatz on Sept 23, 2021 17:28:04 GMT
rhythmmethod , I’m not sure anything I do is worthy of being called a “plan”….emotion being what it is. I’m reminded of Mike Tyson’s famed remark. I’m a total return guy, sitting at 64/36. I have to take an RMD before year end and am considering reducing equities to 60/40 at that time. Market action can of course reduce me to 60/40 at any time. The 3 year standard deviation of my portfolio is about 76% of the SP’s 3 year SD…so a little “riskier” than the 64/36 might imply. On the other hand, my recent performance is slightly better than 64/36 might imply. So I’m satisfied, relatively speaking…but always anxious. I have only 6 positions and have not made a trade in over a year. I have 55% of my PV in a single well known balanced fund. My US equity isn’t very far from total stock market…slightly more mid/small. Foreign is 10% of equities. Emerging is 1%. Perennial question is: make no adjustments and ride with 64/36 forever, reduce equities now on the way up, or reduce equities after some degree of decline. I’m indifferent to 5% declines, but 15% has my attention. At 30% down, I would have conceded it’s too late to sell and be left with only “BTD, you fool”. Maybe that is a genius strategy. You tell me. Being “fully allocated” and retired, I likely would not BTD during relatively minor declines. I have no answers. I have looked into various exit strategies, but nothing has materialized that doesn’t involve many yearly trades. Not for me. I’ve toyed with moving averages that might generate fewer signals, but they have the obvious whiplash/false signal shortcomings. Maybe the true name of all strategies is “I hope………”. You tell me.
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Post by rhythmmethod on Sept 23, 2021 18:09:36 GMT
rhythmmethod , I’m not sure anything I do is worthy of being called a “plan”….emotion being what it is. I’m reminded of Mike Tyson’s famed remark. I’m a total return guy, sitting at 64/36. I have to take an RMD before year end and am considering reducing equities to 60/40 at that time. Market action can of course reduce me to 60/40 at any time. The 3 year standard deviation of my portfolio is about 76% of the SP’s 3 year SD…so a little “riskier” than the 64/36 might imply. On the other hand, my recent performance is slightly better than 64/36 might imply. So I’m satisfied, relatively speaking…but always anxious. I have only 6 positions and have not made a trade in over a year. I have 55% of my PV in a single well known balanced fund. My US equity isn’t very far from total stock market…slightly more mid/small. Foreign is 10% of equities. Emerging is 1%. Perennial question is: make no adjustments and ride with 64/36 forever, reduce equities now on the way up, or reduce equities after some degree of decline. I’m indifferent to 5% declines, but 15% has my attention.
At 30% down, I would have conceded it’s too late to sell and be left with only “BTD, you fool”. Maybe that is a genius strategy. You tell me. Being “fully allocated” and retired, I likely would not BTD during relatively minor declines. I have no answers. I have looked into various exit strategies, but nothing has materialized that doesn’t involve many yearly trades. Not for me. I’ve toyed with moving averages that might generate fewer signals, but they have the obvious whiplash/false signal shortcomings. Maybe the true name of all strategies is “I hope………”. You tell me. Looks pretty good to me. Were it me about to take RMD, I'd lock in some profits on that 64/36. But you know your tolerance. Good luck!
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Post by uncleharley on Sept 23, 2021 18:46:02 GMT
Here's to a world where the Fed(s) isn't, (aren't), there to save the day. Literally, ONE day. You may have been born to late to witness that scenario. jmho
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Post by ignatz on Sept 23, 2021 23:15:09 GMT
Well...I bit a medium-sized bullet.
Sold enough in taxable to get me down to 59/41 from 64/36.
As I am a certified contrary indicator, look for a good up day tomorrow.
Deliberately avoided selling enough to push me into a higher tax bracket.
All proceeds to core cash in taxable. Cash now 6.8% of portfolio, up from 1.5. May eventually move some of that to a bond fund or out of portfolio entirely to an external savings account earning about .5%.
Still have to do the RMD in rollover, which will require only minor sales in either my balanced fund or my primary bond fund.
Will wait for December distributions to do that and maybe some small year end tweaks to get to 60/40 on the nose.
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