"You Can't Time the Market, But..."
I've been amused over the years by number of people who, in one breath, preach the mantra: "you can't time the market", but in the next advocate something which involves market timing. Examples:
1) you can't time the market but, it's obviously a bubble, you should get out
2) you can't time the market but, I did take profits on something since it ran quite a bit and put them into something else
3) you can't time the market but, after analyzing this situation I realized there is nothing this stock could do but outperform the market so I bought
4) you can't time the market but, I would never buy a dogshit stock like RICK (i.e. it's a better time to buy something else)
5) you can't time the market but, I would never buy at a random time
6) you can't time the market but, I would never buy stocks selected at random
7) you can't time the market but, I am over allocated in X (i.e. it's a better time to buy that than something else)
Guess people like to say things without understanding the true meaning.
Lol!
1) you can't time the market but, it's obviously a bubble, you should get out
2) you can't time the market but, I did take profits on something since it ran quite a bit and put them into something else
3) you can't time the market but, after analyzing this situation I realized there is nothing this stock could do but outperform the market so I bought
4) you can't time the market but, I would never buy a dogshit stock like RICK (i.e. it's a better time to buy something else)
5) you can't time the market but, I would never buy at a random time
6) you can't time the market but, I would never buy stocks selected at random
7) you can't time the market but, I am over allocated in X (i.e. it's a better time to buy that than something else)
Guess people like to say things without understanding the true meaning.
Lol!
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55 comments
I've ridden the market up and down for the last 20+ years. Constantly in stocks. On average, about 10% per year. I'm ecstatic with that.
In my younger, arrogant days, I tried timing the market. Always got out just before it recovered. Idiocy.
If I had to do it all over again, I might try for a career in computational finance. Although it seems frustrating to try make predictions on something that seems to be based on mass psychology. That's how it appears to an outsider.
Did you follow MPT diligently regarding how much you are supposed to allocate to bonds or was it just stocks?
Now you know the secret.
What I think guys mean when they say you can't time the market could be said more accurately this way, it is vey difficult to buy the bottom and/or sell the peak. That to me represents a realistic approach.
Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis.
http://daviddfriedman.blogspot.ca/2007/0…
The evidence is they do, however.
Some argue risk, but in stocks high risk actually, and very surprisingly, does not correlate to higher return.
Not clear to me if stocks will continue to outperform bonds going forward. Especially if robots and AI mean we are going to enter an era of long term deflation. But if you think it's clear stocks, I would say that is market timing.
However, with compelling evidence, I think the market can be timed.
This approach has served me well over the long term.
This is getting just comical now. You are willing to put 100% in stocks and nothing in bonds, b/c you don't care about risk and can withstand a large draw down, so your rationalization goes. However, now way you want to take on currency and political risk of foreign stocks. Definitely saying now is a better time for US stocks vs bonds vs foreign stocks = market timing.
Whatever the label for my investor style, it's worked just fine for me for 20 years.
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You know, it's as if there's some set of magical equations that you can make a successful investor. Like there's some rational argument that governs the direction of the markets. In reality it's just the amalgam of a bunch of irrational human beings trying to make a buck. Stock market behavior belongs more in the realm of psychology; it's not like predicting the motion of Pluto around the Sun.
One thing that is amusing, is that if I really am stupid, it's kind of funny that a stupid person has, objectively, done a much better job of analyzing both markets as you have.
Lol!
https://www.amazon.com/America-Who-Reall…
Sorry, I mean, just like mark94 sounds to be, I also am a white college educated male. I guess I should be screaming for my entitlement of a government subsidized upwards wealth transfer siphon, and patting myself on the back when it works out. But fact is, I have more important things to do with my life, and I believe they will yield far more money, though that money I will use very little of for myself.
SJG
Mister Bond - A Jazzy Cocktail Of Ice Cold Themes
https://www.youtube.com/watch?v=XVQ8lpPu…
I am really surprised by how dumb you can be for someone who claims to be "college educated" SJG, and, especially, hinting that your background was in physics or engineering. If so, all this should be obvious to you. So you're either trolling or much dumber than I ever gave you credit for.
I am surprised at how shameless you are Dougster.
SJG
Think, SJG. Think.
"You know, it's as if there's some set of magical equations that you can make a successful investor. Like there's some rational argument that governs the direction of the markets. In reality it's just the amalgam of a bunch of irrational human beings trying to make a buck. Stock market behavior belongs more in the realm of psychology; it's not like predicting the motion of Pluto around the Sun"
You do realize that most human behavior is rational, and can be analyzed to predict for reasonable outcomes, the stock market is no different just assume that profit is always the motive and based on experience and other factors most intelligent beings that have had some training can formulate, whether a thing has value or not. If the motive is not profit you should be able to ascertain that, and don't invest where the desired outcome or objective differs from your own. In other words, there's nothing magical about investing,(or psychology) it just takes patience and discipline just like any other human endeavor, as such some are better at it than others, that's all.
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Yeah, I get the point that you're making @25. Although I've lived through the dotcom crash (lost money) and the housing bubble (took advantage and bought a nice house in foreclosure) and in both cases the intrinsic value got wildly out of synch with the overall PE(market) or price-to-rent(housing). Collectively, human beings can act irrationally and it seems like psychology is sometimes the most important factor.
I guess these new hedge funds are relying more and more on AI and machine learning. It'll be interesting to see how the new trading algorithms hold up in the future.
Since they aren't creating anything of value (as SJG likes to, occasionally, remind us :-) ) that will just mean everyone will make the same as buy and hold. At which point people will less value in investing in them. At which point the best minds their will leave and start AI startups, looking to be the world's first trillionaire.
How long does that take? Well if Kurzweil is right about 2029 being the year a computer passes a Turing test, got to think it's going to be slightly before that.
"Computer here are a 100 charts which show historical examples of greed. Here are 100 charts which show examples of fear. Hear are 1000 which show boring market conditions. Where are we now?"
The future is good and I look forward to it but don't forget tip your bartender.
The implications of money velocity usually signals good economic activity ahead. This usually means that rates will need to adjust, but how quickly nobody knows? Inflation is tame, and is hedge a portion of my portfolio with a basket of commodities(5-10%). No gold as a hedge, it's demand is decreasing, unlike copper and lumber and energy.
One of the ways Warren Bufftet likes to buy a stock is by selling put options on it at a lower price than it is currently trading. If the price drops, he collects the put premium and buys the stock. If the stock price doesn't drop, he still collects the premium. You just have to have the cash to cover 100 shares of the stock for each contract and be willing to buy the stock at a price that may be a lot less than the strike price selected.
The current situation is insanity.
The sooner it crashes, the less sever it is. So bring it down as quickly as possible.
SJG
Once all of this speculative economy crashes, then we can get down to sustainable living.
Simply expanding capitalism benefits no one.
sustainable world that meets human needs
https://www.youtube.com/watch?v=PQ9HCi5D…
SJG
Sounds like ABSOLUTE GLOBAL ECONOMIC DOOM!
No, the sooner the crash the softer it is. And ending this Ponzi economy, which is so big that its believers drive our elections and that both parties have to serve them, is the best thing possible for there to be a beautiful world before us.
So bring the crash on, just don't walk under high rises.
SJG
Grace Potter and Joe Satriani cover Cortez the Killer
https://www.youtube.com/watch?v=paeNnR33…