Market timing is just gambling:

Comments

• JD_co

  November 4

  It's human nature to want to protect what you have built. It works against us sometimes, no doubt.
  
  
• Observant1

  November 4 edited November 4

  Thanks for sharing your story but don't be too hard on yourself.
  Many extraordinary events have occurred this year which potentially
  could — and still may — destabilize equity markets.
• racqueteer

  November 4

  Whenever we buy something, barring those with recurring fixed increments, we're guessing. Hopefully, with at least some reasoning and logic involved. It's all a matter of degree.
• Mark

  November 4

  If it makes you feel any better (and I'm doubtful) even the most savvy get it wrong sometimes. See BRK and its investment in AAPL. Granted they made a huge pile while they held it but look what's happened since they started selling.
• DrVenture

  November 5 edited November 5

  I have had better luck increasing my buying at a perceived bottom, than selling at a perceived top. But, I feel your pain.
  
  My current thesis is that this AI spending splurge is going to drive everything higher for a while. AI stocks directly, supporting stocks, then everything else as we get closer to the top.
  
  I do fear a big reckoning at some point. When that comes is the big unknown.
  
  
• sma3

  November 5

  The only thing that I think makes sense intellectually is to
  
  1) Keep enough in cash or FI so you do not have to sell during a market crash to pay your current bills and anything else you will need in the X number of years you conservatively believe it will take to recover.
  
  2) many people's recommendation for the duration of the former in #1, I think is much too short. 3 years or five years etc pales in the light of the 11 years it took SP500 to to completely recover from 2000
  
  3) If you have sold in a panic during previous crashes, you have too much in equities
  
  4) Diversify and realize your starting valuations are a very good measure of the returns you can expect going forward.`Buying the SP500 today has a low chance of being a good investment in the next five years.
  
  5) Take the money you need to live on from the best preforming investment. ie if the SP500 is within 5% of it's all time high sell that.
• gman57

  November 5 edited November 5

  I'm in the 120 minus your age in equities mindset so I have plenty of cash/bonds. I have had a plan for several years now but have deviated a little from it at times. I need to follow it and not deviate as much. Easier said than done when most days you poke around various websites reading financial information but I'm getting better and better at sticking to it.
• Old_Joe

  November 5

  Yeah, the markets beckon like a Vegas slot. Hard to resist sometimes. I recently threw in a couple of thousand just to see what would happen. So far, it's just like Vegas- disappearing, ever so slowly.
  
  Oh well...
• hank

  November 6 edited November 6

  Proviso - Your investments should reflect your needs based on things like: age, expected time horizon, risk tolerance and your other assets and sources of income.
  
  (Speaking as an Old F here) - If hedging or going more conservative is gambling, then “guilty as charged”. I’ve got 1.5% in SPDN (short S&P 500). 1.5% on DOG (short Dow), 1.5% TAIL. But having a 4.5% stake that often moves opposite the market provides a modicum of stability, allowing me to take risk in other areas. Baring a significant market correction, I’ll keep those hedges in place. Prepared to wait UHFO.
  
  To me, a portfolio is a package with many parts serving different roles. It’s not an “all-in” or “all-out” proposition. Gambling may be a suitable term though, because a good gambler’s job is to assess risk / the likelihood of something occurring. These likelihoods (odds) are sometimes expressed in percentages. Bill Gross was a professional gambler before starting PIMCO. To the professional, gambling is a lucrative science. A good spot to remind folks that the motto above the old Fund Alarm board was a line from Kenny Rogers’ “The Gambler”.
  
  ”Know when to hold ‘em. Know when to fold ‘em …”
  
  Should you market time? NO - if you mean speculating for near term gratification. YES - if you mean amping-up your risk exposure or tamping it down a bit from time to time based on your best assessment of relative valuations and investor sentiment. But there are no guarantees. Had you gone “all in” after the initial 50% drop in 1929 thinking the market looked “cheap”, you’d have shed another 20-30% of that sum until the markets finally bottomed a decade later.
  
  Food for thought.
• larryB

  November 6

  At Hank. “Thinking in Bets” by Annie Duke. Check it out.
• mskursh

  November 10

  I think when things get "frothy" its always a good time to reevaluate your risk tolerance. Is that technically timing if you decide to make a "moving forward" change, yes but not in the same way that people talk about when they say don't time the market.

  DrVenture said:

  I have had better luck increasing my buying at a perceived bottom, than selling at a perceived top. But, I feel your pain.
  
  

  I fully agree as i'm in accumulation mode. I don't worry about tops. But what I do is try and squeeze at perceived bottoms and try and get as much extra money in the markets as humanly possible.
  
  
• FD1000

  November 10 edited November 10

  gman57 said:

  One more post that timing the market is just gambling:
  
  I reduced my equity holdings from 45% to 30% over the summer thinking things were too overvalued and told myself I will not buy until October which is normally not a good month. FOMO was hard as everything was going higher and higher just about EVERY day but I wasn't going to budge! I apologize for not alerting the board that I was going back to 45% November 3rd. The last 2 days are just a slap in the face which as we all know happens to all of us. Down days after a big purchase. I will follow my asset allocation plan, I will follow my asset allocation plan. I will continue to type that 100 times as punishment for bad behavior. UGH

  You’re obviously not great at timing — so why bother doing it at all?
  Timing is like swimming: you can’t become a good swimmer by just reading about it. You have to spend countless hours in the water — and even then, not everyone becomes great at it.
  
  Conclusion: If practice doesn’t make you great, maybe it’s time to stop doing it.
  
  Good timing isn't about selling at the top and buying at the bottom; that's impossible. It's about missing most of the decline and making most of the upside.
  At retirement it's a much better choice for investors who have enough.
  Timing goes hand in hand with identifying sectors that do better and using special funds.
  There are so many myths that must be debunked.
  Diversification doesn't guarantee better performance. Concetrating in the right sectors does.
  This is why Buffett said: "Diversification is protection against ignorance. It makes very little sense for anyone that knows what they are doing". This is true for a very small % of investors. For the rest, Buffett recommends investing in the SP500, again concentrating, not in 10 sectors.