I went 90% cash today.

[plm]

[quote=AN]There’s a difference between trying to time the market by staying in cash for a long extended period time to buy and sell at the time you think its optimal and to not participate in the market for a few days while you wait for an event to occur that can potentially crater the market. Once the event happened, then you’d buy back in at whatever price it is. That’s not timing the market. That’s just remove risk from your portfolio for a short period of time.[/quote]

Yes timing the market for a long duration is much worse than what you did which is more like risk adversion. But I would think most people who sold did not get back in right away like you did missing out on the rally. My problem was as the market kept going up without a correction, I stayed out since it just seemed more likely that there would be a correction.

[spdrun]

flu: who says you’re wrong about being spooked long-term? He’s not even in office yet.

[Rich Toscano]

[quote=AN]There’s a difference between trying to time the market by staying in cash for a long extended period time to buy and sell at the time you think its optimal and to not participate in the market for a few days while you wait for an event to occur that can potentially crater the market. Once the event happened, then you’d buy back in at whatever price it is. That’s not timing the market. That’s just remove risk from your portfolio for a short period of time.[/quote]

Ok, we can agree to disagree on what does and doesn’t count as “market timing,” but semantics aside, my original point remains. (Which was: whatever your position is on the matter shouldn’t change because someone guessed the short term market direction right one time).

[an]

[quote=cvmom]I disagree. Missing even just a few very good days in the market (which no one can accurately predict when they will be) can cause your returns to be significantly lower than buy-and-hold. http://www.marketwatch.com/story/how-missing-out-on-25-days-in-the-stock-market-over-45-years-costs-you-dearly-2016-01-25%5B/quote%5D
I’m not talking about missing a few days. I’m talking about selling the day of the election and buy back the morning after if the floor didn’t fall out underneath us. Which mean you only miss a few minutes to hours depending on when you sell and buy.

[an]

[quote=plm]Yes timing the market for a long duration is much worse than what you did which is more like risk adversion. But I would think most people who sold did not get back in right away like you did missing out on the rally. My problem was as the market kept going up without a correction, I stayed out since it just seemed more likely that there would be a correction.[/quote]You’re correct and I agree with you that it’s impossible to time the market. Which is why like you said, what I did is more like risk aversion than timing the market, because what I did is not dependent on time but more dependent on the event that can cause major risk passing.

[an]

[quote=Rich Toscano]Ok, we can agree to disagree on what does and doesn’t count as “market timing,” but semantics aside, my original point remains. (Which was: whatever your position is on the matter shouldn’t change because someone guessed the short term market direction right one time).[/quote]I think that’s where you misunderstood me. It’s not about guessing the right direction of the the market short term. It’s about not knowing which direction the market will go because you don’t know how the vote will turn out. I sold the day of the election and bought right back in the morning after the election. Not because I was right in guessing the direction of the market (I actually had no guess as to which direction it will go the next morning and would be happy in either direction), but because the risk is gone. Also, as a long term investor, don’t you re-balance your portfolio base on where you expect the economy will go? When you have two people w/ two very different view of the economy, how can you invest long term in one sector vs another without knowing which direction the country will go? Wouldn’t you want to take the opportunity to pick the industry/sector you think will do the best in the next 4 years after knowing who won the presidency?

[plm]

Unrelated topic but have anyone heard of or used Investools? TD Ameritrade will give me three years of this in addition to a gift card for putting more money into my account.

Don’t know much about investing in the stock market, so I should probably do it but don’t want to waste my time or be scammed. Seems like it does training and all kinds of fancy charts.

Thanks

[masayako]

70% Stocks / 30% Bonds. I stayed with this asset allocation consistently.

[masayako]

2005-2008 housing crash is not a market timing call. As Rich said, “valuations were such that long-term risk/reward was very poor.”

[moneymaker]

As is the case right now. These stock prices are unsustainable because even as a global economy the wheels need to turn faster to sustain the current highs. That’s my opinion which of course could be wrong. Long term the market will rise but short term I’m betting against it.

[an]

[quote=masayako]2005-2008 housing crash is not a market timing call. As Rich said, “valuations were such that long-term risk/reward was very poor.”[/quote]It is a timing call because you have to live some where. You made a decision to sell and rent and hoping that you can buy back later at a lower price. How’s that any different than any other timing sell/buy? It’s just that housing is on a much longer cycle.If you timed it right, you sell at the exact peak and buy back at the exact bottom. If you timed it wrong, you could sell too early and buy back too late and not be that much better off. That is timing.

While selling before an event that have high risk and buying back soon after regardless of how the market reacted is not timing, since you’re not hoping to time your buy back at a lower point and time your sell at a high point.

[Rich Toscano]

[quote=AN][quote=masayako]2005-2008 housing crash is not a market timing call. As Rich said, “valuations were such that long-term risk/reward was very poor.”[/quote]It is a timing call because you have to live some where. You made a decision to sell and rent and hoping that you can buy back later at a lower price. How’s that any different than any other timing sell/buy? It’s just that housing is on a much longer cycle.If you timed it right, you sell at the exact peak and buy back at the exact bottom. If you timed it wrong, you could sell too early and buy back too late and not be that much better off. That is timing.
[/quote]

No. You are describing it like a market timer would, and maybe some people were thinking of it that way. In their case I guess you are right.

But as I already pointed out, the case I always made was based on valuations. Home valuations were 3.5 standard deviations over historical median. That’s it. It has nothing to do with cycle lengths, or picking peaks and troughs, or getting in at the top or bottom. It’s that I just don’t want to buy something that’s so overvalued. This is NOT market timing — it is just making investment decisions based on valuations.

Market timing is path dependent. Value investing is not; it’s just about the long term destination. You invest based on the prospective long term return and risk, and don’t pretend that you can reliably predict the path that will be taken to get to that destination. That’s the difference.

As far as “needing to live somewhere” — that has nothing to do with it; you can always choose to live in a rental if housing doesn’t seem like a good investment.

[Rich Toscano]

PS I just realized that my “path dependent” definition is why we also disagree on your scenario of selling before a potentially risky event, and immediately buying back in after it.

That’s completely path-dependent: it helps you if prices go down that day, and it hurts you if they go up. It’s got nothing to do with valuation or investment merits, it’s all about what the price is going to do on that one day. That’s why I mentally categorize it as market timing, because it’s all about the path of prices on that one day.

But of course “market timing” is just a concept and it’s possible to have different definitions for it. I see your point, that you aren’t really expressing a view in what prices are doing, so I can see why you don’t think that phrase applies.

So I could go either way on that one (and it doesn’t really matter anyway… you could have called it something entirely different and my original point on my first post would have remained). But not on the value investing thing from my last post… that is absolutely NOT market timing.

[Anonymous]

Buying and selling “the market” (e.g. the SPY ETF) based on valuations or some other fundamentals of the underlying instrument is not market timing.

Buying and selling based on world events is market timing.

The definition is the same for the stock market, or real estate, or any other investment.

[Author]

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