Down goes the Dow

K5 wrote:

Seems like an overly complicated version of my system; when the market is volatile and trending downward, get the Hell out.

um, no.

the market is not currently volatile - volatility is in fact at near record low levels.

And the market is not trending downward - Just a week ago it hit all time highs.

So WTF?

loopere wrote:

K5 wrote:

Seems like an overly complicated version of my system; when the market is volatile and trending downward, get the Hell out.

um, no.

the market is not currently volatile - volatility is in fact at near record low levels.

And the market is not trending downward - Just a week ago it hit all time highs.

So WTF?

WTF is right. Did you send that comment to me on purpose. I am not getting out of the market now. Maybe you missed it -- I got out months ago.

Boshman wrote:

agip wrote:

check out that yahoo chart I posted.

basically, it tells you to sell when stocks fall a significant amount. then tells you to buy after they have started rising a significant amount.

but it keeps you invested at times like this, which seem scary but might not be.

That's crazy. It allows you to take a significant ride down ("tells you to sell when stocks fall a significant amount") and then makes a pure assumption that, after this significant ride down, the decline will continue. Which of course is just a guess. You may very well end up selling at the bottom just before the market begins to return.

There is no mathematical or logical basis to that system

I think you are reading it wrong. You OWN stocks during the long runups. You sell them when the market noses over a little bit. You are out of the market while the market falls. You then get back in when the market starts nosing back up a little.

Maybe you are reading it in the inverse. the system does not 'allow you to take a significant ride down' You would have sold in 2000 and 2007 after a small give back, and bought back in near the bottoms.

K5 wrote:

Seems like an overly complicated version of my system; when the market is volatile and trending downward, get the Hell out.

like you did 6 months ago?

actually.... wrote:

K5 wrote:

Seems like an overly complicated version of my system; when the market is volatile and trending downward, get the Hell out.

like you did 6 months ago?

You think selling stocks because I feared a meltdown is overly complicated?

Perhaps you can expand on that idea.

K5 wrote:

Thanks Flaggy for your confirmation that you actually believe you do not lose money when the market you are in tanks. And that a 1 in 4 chance of winning $1 million for a $50 bet is not worth taking. What a bright guy you are

1) You don't lose until you sell...that's why you make it a point to have other sources of income in retirement (SS or rental income or pension or something) and cash reserves or other investments not tied to stocks. That way you can use those while the market is down, allowing it all to come back (because it ALWAYS will).

2) Dude, if you want to say I'm not bright for wanting to risk $50,000 for a 1 in 4 shot at a million dollars, then go ahead. No freakin' way am I doing that. $50k is still a lot of money to me, and I'm not risking it by gambling like that.

K5 wrote:

actually.... wrote:

like you did 6 months ago?

You think selling stocks because I feared a meltdown is overly complicated?

Perhaps you can expand on that idea.

Not complicated, just misguided.

There is no mathematical basis to support this "system".

You are assuming if a trend is long enough that it will continue. You hang in for a decline until it is significant and long enough that the price is below its average price over the past 200 days of ten months. Then sell based on the assumption the downward trend will continue.

And you could lose a bundle if waiting for the price to fall below the ten months average depending on how the price has behaved over the past ten months.

Let's say it took a recent and quick run-up in price over the last month. It will then have to fall quite a ways to fall below the ten month moving average and you could lose a lot of value if you wait until then to pull the trigger.

Your system is just overly detailed guessing built on lots of assumptions

Flagpole wrote:

[quote]K5 wrote:

Thanks Flaggy for your confirmation that you actually believe you do not lose money when the market you are in tanks. And that a 1 in 4 chance of winning $1 million for a $50 bet is not worth taking. What a bright guy you are

1) You don't lose until you sell...

Dumbest comment of all time.

if the market value of your holdings drops from $1 million to %750,000, you have lost $250,000. Period.

2) Dude, if you want to say I'm not bright for wanting to risk $50,000 for a 1 in 4 shot at a million dollars, then go ahead. No freakin' way am I doing that. $50k is still a lot of money to me, and I'm not risking it by gambling like that.

New contender for the dumbest comment of all time. Taking on 4-1 odds for a 20-1 payoff is a no brainer. Sure 3 out of 4 times you lose $50k but 1 out of 4 times you win $1 million.

actually.... wrote:

K5 wrote:

You think selling stocks because I feared a meltdown is overly complicated?

Perhaps you can expand on that idea.

Not complicated, just misguided.

Time will tell.

I hear what you are saying - but I think what you consider to be weaknesses in the system are actually strengths. it isn't TRYING to get you out exactly at the top. it gives the market wiggle room for times like right now, when the market has fallen 3%. You can't sell at the top consistently...so the next best thing is to avoid the big drops. that's what this does.

Check out Mebane Faber, Jeremy Siegel and Barry Ritholz - look them up if you have to - each of them endorses the system based on backtesting for over a century of stock returns.

on the ground, it increases returns and reduces volatility, with some major caveats (based on the false alarms and the big rally days you miss at the bottoms)

another way to think about it is this: let's say you are 65 yrs old. You need to own stocks but you really don't want to lose a bundle in a 50% fall. This would help prevent that big loss.

1) You are incorrect in your view of stocks and their value. Some would even argue that if you BOUGHT the stock at $5 and that it went to $10 but then you sold at $8 that you didn't lose $2 but you gained $3. YOU DO NOT REALIZE A LOSS UNLESS YOU SELL. That is the correct view on that. Since YOU took money out of the market, the amount I have gained from being in is RIDICULOUS. You have no idea.

2) What you say about it being a no-brainer should be right up your alley then...since you need no brain to do it. UNLESS I can go in with several people who all put in $50,000 and eventually one wins and we all split, OR I get to take those odds as many times as I want, then I want no part of that deal. If it's a one-time thing, give $50,000 for a 1-in-4 shot of winning $1 million, then no thanks. That's flat out gambling, and brother, that kind of attitude will get you nowhere in life.

I'm going to have to stop conversing with you...seriously. I mean, I'm ok with it if people have differing opinions, but I'm FAR from an idiot and the other things you've said. I'm not OFFENDED by anything you say, and I can write and debate better than you can and provide evidence that I'm right, and I even have most people here siding with me against you, but I seek smart people to converse with, and anyone who calls ME dumb is not smart at all, so I lose interest.

You go ahead and take money out at 15,000 and declare it's going down to 13,000 if you want and then try try try as you will to try to make that look like it was a good idea, and then keep jumping in and out of the market like you have been doing even though the stats say you stack the odds against you when you do that.

You have proven yourself uninteresting to me, so unless you have a question in which you are actually seeking some advice from me (because you DO need that, brother), then I'll likely not respond to you again. No other reason than you're just a bore.

Flagpole please reread K5's post so you fully understand. Its painful to watch you repeat the same crap over and over again arguing your point. We know what you are saying but selling out at the peak and buying when its low will probably resort in more profit in the long term. Sure, you don't lose the money until you sell but why do that when you can sell at the top?

The system give no numerical advantage over pure guessing.

Basically it has you selling at a certain point in a decline.

Which you can do without a strict set of rules that create numbers that need be tracked.

You are effectively trying to time the market.

It may or may not increase returns (which is the point after all).

The system give no numerical advantage over pure guessing.

Basically it has you selling at a certain point in a decline.

Which you can do without a strict set of rules that create numbers that need be tracked.

You are effectively trying to time the market.

It may or may not increase returns (which is the point after all).

asdfasd wrote:

Flagpole please reread K5's post so you fully understand. Its painful to watch you repeat the same crap over and over again arguing your point. We know what you are saying but selling out at the peak and buying when its low will probably resort in more profit in the long term. Sure, you don't lose the money until you sell but why do that when you can sell at the top?

How does one do that....sell at the top and buy at the bottom? How do you know when you're at the top/bottom? Guess? Feel?

Boshman wrote:

The system give no numerical advantage over pure guessing.

Basically it has you selling at a certain point in a decline.

Which you can do without a strict set of rules that create numbers that need be tracked.

You are effectively trying to time the market.

It may or may not increase returns (which is the point after all).

are you assuming stock market returns are random? that good months and bad months are sprinkled randomly? I think that what you are saying.

in reality, the market takes giant dives that last for many months. then it take giant climbs that last for many months.

this is not random behavior. if the market moved randomly, then the 200 day system would be = to guessing. but the fact on teh ground is that the stock market tends to move in long sweeps. this strategy is an effort to reduce the pain of the bad long sweep,while letting you profit from the good long sweep.

is that it? are you seeing market returns are randomly distributed?

Anyway, the backtests all prove it works - it adds a percent or two to annual returns. you'll have to explain away that before you make any ground on the math.

actually.... wrote:

K5 wrote:

You think selling stocks because I feared a meltdown is overly complicated?

Perhaps you can expand on that idea.

Not complicated, just misguided.

You are apparently unfamiliar with the proper use of the term misguided.

The decision to buy, sell, hold stocks may prove to be a mistake or not, but it is generally not misguided.

I don't think that is the point. The point is that according to that concept (no matter how you find the top/bottom) selling at the top and buying at the bottom will be more profitable. But I do know what flagpole is trying to say, but people think that way if they aren't looking for a huge profit. So does flagpole hold on no matter what because he does not know how to time the market? That seems like a good conservative approach. A riskier approach will likely result in a big payday.

I mean I could be totally wrong with that line of thinking. I am no expert but I can gladly take a correction.