Down goes the Dow

Boshman wrote:

Basically your system requires that you spend a lot of time on the sidelines (for reasons I think are evident) which would appear to be a direct contradiction of the theory that you need to stay in over the long haul to maximize your return. Which I believe you espouse.

Without checking the math of what you say, it also strikes me odd that here is a system that always works in that, over time, it always increases returns -- yet it is not common knowledge and is not being used by every investor.

I will take a look at the math behind it and suspect I will find there is a flaw in your logic

ok - I'm interested to hear what you think.

I think the paper I posted earlier from Mebane faber will answer most of your questions. you can download it for free - choose 'download anonymously' when it asks you to sign in.

btw, the strategy doesn't always increase returns - I think half the years it actually costs you money. But you make it back by dodging the big dumps.

also, per strategies that work over time but people ignore - there are actually several of those. Buying just value stocks. buying just small caps. owning just consumer staples. buying high dividend paying foreign stocks. these all work over time, but not all the time, so people are afraid of them.

DFA management has built a huge business exploiting these. as has gotham, as has o'shaughnessy asset management. Wisdom tree is trying - we'll see.

asdfasd wrote:

A riskier approach will likely result in a big payday.

A riskier approach might result in a big payday, but will likely result in losses based on historical evidence.

K5 wrote:

actually.... wrote:

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.

It is misguided when one relies on gut feeling.

DFA makes money putting its hand into its investors pockets, not investing its own money well.

Your mother was misguided when she put pout for your father

K5 wrote:

Your mother was misguided when she put pout for your father

Huh?

wowsaf3f4 wrote:

Just read the first few pages. K5 and Flaggy still arguing about the same things from pages 1-2 haha. Man I wonder what it would be like to arrange a meeting between you two guys

K5's mom wouldn't let him go

K5 wrote:

Monies lost in the equities market is not lost because you haven't yet sold your holdings.

Correct.

Farthing wrote:

K5 wrote:

Monies lost in the equities market is not lost because you haven't yet sold your holdings.

Correct.

Simply astounding.

K5 wrote:

Farthing wrote:

Correct.

Simply astounding.

Give it up. You simply cannot reach people like Farthing

ok,you theoreticians. Let's say you have a gold bar hidden in your 1970s era fallout shelter, next to your spam hoard.

Gold has fallen 27% this year.

Since Jan 1, 2013, have you lost:

Money?

Value?

Nothing?

I usually stay away from these theoretical discussions because they are completely useless, but gold is an oddball since many people consider it to be 'money' not a 'store of value'

K5 wrote:

K5 wrote:

Simply astounding.

Give it up. You simply cannot reach people like Farthing

why did u reply to urself?

asdfasd wrote:

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.

If you want to play with trying to time the market looking for a "big payday" then you should do so only when...

1) You are already putting 15% or more into retirement accounts.

2) You own your home outright.

Then, go ahead.

Doing that with all of your invested money though is foolish. Timing the market just does not work. Study after study has proven that those who jump in and out of the market do worse overall than people who stay the course. And this doesn't mean just Buy and Hold either...you can buy different funds, get out of some funds, whatever...but you need to have a consistent presence in the market.

It sounds so easy to look back and say "If I sold at 14,100 and then bought back in at 6400 and then sold at 16,175 and bought back in at 15,200, and I kept doing that, I'd be rich". The problem is that NO ONE can market time like that. The OP took money out at 15,000 in JUNE, betting that it would go below 13,000, so he's been out for half a year now. NO WAY would I want to give back what I've gained since June.

Statistically the best investors are women...why? They don't chase peaks and valleys. They put money in like clockwork and don't have some macho need to try to "earn as much as possible". They have it right.

Don't buy low and sell high...you don't know when low is and when high is.

What you DO know is:

1) The stock market goes UP 73% of calendar years, and ALWAYS over time it goes up, beating inflation to a pulp.

2) When most people are getting OUT of the market as it drops, that's the time to BUY MORE. Wait! Isn't this market timing? NO. You keep your invested pile in there at all times until you are ready to retire, and if there's a big drop and IF you have extra money you don't need right then, you put in more. We do that all the time with sales at stores...why do we shy away from buying stocks when they've dropped a ton? INDIVIDUAL stocks, maybe as that might indicate a weakness in that company, but if you spread out mutual funds over different types (growth, value (income), international), and you have many of them so that you are diversified, you are greatly protected.

So, do this:

1) Emergency fund in place of 3-6 months of expenses.

2) Debt free but for a home OR a large student loan.

3) 15% into retirement accounts minimum.

4) Pay off house early.

5) IF you are 100% debt free including a paid for home, and you continue to have money in mutual funds in your retirement accounts (continuing to invest in them too if still working) now you can buy individual stocks if you want...buy no fewer than 5, have ~20% in each one, and make sure they are all in different sectors of the market.

You put money in your investment like clockwork...NEVER stop doing that. It's easy to be a quitter, and quitters don't win. Studies show that when people take money out of the market or stop contributing to the investments that they will just SPEND that money rather than save it to invest later (as they say they will) when they think the market has dropped enough.

The biggest problem with waiting for the market to drop before you get back in is that since 73% of years are UP years, that's a losing proposition waiting for it to go down significantly. Yes it will go down in a certain year, but did it just go UP three years in a row before that?

When you are out, you miss out on dividends, money that you would have put in that statistically you won't save to do so later, and then just growth.

Oui no hoo u r wrote:

K5 wrote:

Give it up. You simply cannot reach people like Farthing

why did u reply to urself?

It should be obvious that some spineless individual is posting under other people's handles including those of K5, Bigfoot Investments, and possibly others.

Coach D, even though we had worked some of it off, bullish sentiment is incredibly, historically high, complacency is low, margin debt is at levels higher than 2000 and 2007, the market is priced very high looking at P/S, P/CF, Shiller P/E, 9 out of 10 guests on CNBC are bullish, and retail is finally engaging, though not in a big enough way yet. So, you know I am not a technical guy, but what do your technicals project for the top and what time frame? The fly in the ointment is that if Europe comes unraveling or China doesn't perfectly manage their economy, you could have a huge capital flight to the US. Unfortunately, I think the Fed has left very little ammunition to thwart a Black Swan-type event.

Hi Sagarin. How are you measuring sentiment and why do you think it is "incredibly, historically high"?

this survey says sentiment is pretty much average:

I think you mean complacency is high

I'll agree with your descriptions of valuations being too high - that's my main fear

I'm looking at Ned Davis, am amalgamation of many measures of sentiment. I acknowledged that retail has not fully engaged yet, which is why I think we go higher. By the way, I, as many know, got out in 2008, didn't get back in until '09, and simply cannot believe what the Federal Reserve is doing (studies show 0.6% of GDP growth bought and paid for by $3.5 trillion on Fed's balance sheet). I have had to be very tactical, favoring multifamily dwellings and short metals at the moment, though I suspect a possible intermediate bottom in gold around 1050 or 1100. If we don't hold, then we break down. So I understand K5's posture, though wish he would get away from the anti-Jewish sentiment, but am and have been more on the same page with Coach D, as noted many times earlier in this thread.

Sagarin wrote:

I'm looking at Ned Davis, am amalgamation of many measures of sentiment. I acknowledged that retail has not fully engaged yet, which is why I think we go higher. By the way, I, as many know, got out in 2008, didn't get back in until '09, and simply cannot believe what the Federal Reserve is doing (studies show 0.6% of GDP growth bought and paid for by $3.5 trillion on Fed's balance sheet). I have had to be very tactical, favoring multifamily dwellings and short metals at the moment, though I suspect a possible intermediate bottom in gold around 1050 or 1100. If we don't hold, then we break down. So I understand K5's posture, though wish he would get away from the anti-Jewish sentiment, but am and have been more on the same page with Coach D, as noted many times earlier in this thread.

Eff you. I have no anti-Jewish sentiment. Just for the Jewish elite who are screwing up America so badly

K5 wrote:

Eff you. I have no anti-Jewish sentiment. Just for the Jewish elite who are screwing up America so badly

Why only the Jewish elite? Why not the others?