odiousgambit
odiousgambit
Joined: Nov 9, 2009
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February 13th, 2015 at 12:40:17 PM permalink
teddy, I was afraid of that.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
HowMany
HowMany
Joined: Mar 22, 2013
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February 14th, 2015 at 6:26:38 AM permalink
I just read thru this entire thread. Here is how I invest my money.

25% invested in individual stocks (currently all of it is invested in KNX)

The remaining money is invested in low cost index funds:
30% domestic equity
15% foreign developed equity
10% emerging markets
15% real estate
7.5% short term US treasury bonds
7.5% intermediate term US treasury bonds
15% treasury inflation protected securities (TIPS)

In the past I took much more risk- up to 60% of my money was invested in 2 stocks (FDS, KNX). The added risk netted substantial gains, so I sold all of FDS, half of KNX, and diversified.
odiousgambit
odiousgambit
Joined: Nov 9, 2009
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February 14th, 2015 at 6:48:39 AM permalink
Quote: HowMany

The added risk netted substantial gains, so I sold all of FDS, half of KNX, and diversified.



Nice move. I haven't had all my money in one or two stocks since having any at all came from my employer's stock purchase plan; I'd suggest never doing that again, nice it worked out though.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
RaleighCraps
RaleighCraps
Joined: Feb 20, 2010
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April 2nd, 2015 at 6:23:36 PM permalink
http://www.msn.com/en-us/money/markets/will-the-stock-market-correct-or-completely-collapse-in-2015/ar-AAammWY

Here's an article that talks about how you would fare if you were in cash during bear markets.........

"The stock market has a tendency to move in six-to-eight year cycles. The current bull market is now at seven years and there are several indicators signaling weakness. A bear market could be about to emerge. Beyond market cycles and technical indicators, rising interest rates can cause weakness in the equities market."
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.
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"The chart below shows the gain you would have from 1995 to 2015 if you sold your stock holdings when the U.S. stock market topped, avoiding the last two bear markets.

Having a 100% cash position during bear markets would have generated 635% return on investment, which is a 31% average annual return. The numbers are staggering to say the least. "
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
odiousgambit
odiousgambit
Joined: Nov 9, 2009
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April 3rd, 2015 at 6:26:15 AM permalink
Quote: RaleighCraps

Here's an article that talks about how you would fare if you were in cash during bear markets.........



This has been well known for a long time. If you could do this perfectly very well at all you wouldn't have to worry about picking the right stocks or anything. It's maddening to think about since it would pay off if you could just improve your results some by being able to do it right once in a while. That means timing it correctly *twice* however.

So well known I thought I could find more than I did with google. I have seen a demonstration of the potential of timing on every possible opportunity and it is just awesome [couldn’t find anything just now]. I don’t doubt the figure they use, 31%, is stating it conservatively.

Here is a chart showing someone’s results starting with $1000 over 20 years [and no further investment] getting 31% increases annually. I used http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php



That’s turned into over $221,000.

So, what are we waiting for? The market is overdue for a correction, right?

Unfortunately, nobody can do this. The market is already reflecting all known factors as is - imperfectly of course - but good enough to foil this practice. Again, this is well known, but people who have tried this have been followed. Sometimes they get the exit time correctly, but, being worry warts, they stay out and do not get back in at the right time. You have to be right on the timing twice! Cash is no safe place to be! To get something out of this post, please at least absorb this fact! Cash is no safe place to be!

Being a gambler, I can’t resist market timing. But what I do is two things:

*I rebalance my holdings maybe once a year. This is similar to market timing but actually gets the blessing of all the more informed gurus out there.

*When it is time to rebalance by buying stocks, I do try to time this. I feel like I do OK by waiting for swoons, but it probably can be shown that I have wasted my efforts [I don’t know].

It’s probably fair to say I wander into more market timing efforts than purely the above, just to make it clear I am not a Saint.

There are plenty of investment outfits who claim they can do market timing. To me, this just underlines the danger of this kind of thinking. It is true temptation.

One final thing: the same financial advisors who like to tell you not to do market timing also like to say that the average investor is terrible at it. The more instinctive your approach is, the more likely you are to get the stink-eye about this. So here is a meme:

As an investor I wanted to be a better Market Timer.

So I quit being an Average Investor.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
mdhovland
mdhovland
Joined: Jan 16, 2015
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April 3rd, 2015 at 1:50:01 PM permalink
Quote: RaleighCraps

http://www.msn.com/en-us/money/markets/will-the-stock-market-correct-or-completely-collapse-in-2015/ar-AAammWY

Here's an article that talks about how you would fare if you were in cash during bear markets.........




Raleigh and Odious -

Two excellent posts, once again. I began following this thread not long ago but it has my complete attention. Sometimes I can gauge add'l insights from forums NOT related to markets and finance.

Many will say that it is folly to try to time markets with entries and exits. I disagree. It's true that no one can pick exact tops and bottoms 100 percent of the time, but that is not the goal. The goal should be capital preservation. Period.

How? Risk management. There are useful tools available to determine when risk is high (bad time to enter) and when it's low (good). I've hinted in a few posts at some that I use. Yes (to those who will scoff), they are charts depicting price and breadth as well as sentiment.

Personally, and with three decades experience on the other side of the desk, I am glad I got that religion. It protected clients from Q2, 2000 through Q3, 2002 as well as 2008 and 2009. By Q1, 2003, my moneyline (aggregate of total account values) was making NEW money by having avoided the sharp losses most experienced. Same is true for the second shoe that dropped. 2010 started seeing profitability again. Some people too ten years to break even. Some never did at all.

A guy by the name of Sosnowy wrote a book about "timing" in the mid 90's. To paraphrase, (my words) "The key to investment success is AVOIDING severe losses."


I have no problem at all being only 30-40% invested right now because, even though the cash equivalents are earning less than zero, I work best at puting that cash back to work when indicators I trust demonstrate that risk is low. That's also when I am the most scared to act, but act I do - typically with both fists loading the truck up.

It works.

I don't outstrip market results, I simply get similar results (often better) with far less risk, volatility and drawdowns.

I may pass through again this weekend to add a couple more (opinionated) thoughts.


Best,
Mark
odiousgambit
odiousgambit
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April 3rd, 2015 at 2:12:22 PM permalink
Quote: mdhovland

I may pass through again this weekend to add a couple more (opinionated) thoughts.



Your input is appreciated.

Like a Craps player who doesn't seem to realize that if the game goes slower, this is better for him, the market being closed is a downer for me LOL. I should realize that daily attention is not needed.

Do you also find that these little dips we get are unplayable? The Dow going down 300 points doesnt mean what it used to mean [not even 2%]. I know what I want to do with 10% corrections, but 300 points down one day, then back up the same amount the next does nothing but irritate me.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
Paradigm
Paradigm
Joined: Feb 24, 2011
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April 3rd, 2015 at 4:57:44 PM permalink
Timing overall markets is very difficult regardless of indicator used. I prefer to pick and time individual stocks. Knowing a company specifics and potential for growth/appreciation and then using price and volume movements (charting) to determine when to buy and sell.

Obviously most stocks tend to do poorly in a bear market and there are times to hold a lot of cash and just wait. But I don't think that strategy works as well going in and out of funds & indexes. Too much data on the reduction in returns if you miss the 10 best up days in a market, etc..

Find 15-20 good companies with solid prospects for growth and buy them at good valuations and/or on breakouts on good volume days when you know the markets are not in a general downtrend (e.g. it is getting scarier to do that know vs. a year ago).

Despite the bubble talk there are still good values out there on quality growth companies that I have very little doubt will do very well over the next 5 years.
100xOdds
100xOdds
Joined: Feb 5, 2012
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April 6th, 2015 at 5:23:43 PM permalink
Quote: mdhovland

A guy by the name of Sosnowy wrote a book about "timing" in the mid 90's. To paraphrase, (my words) "The key to investment success is AVOIDING severe losses."



let us know if you see a crash coming so we can sell into Bonds :)
Craps is paradise (Pair of dice). Lets hear it for the SpeedCount Mathletes :)
odiousgambit
odiousgambit
Joined: Nov 9, 2009
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April 6th, 2015 at 5:34:53 PM permalink
I can see a crash coming ... in bonds!
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder

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