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Does Market Timing Work?

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Re: Does Market Timing Work?

#101

Post by mattbrewsbytes »

auxym wrote: post #95
bluGill wrote: post #86

Earlier quoted context omitted.

A few people have consistently beat the market over many years. I call that skill. I don't know if they really know thier how they do it though

Sorry for shilling this podcast that I mentioned in another comment in this thread, but they do have very relevant information on this too: https://rationalreminder.ca/podcast/220 This is an interview with two academic researchers into active fund managers who can indeed beat the market consistently sometimes. One factor why they exist is that they have access to better information than the average individual investo…

> beat the market consistently sometimes

Is this like "60% of the time it works every time"? The fact that there are a few individuals that have beaten the market on occasion is a strong indicator that the chances of any retail trader doing this are slim to none.

I suspect poker has more skill involved than stock trading.

Re: Does Market Timing Work?

#103

Post by crazygringo »

TacticalCoder wrote: post #79
zer0tonin wrote: post #54

Earlier quoted context omitted.

The dogma that it's impossible to beat the market is frankly weird at this point. If the markets were truly efficient, randomly picking stocks would beat SPX ~50% of the time. Since markets are not super efficient, basic exposure to performance factors (small cap, value, momentum...) puts you at a fairly high likelyhood of beating SPX.

> The dogma that it's impossible to beat the market is frankly weird at this point. I agree. Meta was literally priced below $90 not even a year ago (I entered at about $100 FWIW, which was my nice and round number). Now at $315. Anybody who believes the market is efficient is on some serious drugs. The market correctly valued Meta a $380 or so before the crash (because "TINA" I'm supposed to believe), then correctly…

You've provided zero evidence for them being incorrect, though.

There's nothing wrong with 3x changes. A lot can happen in a year to diminish or improve a company's outlook -- even a large company. And yes, by 3x -- or even much more.

The onus of proof here is on you to explain why those don't reflect largely realistic estimations of NPV of future profits, and to explain why you think you have better information, experience and judgment than the market.

Re: Does Market Timing Work?

#104

Post by matwood »

TacticalCoder wrote: post #79
zer0tonin wrote: post #54

Earlier quoted context omitted.

The dogma that it's impossible to beat the market is frankly weird at this point. If the markets were truly efficient, randomly picking stocks would beat SPX ~50% of the time. Since markets are not super efficient, basic exposure to performance factors (small cap, value, momentum...) puts you at a fairly high likelyhood of beating SPX.

> The dogma that it's impossible to beat the market is frankly weird at this point. I agree. Meta was literally priced below $90 not even a year ago (I entered at about $100 FWIW, which was my nice and round number). Now at $315. Anybody who believes the market is efficient is on some serious drugs. The market correctly valued Meta a $380 or so before the crash (because "TINA" I'm supposed to believe), then correctly…

Usually what's meant is that it's impossible to beat the market over time. I also saw Meta completely oversold and bought in. As someone who follows tech, it seemed obvious to me that Meta's impending death was greatly exaggerated. The problem is, can I do that over and over across the entire market? Nope.

Re: Does Market Timing Work?

#105

Post by Der_Einzige »

creakingstairs wrote: post #97

One of my family members is absolutely convinced that they can time the market and it kinda drives me up the wall every time it comes up. They will use all these “techniques” to draw arbitrary lines on the chart to establish a trend in the market while watching the news like a hawk everyday. Meanwhile I just get on with my day with index funds and get better returns.

Actual “timing the market” does exist but it’s illegal. We call it insider trading.

Re: Does Market Timing Work?

#106

Post by ignoramous »

creakingstairs wrote: post #97

One of my family members is absolutely convinced that they can time the market and it kinda drives me up the wall every time it comes up. They will use all these “techniques” to draw arbitrary lines on the chart to establish a trend in the market while watching the news like a hawk everyday. Meanwhile I just get on with my day with index funds and get better returns.

> Buffett's ultimately successful contention was that, including fees, costs and expenses, an S&P 500 index fund would outperform a hand-picked portfolio of hedge funds over 10 years. The bet pit two basic investing philosophies against each other: passive and active investing.

https://www.investopedia.com/articles/investing/030916/buffe...

Re: Does Market Timing Work?

#107

Post by matwood »

TacticalCoder wrote: post #82
anonu wrote: post #65

Earlier quoted context omitted.

Schwab would rather you have cash in your account than be invested in securities. This is how their cash sweep works. The article is educational and generally stands up to the research on the topic. It is designed to build trust with clients so they invest in Schwab.

> Schwab would rather you have cash in your account than be invested in securities Compared to IBKR which gives "benchmark - 0.5%" on your NAV in USD, what does Schwab give for your USD sitting idle?

It's not an automatic sweep, but anyone holding cash at Schwab moves it to something like SWVXX [1] paying ~5% right now.

[1] https://www.schwabassetmanagement.com/products/swvxx

Re: Does Market Timing Work?

#108

Post by bumby »

ignoramous wrote: post #106
creakingstairs wrote: post #97

One of my family members is absolutely convinced that they can time the market and it kinda drives me up the wall every time it comes up. They will use all these “techniques” to draw arbitrary lines on the chart to establish a trend in the market while watching the news like a hawk everyday. Meanwhile I just get on with my day with index funds and get better returns.

> Buffett's ultimately successful contention was that, including fees, costs and expenses, an S&P 500 index fund would outperform a hand-picked portfolio of hedge funds over 10 years. The bet pit two basic investing philosophies against each other: passive and active investing. https://www.investopedia.com/articles/investing/030916/buffe...

Isn’t a large part of the underperformance of the hedge funds due to their fee structure? Investors lose 20%+ of the profits just in fees. While I don’t think stock picking is a great idea for the layman, that fee structure isn’t generalizable to the average Joe picking stocks.

I believe there’s some evidence that low-volatility trading has been shown to beat the market over long periods of time. Although, “picking stocks for volatility” may be different than “timing stock picks”

Re: Does Market Timing Work?

#109

Post by hash872 »

Worth noting that about 30% of active fund managers have beat the S&P 500 going back to 1993 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4096205

They may not do so for their investors- this is before fees. But it does seem significant that they are beating the index on their own, and over a consistent period of time. 30% is not nothing. Seems like a blow to strong-form EMH to me.

As an FYI, I never want to hear a real-life fund or investor compared to a benchmark again. Benchmarks are theoretical investments with a 0.0% expense ratio- once you add in some of the real costs of running a passive fund, you start to get more real numbers

Re: Does Market Timing Work?

#110

Post by envsubst »

ignoramous wrote: post #106
creakingstairs wrote: post #97

One of my family members is absolutely convinced that they can time the market and it kinda drives me up the wall every time it comes up. They will use all these “techniques” to draw arbitrary lines on the chart to establish a trend in the market while watching the news like a hawk everyday. Meanwhile I just get on with my day with index funds and get better returns.

> Buffett's ultimately successful contention was that, including fees, costs and expenses, an S&P 500 index fund would outperform a hand-picked portfolio of hedge funds over 10 years. The bet pit two basic investing philosophies against each other: passive and active investing. https://www.investopedia.com/articles/investing/030916/buffe...

Buffett says this kind of stuff publicly. But his own fund moves in and out of investments all the time.
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