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Does Market Timing Work?

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Re: Does Market Timing Work?

#191

Post by gtani »

There's nuanced market timing, somebody reads WSJ and Barrons, watches Trade brigade and Tastylive analysts on YT and decides on overall cash/stock/bond %ages, that should have kept you out of bonds and out of the Bogleheads situation in the past year. Also last January you would have been looking at bitcoin, TSLA, NVDA and thinking these are going to have some kind of recovery, V shaped or long and grinding, but some kind...

Then there's the opposite question, how many active/day traders are consistently profitable, i think the answer is less than 5% of everyboedy that tries, the ideal is that somebody realizes they're not going to make it while replay/sim / paper trading, or people get stopped out quickly on substantial positions.

Re: Does Market Timing Work?

#192

Post by danans »

PaulDavisThe1st wrote: post #153
jfthoi wrote: post #144

Earlier quoted context omitted.

I'm unsure if you're being facetious so I'll take your comment at face value. Government isn't a static thing - especially one that is elected by the people (for the people). Sooner or later members within said government will also consider retirement. So even if you can elect a government that disagrees with #1, you won't be able to hold it for too long.

"People ought to be able to retire" ... I assume that you mean the idea that people who have worked most of their lives should be able to stop working something in the age range of 60-70, and then enjoy at least a moderately comfortable life until death. If that assumption is correct, this is a relatively new idea, at least in the sense that government has any active responsibility for it. I can absolutely guarantee…

> Don't save/invest appropriately?

You missed one: "inherit"

Re: Does Market Timing Work?

#193

Post by kjkjadksj »

rr808 wrote: post #113

The problem with buy and hold and pretty much every current strategy is that its distorted by the huge 40 year bull market we've seen in the USA. Every American asset has gone up big time - of course "time in the market" is a good thing. If you look at Japanese or European stock markets they tell a very different story. Similarly the next 40 years in the USA could be a miserable time for investors. I can't believe ho…

Part of the reason for the bull run is that people have 401ks. They have IRAs. They buy index funds. In either case the amount of americans who automatically devote a portion of their pay to buying equites has probably never been higher.

Re: Does Market Timing Work?

#195

Post by bumby »

LapsangGuzzler wrote: post #187
bumby wrote: post #182

Earlier quoted context omitted.

While I agree that most of society should be the beneficiary of productivity gains, I’m not sure retirement is still a net positive. It seems like a lot of health and well-being is related to being a valuable member of society and fortunately or unfortunately, for many, work provides that function.

> and fortunately or unfortunately, for many, work provides that function. I agree with this, but the problem is that there is no guarantee of work being available to everyone. With the rise of AI and hyper-specialization of work, that problem is only going to get worse.

I see the problem but have a hard time squaring it with history. Decades ago I had an old professor who spoke about how he was tasked, as a student decades prior yet, to write a report on what people will do with all their free time due to automation.

And yet, here we are with people still working many hours on average and many jobs going unfulfilled. I personally think it’s a problem with our relationship to work, rather than limited opportunity for work. Humans seem to have an insatiable apple for more, which requires continued amounts of work to be done. I think the bigger problem is getting people to have the skills to do the jobs that will still need to be done.

Re: Does Market Timing Work?

#196

Post by zie »

envsubst wrote: post #110
ignoramous wrote: post #106

Earlier quoted context omitted.

> 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.

Sort of, not really? Most of BRK is invested in 100% wholly owned companies. They do have a "small"[0] public equity portfolio, that does change investments periodically, but most of those investments are also pretty long term, if you go look.

Wholly owned companies list: https://berkshirehathaway.com/subs/sublinks.html

0: In terms of BRK's overall wealth, it's still in the many billions of dollars.

Re: Does Market Timing Work?

#197

Post by tippytippytango »

The intuition is that low information investment returns are compensation for putting capital at risk. The capital must be at risk to collect the risk premium. You’re an insurance provider as much as an investor. When you are timing the market you are trying to collect in excess of the risk premium while having your capital at risk for less time. This can only work with an information asymmetry or luck.

Re: Does Market Timing Work?

#198

Post by zie »

anonu wrote: post #99
TacticalCoder wrote: post #82

Earlier quoted context omitted.

> 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?

Cash sweep in Schwab is like 0.5%, it's nothing. But this is how they make their money, turning around and lending at 8%. But you can just as easily buy a short duration Treasury ETF yielding 5%+ or a CD.

Or even Schwab MMF's, which are reasonable. It's mostly just the default that's terrible on return.

Re: Does Market Timing Work?

#199

Post by Aachen »

unusualmonkey wrote: post #125
hash872 wrote: post #109

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 h…

A blind monkey throwing darts will beat the S&P 500 some of the time. The problem isn't that it's impossible to beat the S&P 500 (it's actually trivial), the problem is it's hard to predict which portfolio will outperform the S&P 500.

The point they're making is that fewer than 30% of monkeys would still be positive after so many years if it were random chance

Idk if that's true but you're not saying what percentage one would expect to see instead

I also think monkeys are the wrong example here because aren't they at even odds with the index? 50% of them, assuming they take no bananas for their service and assuming they don't get to make more trades than the index does, should have beaten the index, if my currently-half-awake brain is working correctly

Re: Does Market Timing Work?

#200

Post by popinman322 »

ghaff wrote: post #194
dannyw wrote: post #175

Earlier quoted context omitted.

I’m genuinely a little bit more productive with ChatGPT. A lot of tasks I do take 30 mins or a hours less, several times per week.

So a basically trivial improvement in other words.

Half an hour of time recovered using a system not specialized to the work at hand. With better tooling and integrations that could scale to several hours a day spent doing more valuable work.
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