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Does Market Timing Work?

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Re: Does Market Timing Work?

#221

Post by danielmarkbruce »

Findeton wrote: post #185
theptip wrote: post #142

Earlier quoted context omitted.

> No one really knows but it wont be as good as the last few decades. Such confidence! The first part is of course true, but you’ll make money teaching the market that you are smarter if the latter is true. Perfectly possible that AI kicks the economy into overdrive in the next few years and growth increases. I wouldn’t bet my house on it, but also wouldn’t bet my house against it either.

Absolutely no chance that AI is able to do that. Investing decisions are too subjective for the current state of AI. A good value investor knows this… and also knows that you don’t need a bull market to make decent returns.

The number of people on planet earth who deeply understand the current state of the art in LLMs, the available information in a format an LLM can "reason about", good ways to condense information so that X v Y decisions can be made across a lot of Xs and Ys, and deeply understand how to do value investing in a practical way and enough about a set of industries to pull it off, is about zero.

Regardless, I'd happily take a bet at even money up to a reasonable sum that we'll wake up in 20 years to find that a system using LLMs has just destroyed the market doing fundamental analysis, for 15 years.

Re: Does Market Timing Work?

#222

Post by jatins »

shrimpx wrote: post #162
mr_mitm wrote: post #53

Earlier quoted context omitted.

I bought when it dropped 5% because I thought it was "a clear buy signal". Then it dropped even more and I couldn't spare any cash to buy more. How could you have known at the time that 20% was the bottom?

Anything on the way down in a steep selloff is a good buy, so you did good. Also WRT the pandemic it was pretty clear that there was going to be panic selling, as soon as a pandemic was announced. What wasn’t clear was where the bottom was and how long the recovery would be. Some waited for a deeper bottom and missed out on the vertical recovery.

> Also WRT the pandemic it was pretty clear that there was going to be panic selling, as soon as a pandemic was announced.

If you were this sure, did you take a short position when pandemic was announced? Hindsight is 20/20.

Also not sure what you meant by when pandemic was "announced" but I guess you are referring to March 2020 broadly

Re: Does Market Timing Work?

#223

Post by jgalt212 »

One cynical side of me things you can, and on cynical side of me thinks you cannot.

Anecdata: During my banking days, any time I received an outsized bonus it did seem to occur at a local market maxima. I had noticed this, and I was like I should have worked in entertainment as their earnings and thus investment opportunities were largely uncorrelated to the price of the stock market. Of course, this did change a bit when the stock market fueled streamers started spending money like drunken sailors on "content".

Re: Does Market Timing Work?

#224

Post by AnthonyMouse »

the_gastropod wrote: post #166
missedthecue wrote: post #161

Earlier quoted context omitted.

No, I mean societally it's unaffordable. The government will eventually need to raise taxes significantly or begin means testing it. The current system is mathematically unsustainable

The current system is mathematically unsustainable pretty much by the design of a certain political faction interested in demonstrating the incompetence of government. Removing the income cap—currently around $160k—on the social security tax would do a great deal to make social security sustainable (and more equitable).

> The current system is mathematically unsustainable pretty much by the design of a certain political faction interested in demonstrating the incompetence of government.

The current system is mathematically unsustainable as a result of politics.

If you're going to untie benefits from payments then the first sensible thing to do is to make the same payments to everyone instead of giving more to people who made more money, but this would result in large numbers of affluent retirees voting against you.

If you're going to untie benefits from payments then the second sensible thing to do is to eliminate social security tax whatsoever and fund the program from general revenues, which would remove the need for the farce of a "social security trust fund" (the government owes itself money: it's a debit and a credit in equal amounts and nets to zero). But then people would condemn you for "bankrupting social security" or "stealing the trust fund" or similar nonsense, funded by the people the tax burden would be shifted onto.

Removing the cap while leaving the program as it is not only is worse than either of these things, it doesn't even solve the problem, because the program as-designed would then be making higher payments to all of those people when they retire which would consume more than all of the money they paid in because people who made more money tend to live longer.

Re: Does Market Timing Work?

#225

Post by theptip »

rubicon33 wrote: post #167
theptip wrote: post #142

Earlier quoted context omitted.

> No one really knows but it wont be as good as the last few decades. Such confidence! The first part is of course true, but you’ll make money teaching the market that you are smarter if the latter is true. Perfectly possible that AI kicks the economy into overdrive in the next few years and growth increases. I wouldn’t bet my house on it, but also wouldn’t bet my house against it either.

How would AI do that?

Automating knowledge work -> increasing labor productivity.

Re: Does Market Timing Work?

#226

Post by reducesuffering »

oceanplexian wrote: post #212
warner25 wrote: post #207

Earlier quoted context omitted.

I agree that the American stock market has been an outlier, and most Americans don't realize the extent to which that is true; it's good that you do. But compared to buying and holding a widely diversified and low cost portfolio, what was the better strategy for investors in other markets? What would be the better strategy for Americans over the next 40 years (not knowing if it will be a miserable time or not)? I thi…

People keep talking down the US but the only advanced economy reliably innovating at scale. Especially in the post-COVID era, as China faces growth collapse. You don't have to look far to see that all the major tech developments of our species are coming out of the US: Generative AI, Reusable Rockets, self-driving cars, mRNA, Genetic Engineering, NIF Fusion, VR, etc. The US could strike it out on any single item and…

Good investing has never been about X will make a lot of money, buy X. It's about what price are you buying the money that X will make. Right now, a lot of future money US will make is baked into the price of those US companies. You'll pay $100 for $4 of US earnings or $8 of UK/Japan/Netherlands/Canada/Sweden/etc. earnings. People already expect US earnings growth to be almost double. The question is do you think it will outpace even that? Even if you think US earnings growth will be somewhat better than the rest of developed economies, it's a worse investment.

For example, developed economies index, VEA, outperformed US, VTI, last year.

Re: Does Market Timing Work?

#227

Post by paulddraper »

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…

> I can't believe how much people take for granted that stock markets "usually go up 7% a year" or whatever.

Decades of something being true will do that

Re: Does Market Timing Work?

#228

Post by AnthonyMouse »

the_gastropod wrote: post #209
dh2022 wrote: post #183

Earlier quoted context omitted.

If they remove the cap on retirement contributions they should also remove the cap on retirement payouts. I would love to see social security pay former CEOs millions of dollars per year:)

I don't understand why the mental model for SS is any different than any other service the government provides. People don't expect their tax payments to proportionally determine: their access to roads, law enforcement services, fire protection, access to GPS or weather data, etc. Government's purpose is to facilitate the common good. Some fortunate individuals are able to contribute more, some less fortunate individ…

Social security was sold as an insurance program and would have to be completely redesigned to operate like other programs -- you'd essentially want it to be a UBI for everyone over a particular age funded out of general revenues, and might be better off to make it a real UBI for just everyone.

But it's "the third rail" because there is so much money on the table. It's a program that makes transfer payments, which is zero sum, so any change will be fought hard by whoever ends up worse off than they are under the status quo.

Re: Does Market Timing Work?

#229

Post by bumby »

AnthonyMouse wrote: post #220
LapsangGuzzler wrote: post #187

Earlier quoted context omitted.

> 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 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. The key here is to make sure that automation and cost efficiencies make it through to the production of necessities, and we don't prop up artificial scarcity. There are an effectively unlimited number of jobs that employe…

How do you see automation helping housing? I work in an org interested in 3D printed structures and it still seems a long way off. Or are you looking at improvements in logistics that make it easier to live in less expensive areas?

Re: Does Market Timing Work?

#230

Post by bumby »

galaxyLogic wrote: post #218
danans wrote: post #189

Earlier quoted context omitted.

> Investing decisions are too subjective for the current state of AI I think they are talking about AI driving growth in the broader economy, not making investment decisions. Even still, it's not clear that AI will drive that kind of growth.

It is not clear exactly how, but kind of makes common sense. Productivity is about producing the same things faster. If AI can do part of our work for us it means we can accomplish more with the time saved.

Or, fewer and fewer people are needed for approximately the same amount of production. This may lead to a further bifurcated society.

I do think that a service-oriented economy has many, many more nooks and crannies to hide non-productive jobs, though, and that could perpetuate the “bullshit job economy” hypothesis.

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