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Does Market Timing Work?

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Re: Does Market Timing Work?

#251

Post by bumby »

AnthonyMouse wrote: post #250
bumby wrote: post #247

Earlier quoted context omitted.

I agree for a snapshot in time. I think the distinction is that if the liability includes future payments to current citizens posting into the system, the liability may outpace the asset.

The amount of expected social security payments is independent. They don't have enough "money" in the "trust fund" for that regardless. The point is that the "trust fund" is a NOP. It's like writing a check to yourself. When you go to deposit it into your account, your account balance doesn't change. Every penny the Social Security Administration withdraws from the "trust fund" is either coming out of that year's gen…

>The amount of expected social security payments is independent.

This is the kind of economic theory that loses people. It’s like what economists say deficit spending doesn’t matter because a govt isn’t like a person. It certainly matters if confidence in the system matters.

The fact that you acknowledge the money comes from side other source implies there’s a tradeoff. There’s no free lunch here, regardless how creative the accounting gets.

Re: Does Market Timing Work?

#252

Post by wolverine876 »

AnthonyMouse wrote: post #228
the_gastropod wrote: post #209

Earlier quoted context omitted.

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…

How is it like insurance? At least from one perspective, insurance is hedging risks - you put in a little and if something happens, you get a lot back.

Social Security is compulsory savings, and you get out pretty much what you put in.

(Maybe I'm focusing too much on one word.)

> it's "the third rail" because there is so much money on the table.

Also, I think because people feel an existential threat - some people rely on that money to survive.

And because, after seeing that deduction every two weeks for their entire lives, they want their payout.

Re: Does Market Timing Work?

#253

Post by lotsofpulp »

wolverine876 wrote: post #159
missedthecue wrote: post #158

Earlier quoted context omitted.

It's called social security and it's enormously expensive and borderline unaffordable... And not even enough to retire on comfortably

Yet it works so well that the public overwhelmingly supports it. > borderline unaffordable It's funded by your own income; it's a compulsory savings plan.

Social Security in the US is very much a wealth redistribution scheme, and more and more so as time goes on. See adjustments to retirement age and bend points in the benefit formula.

Re: Does Market Timing Work?

#254

Post by lotsofpulp »

bumby wrote: post #108
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...

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 s…

No, fund expenses are typically not included when comparing returns.

Re: Does Market Timing Work?

#255

Post by AnthonyMouse »

wolverine876 wrote: post #252
AnthonyMouse wrote: post #228

Earlier quoted context omitted.

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…

How is it like insurance? At least from one perspective, insurance is hedging risks - you put in a little and if something happens, you get a lot back. Social Security is compulsory savings, and you get out pretty much what you put in. (Maybe I'm focusing too much on one word.) > it's "the third rail" because there is so much money on the table. Also, I think because people feel an existential threat - some people re…

> How is it like insurance?

It pays until you die instead of paying until you run out of savings. The risk it's insuring against is that you live longer than the average person and outlive your savings.

The private insurance companies that offer this type of insurance call it an annuity.

> Also, I think because people feel an existential threat - some people rely on that money to survive.

Nah, the more sensible of the reform proposals are the ones that convert it into a fixed payment for everyone. Those proposals are still every hard to pass because some people would get more than they do now and some would get less, and the people who would get less are the more affluent people with no existential risk, but they would still fight it.

> And because, after seeing that deduction every two weeks for their entire lives, they want their payout.

The program started by making payouts to people who never paid in. Their money is already gone, given to their own parents.

Re: Does Market Timing Work?

#256

Post by theptip »

danans wrote: post #189
Findeton wrote: post #185

Earlier quoted context omitted.

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.

> 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.

Yes, exactly. And agreed, it’s not clear. (Hopefully I conveyed wide error bars, my whole point is that certainty seems unjustified at this point in time.)

Re: Does Market Timing Work?

#257

Post by AnthonyMouse »

bumby wrote: post #251
AnthonyMouse wrote: post #250

Earlier quoted context omitted.

The amount of expected social security payments is independent. They don't have enough "money" in the "trust fund" for that regardless. The point is that the "trust fund" is a NOP. It's like writing a check to yourself. When you go to deposit it into your account, your account balance doesn't change. Every penny the Social Security Administration withdraws from the "trust fund" is either coming out of that year's gen…

> The amount of expected social security payments is independent. This is the kind of economic theory that loses people. It’s like what economists say deficit spending doesn’t matter because a govt isn’t like a person. It certainly matters if confidence in the system matters. The fact that you acknowledge the money comes from side other source implies there’s a tradeoff. There’s no free lunch here, regardless how cre…

So let me see if I can explain this.

The Social Security Administration charges tax to Bob and then uses the money to make payments to Alice. For some years it was taking in more than it was paying out, so it used the rest to buy US government bonds, which is really just giving the money to Congress to spend on something else. Then Congress spent it on something else. It's all gone. All you're left with is a piece of paper that says the government owes itself money -- and not even as much of it as Bob was promised.

Now Bob is retired and expects his money back. But most of the money went to Alice and the rest went to Congress in 1994. There's no money. If you want money to pay Bob then you need to collect more taxes or sell more government bonds into the market.

So which of those things do you want to do? And if you want to use tax revenue, do you want it to be the regressive inefficiently duplicative social security tax or general taxes that don't charge higher effective tax rates to people who make less money?

Re: Does Market Timing Work?

#259

Post by user_named »

shagmin wrote: post #205
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…

There are probably multiple layers of feedback loops going on, who knows how things will pan out. There's a sufficiently large enough pool of investors out there that will buy broad ETFs like SCHB, SPY, VT, VTI, etc., on any dip or just continue to DCA a little of every paycheck into those just due to its history. The US is geographically isolated from potential threats for the most part unlike Europe and Japan, is r…

Don't forget the Canadian threat

Re: Does Market Timing Work?

#260

Post by user_named »

blitzar wrote: post #55
lend000 wrote: post #40

Earlier quoted context omitted.

The fact that you're being downvoted for factual contributions kind of explains why it's possible to beat the markets. Most people refuse to believe it. No public strategies are going to beat the market by a huge amount, and having the discipline to execute them manually isn't easy, but it has been clearly shown to be possible.

Many public strategies beat the market by a reasonable amount; the consistent and disciplined application of them, however, is rare. There is also a lack of consistency about what it is to "beat the market", in the world of clickbait headlines and armchair twitter dd - the benchmark each year (with hindsight) is the highest performing asset.

Ok which strategies.
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