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Does Market Timing Work?

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Re: Does Market Timing Work?

#261

Post by user_named »

paulpauper wrote: post #179
blitzar wrote: post #129

Earlier quoted context omitted.

The market correctly valued Meta a $380. Then Meta announced they were going all in on the Metaverse, had set fire to $100bn so far and were going to continue to throw ~$20bn a year into the Metaverse - the market correctly valued Meta a $100. Meta announded they were going all in on the Ai - the market correctly valued Meta at $315. You have picked a poor example; the moves in the stock, are primarily the fault of t…

Meta had about a zero percent chance of dying like MySpace. Meta has tens of billions of dollars of annual profits (2x of Walmart, amazingly, $30 billion vs $15 billion) near total dominance of social networking, mobile advertising, etc. MySpace had none of those.

This isn't an answer to the poster above. The point is Meta talking about putting all their annual profit on fire. That makes the stock useless for investors.

Re: Does Market Timing Work?

#262

Post by porknubbins »

henry2023 wrote: post #52
porknubbins wrote: post #39

Earlier quoted context omitted.

This has been my experience too, I missed out more by being sidlined during good times than I saved. Personally as an engineering mindset person I am good at identifying likely failure modes of companies (i.e. reality) but rarely anticipate how much things will go up during good times which is more of a social phenomenon (hype).

It seems like identifying failure modes could work if you could model the likelihood of the company going bankrupt in a certain amount of time because even if the enterprise is working on failure mode, public markets have been popularity contests for a really long time.

Sure, Michael Burry is a famous example of it working. But as someone not that good or dedicated its easier to profit on the up side.

Re: Does Market Timing Work?

#263

Post by Turskarama »

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.

It's not even that, the way markets work is inherently unpredictable, in a self fixing way.

If someone finds a way to actually predict the market, then in taking advantage of that they will add unpredictability into it again. This is part of the entire basis of how markets work!

Re: Does Market Timing Work?

#264

Post by bumby »

AnthonyMouse wrote: post #257
bumby wrote: post #251

Earlier quoted context omitted.

> 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…

I’m aware of the system, but all you’ve done is explain how the tradeoff works. It’s also how governments raid pension coffers to pay for something else like infrastructure (see Illinois). I’m not claiming I receive “my” money in SSI, but I am saying there is a point beyond which the system becomes untenable. At some there is a tradeoff because the money is gone. You could raise taxes or pay interest on a new loan, but again, that only works when there’s still confidence in the system. What happens when there is no longer confidence? Interest rates become untenable or the citizenry will not continue to support additional taxation.

Now I will agree that this is a contrived problem because SSI is a contrived system. We could just change the rules and make it continue to work, but that will come with tradeoffs.

Re: Does Market Timing Work?

#265

Post by bumby »

lotsofpulp wrote: post #254
bumby wrote: post #108

Earlier quoted context omitted.

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.

From the linked article in question:

“Buffett's ultimately successful contention was that, including fees, costs and expenses…”

Most good research that I’m aware of includes fees in the comparison because they can significantly erode returns. (Maybe somewhat less of an issue now that most brokerage now offer no-fee ETF trading). Not including fees and expenses is just a marketing tactic.

Re: Does Market Timing Work?

#266

Post by rakkhi »

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…

Correct. Imagine if you bought and hold in Japan in the 1980's. Buy 2023, maybe you would have broken even [1]

There are 2 problems: 1. Market timing works: a. With inside information e.g. US congress b. Take an outsised risk e.g. Nasem Taleb keep buying/selling deep out of the money options. Lose money every day to make an outsised gain 2. You are Warren Buffet. Which is basically buy stocks like you are buying a company. Have the option of buying preferential shares. And hey 1b monkeys on typewriters...

Still totally agree with the OP. The last 40 years have been ridiculous from a macro perspective: 1. Interest rates, the most important price in the economy, the price of money, has fallen from 18% in the Paul Volker days till after covid close to 0. 2. Money has been printed like never before after the 08 collapse and covid.

It is very difficult to look at 2023, with the US fed cash rate at approx 5%, global interest rates going up, price inflation at 7%+, US national debt at $33T and growing at $1T per month exponentially, and the US paying more on Interest expense (not principal, just Interest) than they spend on the military.

I like Nassem Taleb. Invest still in index funds but invest in global infrastructure that is recession proof e..g [3]. Be anti-fragile

[1] https://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=143.FM.M.J... [2] https://www.theatlantic.com/business/archive/2011/12/why-doe... [3] https://www.vanguard.com.au/personal/invest-with-us/fund?por...

Re: Does Market Timing Work?

#267

Post by toast0 »

AnthonyMouse wrote: post #231
bumby wrote: post #229

Earlier quoted context omitted.

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?

It can be more than one thing. But one of the interesting possibilities for housing is modular construction. You mass produce homes on an assembly line as walls prefitted with plumbing and electrical, put them on a truck and snap them together at the site. Now you can produce them wherever labor costs are low and assemble them in a matter of days or weeks rather than months or years. This doesn't get you out of zonin…

People keep saying this, and it keeps not happening in a significant way as described. Trucking assembled parts is harder than trucking the parts, which tends to limit the distances assemblies are trucked. It becomes cost efficient to truck construction workers (even if it's not great for the workers).

That said, some assemblies have become pretty common, I think preassembled roofing trusses are frequently used in favor of framing on site.

Re: Does Market Timing Work?

#268

Post by toast0 »

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…

Really, it's not like insurance, because no insurer would structure their program the way that social security is structured.

But it is like insurance in that the program is named Old-Age, Survivors, and Disability Insurance (OASDI) Program.

It's also like insurance in that the payout is related to the premium / taxes. If you pay your premiums and experience the covered risks, you (or your survivors) get paid.

It's not like savings, because if you don't experience disability, or old age, you don't get paid. Your survivors might still get something though, I don't know much about survivor benefits.

Disability insurance is available from private insurers, but with different terms. Old-age insurance is more or less an anuity, again available from private insurers, with different terms.

The biggest difference with social security is that smaller incomes (and thus, smaller payments into oasdi) get a larger payment per dollar income if they experience a covered event. Another major difference is that if one has multiple former spouses of marriages that lasted at least 10-years, they're all potentially eligible for spousal benefits and they don't have to share it: no private insurer would sign up for that. Also, the actuarial tables are rarely updated and rather out of date at this point.

Re: Does Market Timing Work?

#269

Post by llelouch »

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.

The real techniques that give you an edge are behind NDA's. I know someone who makes 100k a day, trading with very low risk. (0.5% risk per trade).
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