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Does Market Timing Work?

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Re: Does Market Timing Work?

#271

Post by creakingstairs »

llelouch wrote: post #269
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).

Yeah, I don't doubt that there are real people timing the market successfully. But as you said, those methods are under NDAs, not given by random gurus on YouTubes!

Re: Does Market Timing Work?

#272

Post by AnthonyMouse »

toast0 wrote: post #267
AnthonyMouse wrote: post #231

Earlier quoted context omitted.

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 fa…

> It becomes cost efficient to truck construction workers (even if it's not great for the workers).

This gives me a different idea and I wonder if it's worthwhile.

There are industrial robots that e.g. mass produce cars. Suppose you make one to mass produce housing, but instead of putting it in the factory you put it on the truck. Put it on the construction site. It takes a pile of lumber, cuts it to length and turns it into walls, puts the pipes and wires through the walls etc. This is the kind of thing that existing industrial robots can actually do if you program them appropriately.

Then you send it across the street to put together another building. Assembly line, but the products are big so instead of moving the products to the next station you move the robots.

Re: Does Market Timing Work?

#273

Post by ytoawwhra92 »

bluGill wrote: post #86
vik0 wrote: post #68

Ever since I read The Black Swan by Nassim Nicholas Taleb and Thinking, Fast and Slow by Daniel Kahneman, I can't take anything related to the stock market seriously (among other things as well, but this post is related to the stock market, so that's why I'm focusing on it.) There's very little skill involved, which isn't to say there is no skill involved whatsoever - but at the end of the day it really is just luck…

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

"Fooled by Randomness" by Taleb is a good book on this subject.

Re: Does Market Timing Work?

#274

Post by PeterStuer »

fsckboy wrote: post #34
PeterStuer wrote: post #25

The idea with any Ponzi scheme is to get in as early as possible and get out before the inevitable collapse. Though if it is your meta-governement propping up the Ponzi come hell or high water, not sure where you would get out to that would not be sucked into the collapse unless you are part of the 0.000001% that would potentially have an option to watch the world burn from a distance.

The idea with a Ponzi is to create one and make money from the get-go. There is no good idea with a Ponzi if you didn't create it.

Getting in early on a succesfull Ponzi can be very profitable. If only the creator made out the Ponzi would fail to get traction.

Re: Does Market Timing Work?

#275

Post by Centigonal »

RivieraKid wrote: post #157
auxym wrote: post #77

Earlier quoted context omitted.

> 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. This assumes that the expected return of a single, randomly-picked stock is symmetrically-distributed. It is not, single stock returns are highly skewed and "lott…

I've watched all of the videos on Ben Felix's channel and generally share his worldview. But I've been having some doubts about market efficiency and active investing being extremely hard. There were 4 moments when I thought - I should buy this stock for some reason, e.g. after ChatGPT I thought about buying NVidia. But I decided to continue being a purely passive investor. Now I regret that decision because all of t…

efficient markets will be a myth for as long as retail investors are allowed to trade stocks.

The stocks you are looking at are all stocks that have been popular with retail investors, and retail, as a general force, isn't out there doing equity research, incorporating all available information, estimating risk, and allocating its portfolio along the efficient frontier. Retail investors move the market, and there is money to be made if you can quantify how much of that move is driven by short-term sentiment.

That said, the market can remain irrational longer than you can remain solvent, sometimes "irrational" positive sentiment is coincidentally well-placed, and irrational sentiment is contagious and difficult to see through sometimes. Because of these factors, IMO any kind of active investing strategy should come with some kind of risk management component, where if your active bets blow up, you don't lose your life savings. Personally, I keep active bets to <20% of my portfolio, I'm extremely careful with leverage (margin, options, futures), and I put stop-losses on any particularly volatile position and any that incorporates leverage. I want to have it so if I'm dead wrong and also I fall into a coma and can't unwind my trade, my position still can't screw me.

Re: Does Market Timing Work?

#276

Post by [deleted] »

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.

[deleted]

Re: Does Market Timing Work?

#277

Post by sumedh »

wolverine876 wrote: post #146
tlarkworthy wrote: post #137

Earlier quoted context omitted.

I believe human ingenuity and power over the elements goes up 7% a year, of which, the stock market is a proxy for. We are a networked organism and good at leveraging innovation at a global scale through supply chains. I see no reason to be pessimistic, we have AI, we have better space flight, we constantly improving energy sources.

Then why didn't the markets go up in Japan and Europe (per the GP)? Also, why do the US (and maybe other) securities markets increase when the underlying economy is performing poorly?

> Then why didn't the markets go up in Japan and Europe (per the GP)? Also

Japanese companies are notorious for having poor return on equity for decades.

Re: Does Market Timing Work?

#279

Post by bumby »

AnthonyMouse wrote: post #272
toast0 wrote: post #267

Earlier quoted context omitted.

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 fa…

> It becomes cost efficient to truck construction workers (even if it's not great for the workers). This gives me a different idea and I wonder if it's worthwhile. There are industrial robots that e.g. mass produce cars. Suppose you make one to mass produce housing, but instead of putting it in the factory you put it on the truck. Put it on the construction site. It takes a pile of lumber, cuts it to length and turns…

I’ve worked on those robots that mass produce cars. The idea that you can ship them from site to site doesn’t really work. They require a lot of support infrastructure. The use a lot of large parts (dies in the case of cars) that are heavy and must be constantly swapped out. They require a lot of constant tuning that would likely be made worse when subjected to the vibrations of transit. They require whole specialized teams just to maintain.

Re: Does Market Timing Work?

#280

Post by bluGill »

olalonde wrote: post #88
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

If there are really just a few, it could be explained by chance. Warren Buffet is often cited in that group and yet, a blindfolded monkey would have done better than him in the past 20 years[0]. [0] https://www.linkedin.com/pulse/warren-buffett-has-underperfo...

Warren Buffet also said 20 years ago that he was having trouble find any stocks that he wanted to buy, so he predicted his poor performance. He did very well for the first 30 years of his investment life.
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