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Does Market Timing Work?

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Re: Does Market Timing Work?

#41

Post by staplers »

vikingerik wrote: post #20
greatpostman wrote: post #16

Earlier quoted context omitted.

No there are people that can time the market.

There are people that have timed the market, but we can't distinguish if that came from actual predictive ability or just getting lucky. And if it did come from predictive ability, then everyone would just copy their predictions and arbitrage it out.

People successfully time the market all the time (some more than others). Only fools broadcast their intentions.

If they are broadcasting it, the broadcast is part of the strategy.

Re: Does Market Timing Work?

#42

Post by Animats »

greatpostman wrote: post #16
worik wrote: post #7

Earlier quoted context omitted.

> people with the intellect to understand the economy Those people (we people) know not to try.

No there are people that can time the market.

> No there are people that can time the market.

The guy who could died last year.[1]

[1] https://dailyprofitcycle.com/market-commentary/the-legacy-of...

Re: Does Market Timing Work?

#43

Post by dzink »

To time the market, you need visibility into it down fine intervals and tools not available to anyone without a 3 digit investment. Common tools obfuscate data. A typical movement of the market that is obvious on a detailed chart, is explained haphazardly by likely automated financial press. The jobs data was strong on Friday, leading to likelihood of higher interest rates for longer, yet the market jumped up that day? Was that a Dead cat bounce? Short-sellers exiting their positions before a long weekend? A move to drum up retail investor interest in a last ditch effort before the S&P crosses the 4200 point of no return? The beginning of the next bull market?

The retail investor software is designed to take advantage of retail investors left and right. Placing trades is error prone. The spreads can be ridiculous (0.5% at 9:30am). the market zigzags consistently so no stop loss is left un-triggered before a bounce. These conditions are currently leading to a world of take-profit trading. Timing works if you pay attention to it all the time, but most don’t have the time for that. Your retailer software won’t warn you when you are losing profits gained in the past year. That’s why long term investors become complacent after a long stretch of growth and stop paying attention. With bots trading increasingly more and interest rates remaining higher, the market will not look the same as it did since 2010 AT ALL and the data from before then is only a usable in detail to those who can pay. Once retail investors have seen the lines go down. the bounce back won’t be as linear as 2020 or this spring. Treasuries require a lot less sweat.

Re: Does Market Timing Work?

#44

Post by kleene_op »

neilv wrote: post #13

They didn't discuss Peter Perfect's sister, Petra Perfect, who -- rather than just wait for the one bottom day for the year -- instead buys and sells repeatedly, throughout the year, at more local lows and highs. Is that also considered market timing?

That sure counts as market timing.

Pulling out such a strategy would make you insanely rich.

Re: Does Market Timing Work?

#46

Post by veqq »

rocqua wrote: post #38

I wonder if there is a fixed buy date that outperforms dollar cost averaging. Something like "around new years lots of people get money they invest, so prices tend to pop, so buy in november' There just needs to be some kind of yearly pattern for such a strategy to exist. I even recall reading about it on money-stuff. But I can't remember the months.

There are a lot of these. Nowadays, gamma flows are discussed a lot in public spaces. Ignoring most of the topic, combining options expiry dates with typical fund rebalancing dates is simple. (Buy in the last week of the month, basically.)

Historically, April, July, November are the best, while January, June and September are the worst. "Sell in may" and go away used to be a common phrase too.

But if you are purely DCAing, such points don't make much sense. Following the interest rate cycle or business cycle is straight forward, or cycles in your own industry. Oil, shipping and microprocessor companies for example forecast years out when their profitable and unprofitable periods will be, so you can move your capital in and out for much higher performance.

Re: Does Market Timing Work?

#47

Post by lencastre »

A decade or so ago I heard an investments prof liking it to “(…) picking pennies in front of the steam roller” which is fitting I guess. Unless you become a market maker, then by all means you are sitting on the steam roller.

Re: Does Market Timing Work?

#48

Post by nyssos »

thakoppno wrote: post #24
rwmj wrote: post #21

Earlier quoted context omitted.

At a guess they'd lose all their money in transaction costs.

Transaction cost is little O of most significant trading strategies, imho.

Depends heavily on the timescale. 0.1% slippage is irrelevant if you hold for years but a serious problem if you trade every hour.

Re: Does Market Timing Work?

#49

Post by quickthrower2 »

reedf1 wrote: post #26
quickthrower2 wrote: post #3

Which is why better late than never I am overpaying into pension and chucking that on a far/wide international index. My calcs say I won’t retire rich but I will still most likely have the money and beat inflation. And not spend it lol! The real issue for the average Jo seeking alpha is you often need to pay the house (your government!) for the privilege. In Australia you trigger capital gains tax when you sell. And…

You are probably not finding alpha as a retail investor - probably just some form of beta.

Yes - what I am saying is I prefer my E(X) of beta over maybe-alpha minus additional taxes.

(Assuming you meant indexes = beta... ?)

Re: Does Market Timing Work?

#50

Post by nyssos »

medellin wrote: post #9
greatpostman wrote: post #6

For people with the intellect to understand the economy it does. Just very few of those people

If this was true wouldn’t you have many more economists with multiple mullions just from market timing? Even if you can predict the market and you are correct it can stay irrational so i think this comment is completely incorrect

Maybe the economists who study asset pricing in financial markets should, but that's just one subfield among many. No one is beating the S&P with their knowledge of Japanese labor market dynamics or the 19th century Spanish wool industry.
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