Long game or insider trading is the only reliable strategy.
Does Market Timing Work?
81–90 of 292 posts
Re: Does Market Timing Work?
#82While I agree with the general principle of the post, I am skeptical of the fact that schwab published it. If it was done third party research, I would trust it more. (Internet has made me skeptical) However, the only incentive I can think of schwab is to encourage people to invest ASAP they have cash so schwab can get that money in their system so they can charge fees/still services. But that’s just normal business
Schwab would rather you have cash in your account than be invested in securities. This is how their cash sweep works. The article is educational and generally stands up to the research on the topic. It is designed to build trust with clients so they invest in Schwab.
> Schwab would rather you have cash in your account than be invested in securities
Compared to IBKR which gives "benchmark - 0.5%" on your NAV in USD, what does Schwab give for your USD sitting idle?
Re: Does Market Timing Work?
#83Long game or insider trading is the only reliable strategy.
RenCap begs to differ.
Re: Does Market Timing Work?
#84Earlier quoted context omitted.
The dogma that it's impossible to beat the market is frankly weird at this point. 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.
It doesn't count as beating the market unless if you're doing so due to skill. It's not particularly unusual to beat the market and come out of a casino positive. On the other hand, bragging about how good you are at slots, is what will get you "weird dogmatism."
Dang, I guess I will go tell my quant friends their knowledge of probabilities doesn't count actually, they should try having "skill".
Re: Does Market Timing Work?
#85Earlier quoted context omitted.
The dogma that it's impossible to beat the market is frankly weird at this point. 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.
> If the markets were truly efficient […] And who is arguing that they are perfectly efficient? Markets work on information, which is not (initially) evenly distributed and because of the physics can only spread at the speed of light once it is known. The latter was used to detect insider trading: * https://www.npr.org/sections/alltechconsidered/2013/09/24/22... For the former, people are renting satellite time to ge…
Yes, that was basically my point. Thanks for providing the sources.
Re: Does Market Timing Work?
#86Ever 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
Re: Does Market Timing Work?
#87Although when the s&p dropped 20% in a few days in March 2020 — that was clearly a buy signal. And when tech stocks dropped by 70-90% in Nov 2022. Those stocks are now up 2x/3x from bottom. Sure, long term it probably doesn’t work out to time the market but sometimes it’s pretty obvious what’s happening.
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?
I don't believe in buy signals. You never know whether any particular level is the bottom. But that doesn't mean the opportunity is the same when the market is down 5%, 20%, 40% and 60% respectively. Of course a massive crash is a greater opportunity than a small correction regardless of how much further prices fall.
But the real question is whether it makes sense to keep cash on the side in order to wait for one of these relatively rare crashes. The answer is probably no.
Re: Does Market Timing Work?
#88Ever 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
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...
Re: Does Market Timing Work?
#89[deleted]
Re: Does Market Timing Work?
#90For people with the intellect to understand the economy it does. Just very few of those people
This statement is (likely) unfalsifiable. That is, it would have to come from someone who does this successfully, and could offer up some evidence of having done it, and what system and logic they use to understand the economy and thus know when equities are high and low, when to sit on the sidelines, etc.
Few people doing so well would share such a process, but in theory, if they did, and it worked, it would likely trigger a flood of followers, and the behavior of the markets would shift alongside it.
Presumably someone making this claim is a billionaire. Or they've being doing well in stocks for a short enough time that it's yet to be proven if they are as good at timing the markets as they think they are.