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Selling or buying the dip ?!

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  • edited October 8
    Slightly negative, mostly muted dip in DJIA and S&P futures in first 10 minutes after release of surprisingly weaker than expected Sept UE report. NASDAQ futures actually improving.

    As the data gets digested, futures are recovering back to near pre-release levels.

    Initial reaction from some talking heads:
    Suggest weak report opens door for more Fed flexibility in taper timing.
    Effectively, a non-event, which is likely good news for equity markets.
    If your BIG THREE risks were debt limit, employment and FED, you are now down to one, again, for the time being.

    BEWARE the noise.
  • edited October 9
    Fundamental stuff from IBD.

    NOTE: If you're NOT familiar with IBD, primarily geared towards indv stock selection but commentary applicable to the markets as a whole.

    https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-market-rally-5-stocks-at-inflection-points-tesla-fsd-beta-opens-up/

    Excerpts:

    MARKET ANALYSIS

    ...The stock market rally attempt is at an inflection point. After Monday's sell-off, the major indexes rebounded. The market was looking oversold on Monday, so a bounce for a couple of days wasn't a surprise. But the real trick is whether or not big institutions will commit to this new market rally, which is why a follow-through day is key.

    So the major indexes rose on Tuesday, Wednesday and Thursday, but then stalled Friday as rising Treasury yields took their toll. The Dow Jones and S&P 500 hit resistance at their 50-day moving averages while the Nasdaq stopped short of its 21-day line, below the 50-day.

    The indexes need to get above their resistance levels and confirm the new uptrend. If they fall back, there's a serious risk that this correction will take a new leg down...

    ...What To Do Now

    If you made a few pilot buys during the market rebound and you're still flat or slightly up on them, you could hold onto them, though they bear close watching. But right now this is not a great time to be adding. While there could be a quick upside if the market rally strengthens next week, the downside from any new buys could be severe.

    At this point, with the initial bounce over, investors should wait to see if big institutions are really going to support this new market rally.

    If they do, and the major indexes follow-through and break above their 50-day lines, you need to be ready. There are dozens of stocks that are potentially actionable or setting up. Have those on a watchlist, and hone in on a handful that you're most interested in.

    Meanwhile, if the major indexes break down, you need to be quick to cut new buys that aren't working and consider moving entirely into cash....
  • edited October 9
    “At this point, with the initial bounce over … “. LOL


    “Meanwhile, if the major indexes break down, you need to be quick to cut new buys that aren't working and consider moving entirely into cash.... “

    Numerous studies have shown that investors who pile in and out of markets in an attempt to time them fail to achieve the superior returns of “stay-put” buy and hold types. However, if IBD will agree to “ring a bell” when it’s time to jump ship and sell everything (and than re-enter) - and is willing to insure readers who follow such lame advice against loss, I’ll consider subscribing.


    @Derf - Have you considered a Dip 2 thread? This one’s getting a bit long in the tooth.
  • edited October 9
    Laugh all you want, the initial bounce IS over, bub.

    They did NOT say there won't be another leg down, did they?

    No, they said,

    The indexes need to get above their resistance levels and confirm the new uptrend. If they fall back, there's a serious risk that this correction will take a new leg down....

    You must not watch a lot of business news or read much worthy stuff as a central topic of the day Friday was, "Is it too late to buy the dip?" (Read, The initial bounce is over. The easy, LT money-making trades have been booked.)

    And in case you missed it, IBD has been a widely recognized stock picking authority for decades with its specific, time-tested strategy (CANSLIM) for making indv stock investors out-sized returns.

    Trying to diss them by citing "Numerous studies have shown..." is an exercise in demonstrating that old axiom about three kinds of lies:

    (1) Lies,
    (2) Damned lies,
    (3) Statistics.

    To wit, please show a specific study that includes IBD strategy results for indv stock trades and/or market moves to support your broad stoke diss of them.

    FWIW, I used to subscribe to ALL IBD services back in the day and I routinely point to it as one of the primary reasons I retired early about a decade ago at 56.

    YMMV.

    And no need for a new thread on a current topic that already has one. FWIW, I'll continue posting on this thread until the Dip/Diplet is over (likely in a coupla days/weeks) and the BUYS I made during it (from cash and bond OEF proceeds; maturing CD proceeds to be deployed this week) are kicking arse like ALL of the Dip/Diplet BUYS I've made since March 2020.

    Disclaimer: I am a LT Buy/Hold TR investor who BUYS Dip/Diplets with the above-referenced funds and since Feb 2020 have NOT taken a dime out of stocks. Have 96% of nest egg "under the umbrella" (read, tax-deferred a/c's), haven't paid a dime in taxes since 2012, and may not pay them for 5-10 more years.
  • edited October 9
    @Stillers - Just so we’re on the same page here, here’s what I said earlier, to which you appear to object:
    hank said:

    Numerous studies have shown that investors who pile in and out of markets in an attempt to time them fail to achieve the superior returns of “stay-put” buy and hold types.

    - here

    - here

    - here

    - here

    - here

    - here

    - here

    - here


  • Looks to me like IBD's methodology could use a little work. Their track record is 50/50 at best. But hey, I'm just one of the ignorants here who doesn't keep up with the markets or business news.

    Innovator IBD® 50 ETF FFTY
  • @Stillers : This isn't a tax thread ! If you want to talk taxes , start your own thread .
    Derf
  • edited October 9
    @Stillers- Derf is one of the most easy-going folks around here. If you're irritating him as well as hank maybe you should consider lowering your tone of voice.
  • This week I'll allocate some cash to TBUX TRP's new ultrashort bond etf. Lower expense ratio than TRBUX, so hopefully this fund can serve as a cash substitute .
  • No telling where this all ends up by YE, but for now...

    ...with earnings rolling in, futures are UP nicely this AM, and S&P will likely have its 50dma of 4,364 in its crosshairs today/tomorrow (maybe even at today's OPEN).

    If it overtakes it, its previous high of 4,537 will come into focus and be the next target on the UP side.

    Having done this successfully several times since the 2020 crash, I again BOT this Dip/Diplet. At this stage of the process I wonder if I didn't BUY enough.

    Just curious...If you SOLD the Dip/Diplet, what'd'ya do now?

    FWIW, I've been there a few times years ago using my old strategy that was driven by capital preservation/loss avoidance, and EACH TIME failed to respond quickly enough. And it cost me.
  • Ya @stillers...dance,dance,dance. One day the music will stop..fed tightening? Dunno

    I would think if you sold the diplet you were likely to aggressive with your portfolio and likely want a lower deviation fund, stonks etc

    Can't put a price on peace of mind

    Best,

    Baseball Fan
  • No recent fund purchases or sales. But did recently open partial positions in TCEHY and BABA and REIT positions in COLD and PINE. Currently am slightly below my stock allocation percent for 2021 after early September stock trimming and stock market drop since start of that month. Still somewhat agnostic about likely market direction for balance of year. But, earning season is starting out nicely. Will think seriously about 2022 later.....
  • edited October 15
    Ugh! Nobody's dancing here over our recent Dip/Diplet BUYs as the gains are still negligible and the ST verdict ain't in yet. That said, we have partied pretty hard over the six prior BTDs we've participated in since March 2020, all of which are UP 10%-60%.

    But that's NOT the point.

    The point is ALL investors have a choice with Dips/Diplets, as we have EVERY day of the year with/without them: BUY, SELL or HOLD.

    If you bought this last Dip/Diplet, things are looking good. Stories of the the demise of the BTD strategy seem to have (once again) been greatly exaggerated.

    We'll cross over the 50dma today and sights will be set on the most recent S&P high of 4536, 2.2% higher than THU's close.

    If you SOLD the most recent Dip/Diplet, I kindly suggest you address the question, "What do I do now that the market has just about fully recovered?"

    BTW, that answer should have already been in your investment strategy with specifics on the execution of your strategy at a pre-described time/level. If it wasn't, kindly suggest you put it in there now.

    Not the best, but it's FREE:
    https://www.yahoo.com/finance/news/p-500-price-forecast-p-163010316.html
  • edited October 15
    “If you SOLD the most recent Dip/Diplet, I kindly suggest you address the question, "What do I do now that the market has just about fully recovered?"

    Personally, I didn’t sell any equities or other risk assets this year out of valuation concern. I did purchase and own a bit of DOG for a month (September) out of concerns over high valuations. Worked - but generated only pennies. It was an experiment that I may repeat again one of these days,

    To the larger issue, if buying the dip works with stocks all the time, than it should work with other assets. Right?

    Anyone here buying the dip in bonds? How about gold and silver- which have been more depressed than equities this year? The Aussie (Australian Dollar) is reported to be down big time. Anyone buying that dip?

    If dipping just works with a single asset, I’d surely like to learn why that is the case.
  • edited October 16
    hank said:

    “If you SOLD the most recent Dip/Diplet, I kindly suggest you address the question, "What do I do now that the market has just about fully recovered?"

    ...To the larger issue, if buying the dip works with stocks all the time, than it should work with other assets. Right?

    Anyone here buying the dip in bonds? How about gold and silver- which have been more depressed than equities this year? The Aussie (Australian Dollar) is reported to be down big time. Anyone buying that dip?

    If dipping just works with a single asset, I’d surely like to learn why that is the case.

    To the larger issue, if buying the dip works with stocks all the time, than it should work with other assets. Right?

    Assuming your question is in good faith and not a rabbit hole invitation...

    Um, no on both counts.

    BTD does NOT work all the time with stocks.

    Other posters have presented studies to show it does NOT work. I've argued that such studies produce statistics that support the Three Kinds of Lies.

    There are significant variables to the equation that will generate vastly different results: What monies were used to BTD? At what point of the Dip did the investor BUY? What categories of stocks were bought? Are the BUYs still fully invested? What about taxes on the sale of assets used to BTD? Were Dip BUYs ultimately SOLD and gains realized? On and on and...

    That said, it's worked SO FAR for me EVERY time I bought a Dip/Diplet since the 2020 crash. Every Dip I bought (at or near the low point of each Dip - yeah, that matters) with cash, CD proceeds and/or bond OEF sales proceeds. I used money from asset classes that were making nothing-to-virtually nothing. Since then they've ALL increased in value significantly (except the current one which is only UP a few %) over what their value would have been had they been left where they were. ALL BUYs remain invested in broad basket US stocks.

    It's all worked swimmingly BUT much of my gains would evaporate (at least temporarily) in a SEVERE market crash.

    BTD may or may NOT work with other assets.

    And IMO, it likely won't for many other asset classes. To wit, bonds are driven by significantly different market forces and are in a different stage of their market cycle. BTD in bonds for me right now is akin to playing a not-so-friendly game Russian roulette.

    Conversely, BTDs of the S&P since March 2020 crash has worked largely due to the depth of the crash and the Fed actions (to be mild) that have supported its recovery and higher prices.

    And...if history rhymes, some of the future US market Dips/Diplets will transcend into full blown corrections or bear markets. We are getting closer to the next of both with each passing trading day. BTD results when the Dip becomes a C or BM (so to speak) may cause some investors to rush off to the toilets.
  • edited October 16
    - “Assuming your question is in good faith and not a rabbit hole invitation...”

    Why would I waste my time misleading people? My question was intended for MFO board members in total who share an immense amount of combined investment wisdom and experience.

    - “Other posters have presented studies to show it does NOT work. I've argued that such studies produce statistics that support the Three Kinds of Lies.”

    Arguments others may have made to the contrary need not be characterized as lies. It is possible for good and rational people to view the same evidence and arrive at different conclusions.

    - “What categories of stocks were bought?”

    It’s a fair point - but somewhere outside the focus of @Derf’s question which I took to be related more to the broad-based U.S. equity indexes. There are always pockets of value in any market. A separate thread on that question might generate much interest.

    - “What about taxes on the sale of assets used to BTD? Were Dip BUYs ultimately SOLD and gains realized?

    Again - we’re stretching the intent of Derf’s original question. Many here invest in tax-sheltered accounts like 401-Ks and some others, including self, hold substantial amounts in Roth’s which are tax exempt. I’d expect Derf’s question and responses to it to be relevant to those investors as well.

    - “Every Dip I bought (at or near the low point of each Dip

    Therein lies the crux of the issue. What verifiable formula, measurement, or other objective criteria exists to inform an investor when it’s appropriate to buy a dip and when it wouldn’t be?

    - “BTD in bonds for me right now is akin to playing a not-so-friendly game Russian roulette.”

    Fair enough. I like the analogy. But the same might be said of buying the S&P or other broad-basket of equities at elevated prices.

    - “ALL BUYs remain invested in broad basket US stocks.”

    This would seem to contradict point #3.

    - “BUT much of my gains would evaporate (at least temporarily) in a SEVERE market crash.”

    I think that’s what most who have responded to the question are concerned about.

  • "much of my gains would evaporate (at least temporarily) in a SEVERE market crash."

    What a surprise! Who would have guessed?
  • edited October 16
    Buying dips is easy. Catching a falling knife is difficult. Selling just before a dip is damn impossible . Hence why most studies show buy and hold works for most people.

    I kind of think when people here say they bought the dip they are talking about a fraction of their portfolio. Again the benefit is not very significant versus risk compared to buy and hold. Could be wrong but I doubt it.
  • Right there with you MikeM.
  • edited October 17
    MikeM said:

    Buying dips is easy. Catching a falling knife is difficult. Selling just before a dip is damn impossible . Hence why most studies show buy and hold works for most people.

    I kind of think when people here say they bought the dip they are talking about a fraction of their portfolio. Again the benefit is not very significant versus risk compared to buy and hold. Could be wrong but I doubt it.

    Agreed on everything except your reference to "a fraction of their portfolio." That does not describe my particular case.

    I'm a LT, B&H, TR investor who significantly increased my stock exposure by about 50% through BTD since the March 2020 crash.

    Funds for ALL BTDs was from cash, CD proceeds and bond OEF sales. Most funds came from CD ladder rungs that fell off during that period and I chose to not replace and instead BTD.

    It has worked tremendously well for me since March 2020.

    Really tired of trying to explain that and going to move on from this thread after two more replies.
  • Old_Joe said:

    "much of my gains would evaporate (at least temporarily) in a SEVERE market crash."

    What a surprise! Who would have guessed?

    If you're poking fun at me, not sure why. I posted that because some posters here seem to have needed that stated clearly.
  • edited October 17
    hank said:

    - “Assuming your question is in good faith and not a rabbit hole invitation...”

    - “Other posters have presented studies to show it does NOT work. I've argued that such studies produce statistics that support the Three Kinds of Lies.”

    Arguments others may have made to the contrary need not be characterized as lies. It is possible for good and rational people to view the same evidence and arrive at different conclusions.

    Yeah, you kind of short-handed what I've posted here. I did NOT state any specific poster lied.

    Here ya go (again)...

    Studies produce statistics. A very old saying about statistics (maybe only amongst people who professionally crunched data for a living for three+ decades?) goes like this....

    There are three kinds of lies.
    1. Lies
    2. Damned lies.
    3. Statistics.

    Meaning, in this specific discussion...

    Any study that produced/produces a statistic to show that BTD does NOT work is effectively a lie in relation to the ACTUAL results of of my BTD trades since March 2020.

    And there are/will be thousands of other examples of BTD success stories and IMO they can't simply be dismissed/treated as outliers.

    Adios on this thread.
  • Added ASML (thx Old_Joe advise) SOXL little bitcoins and shiba recently

    401k tsp still 90:10 distributions mostly in 2045 and 2050Tdf vpccx vgstx VDE
  • edited October 19
    Just wanted to add one last post to this thread.

    Today the S&P is currently within 0.5% of it's previous HIGH. Given that and scoring at home, when we get to this point I consider the current Dip/Diplet effectively over. YMMV (but I'm not sure why it would).

    So for this latest Dip/Diplet (DOWN from 4,537), the correct response was to BUY or HOLD it, not SELL it.

    FWIW, we made a few broad market BUYs and started DCA'ing into two new stock ETFs around S&P 4,300 using cash, CD proceeds and bond OEF SALE proceeds. Those new BUYs are UP in aggregate ~5%.

    PLEASE don't try to frame this as boasting or bragging (though I know some will). It's simply a statement of what we've been doing since the March 2020 crash. It's worked EVERY time so far and ALL Dip/Diplet BUYs are now UP between 5% (most recent Dip) - 70% (post-crash BUYs). BUY funds would have all been stagnant, losing money or barely treading water had they been left where they were.

    So if any further studies are presented showing Dip/Diplet BUYing does NOT work, please at least add a footnote regarding the March 2020-current as an outlier performance period.
  • edited October 20
    "thx Old_Joe advise"

    For the record, Old Joe did no such thing, and never would attempt to "advise" anyone on financial matters. At 82 with very decent pension & SS income we are much more concerned with financial stability rather than increase. Our accumulation days are well over.

    I did use some "Vegas money" during the dip to buy a little ASML, which has done very well so far. That's going to be a keeper, because ASML really has a very wide technical moat, no significant competition in equipment of it's class, and a future world needing ever more, smaller and better chips. It's also already very highly priced, so no more buying unless the overall market again retreats so as to provide another decent entry point.


  • edited October 20
    Sold a little on the pip today. Across the board. Hurts a bit to sell some favorites. Unlike many here, I maintain no separate cash reserve - although a very small amount resides within the invested total. So, couldn’t resist parking a bit for my 2022 distribution. I tend to pull from the traditional IRA for the year’s budgeted needs early in the year - more than the required amount. Prefer to pay taxes and let the Roth continue to grow in proportion - now over 75%. of portfolio. Not a market call. Just socking away some sun while the hay shines!

    Good retort @Old_Joe. Depends on type of advice. General financial principles and sound planning = appropriate advice. But buying, selling, allocating - Hell No
  • hank Fidelity allows fractional purchases of stock-I am the proud owner of 1.275 shares of ASML in my Fido IRA !
  • oops should have directed to Old_Joe !
  • edited October 20
    @carew388

    No worry. I sometimes get messages from his wife. What the hell ….

    Fractional yes. Be careful. Not all stocks allow fractional. When I bought some NGLOY a while back that was the case. I had just enough in the core to buy X number of full shares. But in the instant it took for the trade to go through, the price went up. So after it went through I was 3 cents delinquent! Oh. Oh, Sold a share of something else right away to compensate. But was on “pins and needles” for a while wondering if I’d be put on another round of probation.
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