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Boy, was I smart to add to equities last week… Boy, was I smart to sit tight… Maybe I do know what I’m doing… What new fund can I invest in that’ll bring me greater returns than the indexes…
…and this is the thinking, when all “boats are rising,” that gets me into trouble.
Cause there’s an afternoon coming, and anything can happen. Sheesh!
(I’ve restructured the OP into multiple choices and added choice E.)
(A) Boy, was I smart to add to equities last week… (B) Boy, was I smart to sit tight… (C) Maybe I do know what I’m doing… (D) What new fund can I invest in that’ll bring me greater returns than the indexes…? (E) Maybe I should sell everything and run to cash …
I’ll pick answer C
Not to be critical, but “the market” is a phrase often used on CNBC, Bloomberg and other financial wastelands. In truth, there are dozens of different markets (speaking of equities alone). Some may be rising, Others falling … Some running in circles … So the phrase “the market” grossly oversimplifies investing and may lead many to act against their best interests. Whatever may be said in condemnation of small investors dallying into the world of individual stocks, the experience may help drive home / reaffirm the truth that it’s a “market of stocks” and not a “stock market”.
Not multiple choice... Level5 is just briefly describing an involuntary thought process that many of us experience when we actually make some quick money on something. A quick rush of satisfaction.
And he then warns of the actual reality of what is likely to follow.
Well done, I thought.
The mechanism, if taken to an extreme, sounds similar to a quick drug hit. And, to extend that, if not brought under control, eventually to a gambling compulsion.
I sometimes wonder if one long-time MFO poster may have fallen down that rabbit hole. We don't hear much from J anymore.
I tend to know what I'm doing, which usually is to stand back and watch. On days like this I've seen and traded too many hard afternoon reversals when the 'vibe' is all rosy earlier in the day.
Frankly I prefer to buy on down days unless the item I want is itself on sale for some reason (ex-div, news, etc.) Chasing momentum is rarely a good idea.
Thanks for the correction @Old__Joe - I hadn’t considered that I might have altered @Level5’s original intent with my modifications. So, I’ve added a note to that effect.
At a general, unsophisticated Rule, I ALWAYS plow $ into stocks near/at the end of three consecutive S&P DOWN months that cumulatively register a total drop near/in correction territory. That was the case a couple of days ago when I did my standard % dump in.
And, FWIW, I try not to THINK of that Rule, or my overall investment strategy, as smart or dumb, because I KNOW the market will soon enough inform me I'm looking a lot like the other one!
@Hank - point taken; and ooh, yes, let’s add an F) All of the above. Of course if it’s a test, we’re grading on a curve, yes? @Old_Joe - it always feels good when you’re understood. Appreciate you! @rforno - I like buying on down days, but… @stillers - I have little confidence buying equities (or bonds) after they’ve dropped a ton. Of course that’s probably the best time, and then whoops, missed it. Isn’t investing fun?
@Hank - point taken; and ooh, yes, let’s add an F) All of the above. Of course if it’s a test, we’re grading on a curve, yes? @Old_Joe - it always feels good when you’re understood. Appreciate you! @rforno - I like buying on down days, but… @stillers - I have little confidence buying equities (or bonds) after they’ve dropped a ton. Of course that’s probably the best time, and then whoops, missed it. Isn’t investing fun?
Best to all!
Hmmm...You have heard the saying, "Buy low, sell high," correct?
Boy, was I smart to add to equities last week… Boy, was I smart to sit tight… Maybe I do know what I’m doing… What new fund can I invest in that’ll bring me greater returns than the indexes…
…and this is the thinking, when all “boats are rising,” that gets me into trouble.
Cause there’s an afternoon coming, and anything can happen. Sheesh!
I do exactly the same as you and the market is a cruel beast because usually within several days of this I feel like a total idiot…
At a general, unsophisticated Rule, I ALWAYS plow $ into stocks near/at the end of three consecutive S&P DOWN months that cumulatively register a total drop near/in correction territory. That was the case a couple of days ago when I did my standard % dump in.
And, FWIW, I try not to THINK of that Rule, or my overall investment strategy, as smart or dumb, because I KNOW the market will soon enough inform me I'm looking a lot like the other one!
For the ST time being at least, with the major indexes all UP 5.1%-7.6% last week, the above-noted Rule has paid off much faster than usual, and provides support for the old adage that "Even a blind squirrel finds an acorn every once in a while!
Meanwhile, the jury is still out on the move being smart or dumb LT.
I said the following on another forum starting on Nov 1. ============== In other threads I said to start looking to get into the market in October and wait for the entrance.
SPY had a ST+mid term signal buy VIX is down Other stuff looks better too.
Momo looks good in the last several days. All = a buy before closing.
==============
You can just play it simple: no diversification, no predictions, no narrow range funds, looks like tilting LC growth is here to stay which = SPY/VOO or you can gamble and use some QQQ. Earlier in the year I posted that value looks better, based on 2022, but within several weeks, growth started to lead again.
===============
I stick with a simpler approach. Under/Over value don't exist ST(weeks-months) and sometimes for years. I have no idea about a short covering because I don't look for it and I don't know when it started and how long.
I always listen to the Fed. The Fed blinked on Wed. The charts sensed it even sooner, the chart confirmed it. Most stock+bond funds lost in the last several weeks, usually, they recover some or all. I changed 80% of my portfolio last week which I held for several months. My previous funds are still good but why not make more for several days-weeks. Small changes do not make sense to me, never did. I also said before that usually it's that time of the year. I would stick to what worked lately (weeks-months) and wide range funds. I don't know why investors look for bottoms for a narrow sector or what MAY do better (gold, health care, energy, value) when something has been working for months (SPY,QQQ)
When will I sell? no idea, the chart and uptrend will tell me what to do.
I actually mad at myself as to why I didn't change 100%, I got lazy. These periods are the ones where one week can equal several months of performance.
Sincere props and congrats to you @FD1000, glad to see someone doing well in the markets, they are challenging and tricky for sure....
What makes me go hmm, when I read your posts is why does a guy who is comfortably retired make huge moves in and out into various markets when you obviously "have enough"...kinda like an old Harley, if its running good, don't F*#K with it, leave the wrenches in your tool box.
Your models/strategy has obviously worked well but say what the heck would happen if y Iran launches a barrage of missles that overwhelm the missle defenses...what happens if Biden takes seriously ill or worse and we get Kamala in as president (I am intentionally NOT trying to bait anyone into a political kerfuffle) just saying that would jerk the markets limit down, no? You'd likely lose several years of profit in your investments, so why expose yourself to that possiblity?
@FD1000 - always appreciate that you have a system that works for you, along with the brass balls (can I write “balls” here) to support it. My “pair” are just fleshy and when they’re tweaked, I find it very painful; whereas yours…
Still, I did heed your advice and did dip my toe in after your post in October.
“ You have heard the saying, "Buy low, sell high," correct?”
So, my thinking goes, “why not wait a little longer…rest in the mmkt sweet spot with 5%+ for a while. The 3,6,12-month t-bills ain’t bad either.”
Well said, Level5.
Especially since, "The stock market just finished its best week in almost a year, but lurking beneath the euphoric surface are fears about Corporate America’s profit outlook.
Among companies that have issued guidance this earnings season for next quarter and beyond, more have been providing estimates that trail analysts’ expectations. A gauge of forward guidance that compares corporate forecasts with the Wall Street consensus has been lower only once since 2019, data compiled by Bloomberg Intelligence show."
There is also the prospect of a prolonged government shutdown and a market that is still relatively expensive. The Fed's inflation target remains at +2% and rate hikes are still possible.
As a conservative and retired investor, I prefer to err on the side of caution and feel quite comfortable earning a risk-free 5.3%+ in CDs and a Treasury Floating Rate Bond ETF at this time.
At a general, unsophisticated Rule, I ALWAYS plow $ into stocks near/at the end of three consecutive S&P DOWN months that cumulatively register a total drop near/in correction territory. That was the case a couple of days ago when I did my standard % dump in.
And, FWIW, I try not to THINK of that Rule, or my overall investment strategy, as smart or dumb, because I KNOW the market will soon enough inform me I'm looking a lot like the other one!
For the ST time being at least, with the major indexes all UP 5.1%-7.6% last week, the above-noted Rule has paid off much faster than usual, and provides support for the old adage that "Even a blind squirrel finds an acorn every once in a while!
Meanwhile, the jury is still out on the move being smart or dumb LT.
So...my so-called general, unsophisticated Rule worked again, for the time being at least.
Nov was a monster month in stocks, with us personally recouping ALL of our paper losses of the past THREE months and then some.
If you don't have a BUY plan, you might want to consider this one of mine for the times described in my prior posts. It's kind of a no-brainer, but emotions can sometimes keep investors from BUYing markets while they're in Correction. Applying this Rule eliminates the emotion. FWIW, I can't recall a time that it didn't work to near perfection.
FWIW, our BUYs at the end of October were mostly to the general market, but we did also add to one Sector fund:
Fund, MTD TR (thru 11/29) VTSAX, UP 8.9% FXAIX, UP 8.7% FSELX, UP 16.7%
Comments
“When the market is rising I think …”
(I’ve restructured the OP into multiple choices and added choice E.)
(A) Boy, was I smart to add to equities last week…
(B) Boy, was I smart to sit tight…
(C) Maybe I do know what I’m doing…
(D) What new fund can I invest in that’ll bring me greater returns than the indexes…?
(E) Maybe I should sell everything and run to cash …
I’ll pick answer C
Not to be critical, but “the market” is a phrase often used on CNBC, Bloomberg and other financial wastelands. In truth, there are dozens of different markets (speaking of equities alone). Some may be rising, Others falling … Some running in circles … So the phrase “the market” grossly oversimplifies investing and may lead many to act against their best interests. Whatever may be said in condemnation of small investors dallying into the world of individual stocks, the experience may help drive home / reaffirm the truth that it’s a “market of stocks” and not a “stock market”.
And he then warns of the actual reality of what is likely to follow.
Well done, I thought.
The mechanism, if taken to an extreme, sounds similar to a quick drug hit. And, to extend that, if not brought under control, eventually to a gambling compulsion.
I sometimes wonder if one long-time MFO poster may have fallen down that rabbit hole. We don't hear much from J anymore.
I tend to know what I'm doing, which usually is to stand back and watch. On days like this I've seen and traded too many hard afternoon reversals when the 'vibe' is all rosy earlier in the day.
Frankly I prefer to buy on down days unless the item I want is itself on sale for some reason (ex-div, news, etc.) Chasing momentum is rarely a good idea.
Edit: About ”Artistic License” https://en.wikipedia.org/wiki/Artistic_license
And, FWIW, I try not to THINK of that Rule, or my overall investment strategy, as smart or dumb, because I KNOW the market will soon enough inform me I'm looking a lot like the other one!
@Old_Joe - it always feels good when you’re understood. Appreciate you!
@rforno - I like buying on down days, but…
@stillers - I have little confidence buying equities (or bonds) after they’ve dropped a ton. Of course that’s probably the best time, and then whoops, missed it. Isn’t investing fun?
Best to all!
Or a snap forward. It is Christmas rally time, isn't it?
So, my thinking goes, “why not wait a little longer…rest in the mmkt sweet spot with 5%+ for a while. The 3,6,12-month t-bills ain’t bad either.”
"Even a blind squirrel finds an acorn every once in a while!
Meanwhile, the jury is still out on the move being smart or dumb LT.
==============
In other threads I said to start looking to get into the market in October and wait for the entrance.
SPY had a ST+mid term signal buy
VIX is down
Other stuff looks better too.
Momo looks good in the last several days. All = a buy before closing.
==============
You can just play it simple: no diversification, no predictions, no narrow range funds, looks like tilting LC growth is here to stay which = SPY/VOO or you can gamble and use some QQQ.
Earlier in the year I posted that value looks better, based on 2022, but within several weeks, growth started to lead again.
===============
I stick with a simpler approach. Under/Over value don't exist ST(weeks-months) and sometimes for years. I have no idea about a short covering because I don't look for it and I don't know when it started and how long.
I always listen to the Fed. The Fed blinked on Wed. The charts sensed it even sooner, the chart confirmed it. Most stock+bond funds lost in the last several weeks, usually, they recover some or all.
I changed 80% of my portfolio last week which I held for several months. My previous funds are still good but why not make more for several days-weeks. Small changes do not make sense to me, never did.
I also said before that usually it's that time of the year.
I would stick to what worked lately (weeks-months) and wide range funds. I don't know why investors look for bottoms for a narrow sector or what MAY do better (gold, health care, energy, value) when something has been working for months (SPY,QQQ)
When will I sell? no idea, the chart and uptrend will tell me what to do.
I actually mad at myself as to why I didn't change 100%, I got lazy. These periods are the ones where one week can equal several months of performance.
What makes me go hmm, when I read your posts is why does a guy who is comfortably retired make huge moves in and out into various markets when you obviously "have enough"...kinda like an old Harley, if its running good, don't F*#K with it, leave the wrenches in your tool box.
Your models/strategy has obviously worked well but say what the heck would happen if y Iran launches a barrage of missles that overwhelm the missle defenses...what happens if Biden takes seriously ill or worse and we get Kamala in as president (I am intentionally NOT trying to bait anyone into a political kerfuffle) just saying that would jerk the markets limit down, no? You'd likely lose several years of profit in your investments, so why expose yourself to that possiblity?
Good Luck to you and ALL,
Baseball Fan
Still, I did heed your advice and did dip my toe in after your post in October.
Well said, Level5.
Especially since, "The stock market just finished its best week in almost a year, but lurking beneath the euphoric surface are fears about Corporate America’s profit outlook.
Among companies that have issued guidance this earnings season for next quarter and beyond, more have been providing estimates that trail analysts’ expectations. A gauge of forward guidance that compares corporate forecasts with the Wall Street consensus has been lower only once since 2019, data compiled by Bloomberg Intelligence show."
There is also the prospect of a prolonged government shutdown and a market that is still relatively expensive. The Fed's inflation target remains at +2% and rate hikes are still possible.
As a conservative and retired investor, I prefer to err on the side of caution and feel quite comfortable earning a risk-free 5.3%+ in CDs and a Treasury Floating Rate Bond ETF at this time.
Good luck,
Fred
Nov was a monster month in stocks, with us personally recouping ALL of our paper losses of the past THREE months and then some.
If you don't have a BUY plan, you might want to consider this one of mine for the times described in my prior posts. It's kind of a no-brainer, but emotions can sometimes keep investors from BUYing markets while they're in Correction. Applying this Rule eliminates the emotion. FWIW, I can't recall a time that it didn't work to near perfection.
FWIW, our BUYs at the end of October were mostly to the general market, but we did also add to one Sector fund:
Fund, MTD TR (thru 11/29)
VTSAX, UP 8.9%
FXAIX, UP 8.7%
FSELX, UP 16.7%