Is it time to market time?

[hightower]

It's funny that my wife has been asking me about "should we sell our stocks now while the market is up?" lately and I have not really been considering it myself. Why? Because I have our AA set to a level I feel comfortable with ignoring. I posted about this back in March I believe. I freed up some cash at that time because I was concerned we'd have to quit our jobs and stay home, but I didn't pull out of the market completely. I just made sure I had some cash in our taxable and Roths available for withdraw if needed. As soon as I realized we weren't going to be immediately losing our jobs, I bought back in. We sit at 60/30/10 (stocks/bonds/cash). And that's how I direct new investments. This means I don't worry too much about the next crash because I know I'll have at least some cash to buy during a big dip. And I expect to have some ongoing purchasing power through earning an income.
I don't plan on doing anything differently unless my employment status changes at which time I'll free up some funds again and hold those on the side in case I have trouble finding a new job. Then, once employed again, go back to the same AA.

In my opinion, that's the only reason anyone should be thinking of selling right now.

Unless you NEED cash for something, you really shouldn't be thinking of selling investments. That's not really timing the market, it's just making sure you have cash to keep a roof over your head. Timing the market because you think you'll be able to "outsmart it" with the goal of trying to "sell at the top and buy at the low" is true market timing and likely will lead to you timing it wrong.

[EntrepreneurMD]

School me in economics please. The purpose of building permits is not to track a sector in the stock market. It is a leading economic indicator of a significant segment of the economy. It’s about 20%, soooooo that means growth in the economic sector has implications. Permits are the leading indicator. Slight difference between economic analytical and forecasting. Building permits go up eventually translates into economic strength. Nothing to do with a market segment.
One indicator is only one piece of the puzzle.
Just like the interest rate spread (10 yr-Fed funds).
That is not paralysis by analysis. It’s economic analysis.
Building an $8m office building for your practice or as an investment would have an impact on the economy, not the builders stock or segment.
I doubt it would move the needle. It would count as one new permit. Just saying.

Don't take it from me. Look at how important the unemployment rate is to Jamie Dimon:

https://www.cnbc.com/2020/07/18/jami...s-economy.html

I'm not even bothering to follow building permits, or new construction starts right now. But I am certainly following the trending unemployment rate like a hawk, which has been falling the last few months, fortunately.

Last year's inversion was a very powerful piece of economic data which allowed me to redirect resources to my investments that have clearly outperformed the broader markets since the recession started. Didn't try to predict the future, acted on very strong existing data at the time.

I guess I find some indicators more potent/actionable than others. If you're so confident in your analysis of the indicators, let me know where you think the economy is headed. I already gave my opinion at least thru the election and commented on a reliable indicator that has a high probability of pointing out a potential derailment. I was so confident that last year's inversion forecast this derailment that I was willing to reallocate to more steadily performing investments successfully. A good advisor or brokerage should also be able to (and does) provide such quality guidance to investors or at least get it right more often than not if they're managing for you. There should be a value proposition for their fees.

I'm still just mesmerized that I found a brother who understands the difference between indicators and horoscopes. Now let that translate to actionable advantage. 13% long term annualized is rather mediocre. It took me a long, long time from being able to sort thru to more relevant indicators then to actually benefitting from that data. One day we can see another Great Depression or a 3 decade Japanese style stagflation. Both are market methods of PE re-normalization. Not taking the last 50 years for granted. Some basic understanding of the data is prudent risk management in case one day one's forced to take definitive action else lose potentially a few decades. This risk increases the further you are in your career. A retiree needing the funds is going to do more poorly than a younger person who had little in the markets and could benefit from buying on the fire sale of another Great Depression. The Great Depression came just over a decade after the Spanish Flu but after market expansion of the roaring twenties. This time it's COVID-19. We can have another roaring twenties but as a market historian I'll be again hypervigilant around 2029. Invest bur appreciate the value of the data. It's there for more than just absorbing and even understanding it. Wonder if there's a similar site for money managers.

[Tim]

Seeking Alpha and Advisors Perspective.
Economic forecast?
•The Fed (different regions) have the greatest access to data, highly educated brains, and tools tempered with “judgement”. Vastly superior to and academic/private institutions. The problem is their research is available, but their opinions by necessity are carefully worded. I don’t have the training or wisdom to understand it all. Judging their actions is a different task. Their forecasts are probably in a different level regarding quality. Consider the Fed’s unanimous direction reacting to C-19. Alarms sounded, man the life boats, all in immediately. Their dual mandate, employment and growth was 3 levels above the highest alert.
Market Forecast?
No reliable source. Different task.
Back in January I solicited opinions regarding risk:
Healthcare
Economic
Market
I neglected the role of politics. I still don’t have a clue. I only saw significant danger. No one predicted contact tracing because we didn’t even know what C-10 was. All four are elevated risk still and screwups in one will be disastrous in the others. Life goes on. Forecast away!

[Kennyt7]

If in the accumulation phase just keep DCA. If retired, as I am, I took $$$ off the table
This is the worst economy s ince the Great Depression and things will only get worse as many industries suffer and fold and millions unemployed and under employed

[EntrepreneurMD]

16 million unemployed is obviously a good buy signal too, right?

Jobless claims tick up, the market takes a decent hit today. Not a good piece of data today, but it is only one data point and market should recover soon. Jobs jobs jobs. Quite a reliable indicator. We better hope that the unemployment rate continues to fall - that will likely take government resolve for another large stimulus as there is no room for the Fed to work with interest rates (negative rates have not worked well elsewhere).

Where the unemployment rate goes, so will the markets. It can't possibly go back higher can it?

Reminiscent of my vocal prediction last year that this year would see recession. While I largely haven't pulled the trigger, my finger now rests on the caution "sell" button, not the optimistic "buy" button at this time. Perhaps benefit from a double dip? Market timing, or taking a lead from trending data points? New money to be pumped in markets, RE, debt repayment, other? - data translating to action/hedging.

[Andrew Musbach]

Jobless claims tick up, the market takes a decent hit today. Not a good piece of data today, but it is only one data point and market should recover soon. Jobs jobs jobs. Quite a reliable indicator. We better hope that the unemployment rate continues to fall - that will likely take government resolve for another large stimulus as there is no room for the Fed to work with interest rates (negative rates have not worked well elsewhere).

Where the unemployment rate goes, so will the markets. It can't possibly go back higher can it?

Reminiscent of my vocal prediction last year that this year would see recession. While I largely haven't pulled the trigger, my finger now rests on the caution "sell" button, not the optimistic "buy" button at this time. Perhaps benefit from a double dip? Market timing, or taking a lead from trending data points? New money to be pumped in markets, RE, debt repayment, other? - data translating to action/hedging.

My take is slightly different. Market looks out and tries to project what's going to happen in the future and then reacts to news as it comes out and goes up if better than expected and down if worse than expected and no one knows ahead of the data/earnings/fiscal policy/fed involvement, etc. coming out what it will be. At any given point there are a lot of people pointing to a looming recession and citing any number of legitimate sounding reasons and at some point you're going to be right because markets inevitably go through corrections/recessions, but you can be right about what's happening in the economy and wrong about what the stock market does. And then good luck trying to sustainably do this over time. Just look at John Paulson - made a killing off one huge bet (gamble) in 2007 and was thought to be the next star manager. Yet he proceeded to underperform consistently after the one speculative bet and no longer has a hedge fund.

I hope your strategy continues to work out, and who knows, maybe you have a strategy figured out, but I prefer to stick to my boring investment philosophy and tuning out the news

[Random1]

I dont think that taking all investments out is a good choice, but might be a good time to rebalance the portfolio and reassess how heavy you should be in equities.

[Dont_know_mind]

I had 9% cash which I allocated in May to international indexes.

I bought forward future years investments for the rest of this year and next year or about 200k in June and 200k in July and also invested that in international indexes.

In terms of positioning I’m still under allocated and am thinking of bringing forward investments for another year (200k) in the next month or 2.

[Hank]

who else feels like it might be time to deviate from your plan and sell off equities to lock in profits and then wait for an impending crash? I think I will do this for some of our holdings and just let the $’s sit in short term treasury fund. Basically overweight bonds and rebalancing to original AA once things in the market fall apart. I honestly can not see things continuing as is in the next 2 years. If things do not go to ************************ in a hand-basket, will just go back to normal AA in a few years. Could miss out on some gains, but have a potential for bigger gains (IMHO).

How successful have your market timing efforts been over the past few decades?

[ShredtheGnar]

How successful have your market timing efforts been over the past few decades?

Haven’t used market timing before. During the last crash (2009) just had deferrals taken out of paycheck as normal into 401k. Didn’t change the AA. Went way down and got back to it’s pre-crash level after a 3-4 years.

[SuperhandsomeIR]

Just sold some of my index funds. I don’t understand how can the stock be back near feb 2020 values when our GDP is way down and our industry are not necessarily producing the same product as much as before.

[Peds]

Just sold some of my index funds. I don’t understand how can the stock be back near feb 2020 values when our GDP is way down and our industry are not necessarily producing the same product as much as before.

Do you mean changed your AA or rebalanced?

[SuperhandsomeIR]

I’ve liquadated about 40% of my stock holding (all VTI or VTI like index funds) and waiting for the next big plunge which in my opinion will happen some point this year.

[JBME]

then that's market timing and generally not advisable. On April 1 I had the opportunity to sell a bunch of stuff to convert pre-tax money to Roth at a discount since the market wasn't doing well. I didn't do it, thinking in the next few days the market would be worse. Well that turned out to be a big mistake, except I never took anything out of the market so I've gained a lot since April 1 too.

Can't you just pay it forward to everyone else on the forum and tell us a day or two, or even up to a week, when that big plunge is going to happen?

[CordMcNally]

I’ve liquadated about 40% of my stock holding (all VTI or VTI like index funds) and waiting for the next big plunge which in my opinion will happen some point this year.

At what point do you get back in? Is there a certain percentage drop that you're looking for? What if the market doesn't hit it?