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Confession: I am a 'market timer'

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  • Confession: I am a 'market timer'

    For some reason I think that I can 'time the market' and buy when the price is low.

    So twice a month, I transfer several thousand dollars from checking into Vanguard Federal Money market and park it for up to two weeks. Then within the next two weeks I invest it [mostly in VTI as my investment plan has laid out]. I usually invest at the end of the market day when the market has fallen by up to -1%.

    This whole exercise is to prove to myself that I can't figure out when the market will be up or down, but it allow me to think I have some control over when the money goes into the market. Another way to put it is that it allows me to 'scratch that itch' that is market timing.

    The one thing I certainly have learned over the last 10 years of investing is that a dollar invested yesterday is the best dollar.

  • #2
    Far from the worst thing you could do. As long as you're not selling anything, probably not much cash drag there.

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    • #3
      Originally posted by childay View Post
      Far from the worst thing you could do. As long as you're not selling anything, probably not much cash drag there.
      Yeah, I mean it might "feel" good and is probably harmless so go for it. I think most of us do this, at least a little.

      The issue would be if you waited months to invest or were actively selling (creating capital gains) and buying hundreds of thousands in an attempt to beat the market. You would be competing with giants.

      As you said the best thing would be just to throw in a bunch early, but we cannot invest what we have yet to be paid so we invest little by little month by month and hopefully leave it alone for years and years. When during the month it goes in is probably pretty harmless and irrelevant over the long term.

      As they always say: "Time in beats timing"

      Another saying they should say is: "Just don't sell" (unless your are rebalancing in your IRA or TLH etc.)

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      • #4
        As long as you get it in before the next two week inflow, you are good.

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        • #5
          Originally posted by Tangler View Post
          The issue would be if you waited months to invest
          Is waiting months really that bad? Like what if my IPS called for quarterly investments, disregarding what the market is doing at the time?

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          • #6
            Originally posted by pierre View Post

            Is waiting months really that bad? Like what if my IPS called for quarterly investments, disregarding what the market is doing at the time?
            Not that bad either IMO. I tend to do taxable in lump sums. Mostly bc spouse gets hopefully large quarterly bonuses. But at times have definitely held too much cash which I have tried to me more mindful of in recent years

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            • #7
              Originally posted by pierre View Post

              Is waiting months really that bad? Like what if my IPS called for quarterly investments, disregarding what the market is doing at the time?
              It’s best to invest when you’ve got the money. If, for whatever reason, investing quarterly is what you have to do then do that.

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              • #8
                I do something similar with my taxable account. My Roth IRA monies get invested January 1/2, and my 403b and 457b contributions are made automatically every 2 weeks. With my taxable account, however, I save up until I have $10,000 and then send it to my MMF/sweep account. It takes a few days for it to be tradeable, and then I usually wait for a day that looks like VOO or VTI are dropping, and then buy. Over the grand scheme of things it probably matters next to nothing, but I like seeing the value go up right away, even though it’s only a few bucks.

                As an aside, what are the minimum amounts that people are adding to their taxable account? Is it just a time thing (every quarter like mentioned above), or is it when you reach a certain dollar threshold? Just curious what others do.

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                • #9
                  Originally posted by MaxPower View Post
                  As an aside, what are the minimum amounts that people are adding to their taxable account? Is it just a time thing (every quarter like mentioned above), or is it when you reach a certain dollar threshold? Just curious what others do.
                  Ive gone back and forth between just doing it monthly and using a $5k threshold, ultimately settling on just dumping the money in when I have at least $5k. Ends up with me making deposits about twice a month, one large (bonus) and one smaller (salary)

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                  • #10
                    I had built an opportunistic CD ladder. After regular monthly contributions to 401k, 529, HSA and funding a Roth IRA, we have additional savings. If the market dips 5%, I use them to buy. If the market doesn’t dip, they used to go into a CD. I’d set up the CDs to mature once a quarter. This would give me chunks to nibble with if the market dips. This strategy used to work great, but now a decent rate is no where to be found and the market hasn’t really dipped, ergo, I now have a ~15% cash, which is towards the high end of where I like to balance.

                    There are days where I reflect back on what an additional 10% in the market would mean today, and then there are days where I look at the capital gains I have accumulated by buying the 40% dip with this strategy. I think as long as you are making your foundational, routine contributions you are set, and if you want to have some play money and liquidity, it’s not going to kill you. Just know you’re not doing what you’re told (which I admit)

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                    • #11
                      I tend to hold too much cash, I usually bonus out on a quarterly basis, I put it in a Vanguard MM fund which I have set up for automatic withdrawals split between several funds. In the past I used to think I was smart and good at picking the next best thing. and buy some stocks or etfs, usually what I read about recently. Years ago the money magazines were a bad influence on my investment behavior. Looking back I probably would have been better off buying a S&P or TMI fund. But at the time , you feel like you have the edge , especially when the market is going up. I sleep better at night on autopilot with the auto invest rather than lump sum and that way I dont look back and get annoyed with poor market timing.

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                      • #12
                        In taxable my minimum investment is $5k. Most months that is a bimonthly draw. It all depends on cash flow, estimated quarterly tax payments etc.

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                        • #13
                          I'm a stock Picker, but only for a very small portion of my portfolio. Gotta have some fun and excitement in life.

                          cd :O)
                          Yet those who wait for the LORD Will gain new strength; They will mount up with wings like eagles, They will run and not get tired, They will walk and not become weary. -- Isaiah 40:31

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                          • #14
                            Everybody does this in their cash account (buys with limit orders, buys dips, etc). You would be dumb not to.

                            If you are buying mostly or all just VTI, you are still more conservative than 90% of people here. No worries.

                            In addition to index/401 buying, the majority of investors buy single stocks (in IRA, cash, etc accts), most sell call/put options, a few do metals, even fewer do crypto or buy calls/puts, very rare FOREX guys, etc. Overall, this forum is far more conservative than most (index and RE funds advised basically... some even use bonds).

                            Figure out what works for you and enjoy it. VTI is steady and solid... buy always, buy more on dips, start to back the truck up on a crash. No worries.

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                            • #15
                              Originally posted by Max Power View Post
                              Everybody does this in their cash account (buys with limit orders, buys dips, etc). You would be dumb not to.

                              If you are buying mostly or all just VTI, you are still more conservative than 90% of people here. No worries.

                              In addition to index/401 buying, the majority of investors buy single stocks (in IRA, cash, etc accts), most sell call/put options, a few do metals, even fewer do crypto or buy calls/puts, very rare FOREX guys, etc. Overall, this forum is far more conservative than most (index and RE funds advised basically... some even use bonds).

                              Figure out what works for you and enjoy it. VTI is steady and solid... buy always, buy more on dips, start to back the truck up on a crash. No worries.
                              I highly doubt 90% of wci forum invests in single stocks and most do options

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