More on market timing and going into cash

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More on market timing and going into cash

On Saturday I wrote:

About 10 days ago (July 8th) nearly everyone was worried the world was coming to an end. Greece, the euro, the EU, and Europe were going to crash, and the Chinese markets were in a tailspin, and everyone was spinning how that would mean disaster for US companies doing business in China. There was a lot of talk about raising your cash levels in preparation for the coming Bear Market, or at least a correction, and a lot of talk about how long it’s been since the last correction, and how old the Bull is. I was at +31.5% for the year. I stayed fully invested…Now, 10 days later, all those things are (temporarily at least) in the rear-view mirror, and I am at +40.6% for the year.

Clearly July 8th should have been the time to go into cash and protect yourself. The market was falling. Everyone was explaining all the huge problems that were coming. People have written posts on this board talking about all the reasons we should be in cash, in addition to Greece, the euro, the EU, and Europe were going to crash, and the Chinese markets were in a tailspin, and everyone was spinning how that would mean disaster for US companies doing business in China that I mentioned. Things like: the deficit, the Fed raising interest rates, the rising dollar, commodity producers… etc etc.

Now it’s two market days later and I’m +44.4% on the year. Not quite two weeks after the “end of the world”. That’s 13% more than I was up two weeks ago. (The S&P 500 is still up just under 3.0% on the year, by the way). Lot’s of our stocks have contributed to my rise. Here are a few, with comparisons, not to the beginning of the year, but to July 8:

AMBA up 21.4%
ABMD up 17.4%
ANET up 7.9%
BOFI up 10.7%
CELG up 17.5%
INBK up 16.9%
INFN up 7.9%
SWKS up 8.8%
SKX up 9.8%
SEDG up 9.8%
etc

Sometimes I wonder what the S&P tracks to get such poor results?

:wink:

Saul

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More power to you Saul! I certainly agree that bull markets are fun and America is the only place to go. I see that even with a knock to SWKS and PII, I am well up today. Long may the good times roll.

In answer to your question: the S&P tracks companies with currency problems, oil problems and other problems. Let’s try to avoid problems.

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And Sketchers at an all time high today despite general market weakness.
As it is for indices, new highs are a good sign for the next couple of months at least.

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Nevertheless Saul, I cannot resist mentioning that my holding in SPY is up 174% or 27% annualised.

Not too shabby for a tracker with poor results!

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OK,
I’ve been thinking of doing this for a couple weeks, but Saul’s last update has pushed me over the edge.

I have a full position in a company that’s down around 30% for me. Long term bullish on the company recovering and doing quite well. But, think it will take a couple years to get there.

So, I just sold that full position and will re-invest it in to get to a full position in SWKS which I currently only have a partial position in.

The trick for me now will be NOT watching the other company and constantly comparing their performance.

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Hey fools - just a humble opinion. I honestly don’t think anyone can time the market. Sure, there’s been people that have called the internet bubble crash, financial crash, etc. but if you make 10,000 + predictions, you will surely stumble on one that actually happens.

I might be dating myself but three quick stories on when you should be buying into the market:

  1. 1987 and crash just happened. I was interviewing for a stock broker position. Asked question to the guy; don’t you think it is the worst time to be a stock broker? Answer: it is the absolute best time to be one. Challenge is convincing your clientele to buy.

  2. Internet circa 1999ish, lady on elevator told me (she was an admin and no offense to any admin’s out there but she didn’t no boo on stocks) to back up the truck on Amazon. It crashed, burned, and then we all know thrived. Wish I could of bought it then.

  3. Circa late 2008; wife asks me why we aren’t selling out of any stocks as each day we were losing big. Told her, it’s too late, we missed the boat, we have to ride this one out. One example of riding it out; watched a mattress firm, SCSS, go from $25 bucks to .25 cents, and now sits at $29ish. Wish I was smart enough to buy it at .25/30 cents but wasn’t dumb enough to sell it.

Sox Nation

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So, I just sold that full position and will re-invest it in to get to a full position in SWKS which I currently only have a partial position in. The trick for me now will be NOT watching the other company and constantly comparing their performance.

Tim, the trick is to accept that all your decisions won’t be correct. You are just doing the best you can at the time. As for the company you sold, since you don’t own it any more it doesn’t matter what it does or doesn’t do… there are plenty of other companies in the market that you haven’t even heard of that will do well too. So what?

saul

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Tim, the trick is to accept that all your decisions won’t be correct. You are just doing the best you can at the time.

A good rule for life in general.

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Well I rec’d it. NOTE: ^GSPC is S&P 500. 2005-2015

Minimum price
GSPC…$735.09

Maximum price occurred on
Jul-01-2015

Maximum price
GSPC…$2,114.15

Average percent return for all possible buy and sell combinations
21.74%

Number returns
7,260

Number profitable returns (Winners)
5,321

Percent profitable returns
73.29%

Number unprofitable returns (Losers)
1,939

Percent unprofitable returns
26.71%

Winners to losers ratio Stock Return Map
2.74
http://www.buyupside.com/stockreturncalculator/stockreturnca…

You can do that for any stock. It can be humbling.

Only will say that at times I have traded the hell out of certain stocks but this is not that kind of market. This market will not bail you out of your mistakes, circa 1998-2001. Ballard Power Systems, a personal favorite and an ATM. This market good news is good news and bad news is bad news and rewarded and punished as such. Entirely different, probably better, market. Probably.

Greece, that ongoing fraud. :slight_smile: The attention devoted to that Nothingness by so-called experts was criminal. Nice post.

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…Hey fools - just a humble opinion. I honestly don’t think anyone can time the market…

Well these Fools didn’t try to time Amazon and,

The Motley Fool Celebrates a 100-Bagger
By Motley Fool Staff, Tom Gardner, and David Gardner
March 13, 2014
http://www.fool.com/investing/general/2014/03/13/the-motley-…

A lot more than a measly 100 bagger by now, I suppose. Anyone who can watch that video and tell me how they picked Bezos (revenues $16 million Q3 1997–revenues) out of the thousand Bezos wannabes, please do share.

But the amazing thing is how they held that thing down to $7 apparently without flinching. If you know how, please do share.

And the old Rule Breaker used to be pretty good at timing and trading hot stocks. Not that kind of market anymore, will not normally bail you out of your mistakes. Anyone who thinks they can market time over long periods is either fooling themselves or is Warren Buffett. And even he lately, of the IBM 11 billion dollar mistake, meh. Oh, they say it isn’t a mistake. Yet another buying opportunity at these low, low prices. Four years later. Yep. Whistling past the graveyard a popular past time for some investors. Oh hell, the market will bail me out. Good luck with all that over an investing career.

Just punch in those stock symbols for winner/loser combinations. The real results, over time, tend to be humbling.

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But the amazing thing is how they held that thing down to $7 apparently without flinching. If you know how, please do share.

Hi CheeryO, That’s easy to answer. They could hold it because it wasn’t real money, it was just a recommendation. They could recommend it and forget about it. If it was your real money and You lost 95% of your value that’s a completely different animal.
Saul

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Touche, Saul.

That’s what makes this board unique. We’re playing with real money and real people’'s investment lives. Not just recommendations.

Anyone who recommends a stock has infinitely more credibility with me if they are investing their own money into their recommendations.

Jim

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Hi CheeryO, That’s easy to answer. They could hold it because it wasn’t real money, it was just a recommendation.

No, the RuleBreaker portfolio was a real money portfolio. The actually bought positions (I think each began with $25,000) as they recommended them.

THE RULE BREAKER PORTFOLIO is, most importantly, a real-money portfolio. The bucks you see us reporting in each of our trades are lean, green, and Foolishly mean, accepted at all fine establishments, bar none. Take comfort, first of all, in knowing that we have our own money down on the table on every trade we make.
http://www.fool.com/portfolios/RuleBreaker/Introduction.htm

For the record, the RuleBreakers portfolio also recommended (and bought) AOL, Amgen, eBay, PayPal and Starbucks, among others. They had several that turned to dust, but that was the thesis of the portfolio: some would crash, but the winners would be so stellar that it wouldn’t matter.

But the amazing thing is how they held that thing down to $7 apparently without flinching. If you know how, please do share.

The mantra of the Fool at that time (and perhaps today, I don’t know) was “Buy and Hold Forever.” Part of the philosophy was to do a lot of your own due diligence (ignore the daily whip saw nonsense of the market, the chattering heads on TV, etc.) and then buy and HOLD. I know that philosophy was carved in stone, at least at the time, because I remember being clubbed with it in the early days on the AOL chatboards, even before they migrated to the web.

Now with three branded Fool mutual funds, I would guess they have eased up on that, but perhaps not. As I say, I don’t peek behind the “paid” curtain nor am I a participant in the mutual funds, although they have done exceptionally well.

Clearly July 8th should have been the time to go into cash and protect yourself. The market was falling. Everyone was explaining all the huge problems that were coming. People have written posts on this board talking about all the reasons we should be in cash, in addition to Greece, the euro, the EU, and Europe were going to crash, and the Chinese markets were in a tailspin, and everyone was spinning how that would mean disaster for US companies doing business in China that I mentioned. Things like: the deficit, the Fed raising interest rates, the rising dollar, commodity producers… etc etc.

Oh nonsense. This is noise. There are always things you can point to, just as there is always snow on the mountain. It’s safe to ski, right up until it isn’t. If you wait for the avalanche to begin before you ski, you will be sitting in the lodge for years, sometimes decades. The trick is seeing when the snow begins to move. Emphasis on “begins.”

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I think perhaps I won’t come skiing with you.

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