Selling everything when the market reaches a new all time high

AnotherJoe

jimjames wrote: »

Without putting words in bigfrediel's mouth I'm assuming they meant that what's a new high today might not be tomorrow.

Well yes if we assume he meant something opposite what he wrote, then perhaps, but since the point of the OP was to explore selling when the index reached an all time high, thats not really of interest. The OP would wait until it had dropped 10% (according to one post) below the all time high at which the stocks were sold. Subsequent ATH's wouldnt matter as he'd be waiting for a fall to 10% below the first ATH. That might of course lead to a humungously long wait with no dividends in the meantime and a loss of value of cash due to inflation.

As simple thought experiment would show that's not a good plan anyway, if it was, first it would be well understood with everyone doing it algorithmically (whether its 10% or some other number) and second if that happened it would be counterproductive as the mass effect of such coordinated buys and sells would wipe out the effect.

I guess the closest to such a simple rule might be the "sell in May and go away"? but that wouldn't have worked well this year

System

I like to ride out the storm rather than time the market. I'm keeping my compounding monthly direct debits and hopefully the divendends will keep paying out.

Or am I too lazy to log onto my account?

AnotherJoe

Superscrooge wrote: »

The below game generates a random 10 year history of the S & P index and invites you to choose when to sell and when to buy back into the index. Whilst you can on occasions 'time the market', it is surprisingly difficult.

http://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/

Fantastic little game.

Glen_Clark

AnotherJoe wrote: »

US Markets are at an all time high

I'm aware of that, but the recent rise in share prices we have seen in Britain is more to do with the fall in the pound that the rise in US markets.

fairleads

And that's what the website is - a game.

System

I'm selling this week before the turn.....

AnotherJoe

fairleads wrote: »

And that's what the website is - a game.

On one level but since it uses real data, it's a great illustration of how difficult it is to time the market.

Glen_Clark wrote: »

I'm aware of that, but the recent rise in share prices we have seen in Britain is more to do with the fall in the pound that the rise in US markets.

Not the point at issue, its a clear illustration of how difficult it is to time the market due to events of all types affecting prices. Doesn't matter why prices are high or low, the issue is how clever are you at guessing/ predicting what it's going to do.

Glen_Clark

AnotherJoe wrote: »

Doesn't matter why prices are high or low, the issue is how clever are you at guessing/ predicting what it's going to do.

Prices are high mainly because of the fall in the value of the pound. I can't see anything that will make the pound recover anytime soon. Can you?

Ray_Singh-Blue

The algorithm in question has two parts:

1) sell everything when the market reaches an all time high
2) then buy back in when the market dips below 90% of whatever the new all time high becomes.

High point in part 2 will be higher than in part 1. By how much, is (one of) the gamble(s).

EdGasket

If you had sold on a relative high in 1980, you'd have missed out on a 20-year bull run and never been able to get back in. At the moment interest rates are stupidly low so there is nothing else to invest in anyway. If inflation takes off then shares will benefit but cash investments won't. These are all things to consider. I try to sell individual shares that are on a high and buy ones that are out of fashion but often I'd have done better keeping the winners longer.