Trading/Timing the Market

coastline

John_G_Jones wrote: »

For anyone unfamiliar with the weasel words of technical analysts, the “could” in the final sentence above is all that you need to know.

Read back the statements of people in this field, analyse them, and they contain literally no information.

What possible use is a “could” or a “might”?

If the subject had any validity at all it would be filled with statements such as “this stock has a 20% higher chance of going up by 10% than down by 10% over the next five business days as shown by this pattern. Here is the detailed analysis that shows the frequency that that pattern has occurred over all assets in the last decade and the distribution that prices took afterwards.”

The icing on the cake for it being rubbish in this particular case is that the meaning,ses statement is followed by a cherry-picked single example where it would have been the right thing to do.

And yes, I do work in the markets and no, I do not use technical analysis.

If only you had quoted my next sentence " The lower indicators on charts can give decent signals but they won't work all of the time otherwise everyone would use them."
I've never claimed on this forum that charts and indicators are all you need for successful results in stock markets but in my experience over decades they have been very useful.
You can apply the words "could " or "might " to just about everything in life as there ain't many guarantees as far as I can see.
Could Man Utd win the league ? Well they might if Liverpool and Man City slip up ?
Could I employ an IFA to help me invest in the markets. Well you could but DIY might just be as rewarding.?
Could I survive if I jumped off a cliff ? Well you might if you have a nice landing ?
I posted as ever in good faith and I find your words a bit harsh.
I've never studied technical analysis but I began to look at it when the financial internet came along . Free charting packages are available on many websites and they've helped me immensely.
You suggest my links are " cherry picking " but many charting websites don't allow you to copy and paste chart links with lower indicators included. I was lucky to find one so that is the reason for a 1 year view of 2018-2019.

cloud_dog

Ah TA.... The religious crusades of the financial world.

Disclosure: I use TA for some of my trading. Note, it is not a panacea, it is not absolute.

nrsql

He is trading on volatility.
The idea is that the market will go up them come down continually.
That works over most short term periods - even intra-day.
The problem is determining the time period and limits.
Like most algorithms it works fine when the market is fairly stable and you It fails when the market leaves those constraints. Usually it will rise fairly quickly (bubble) which you will miss because you would think it had peaked - but will buy back in to catch the gains (where is the top), then it will fall very quickly and far - too quickly to be caught by a stop loss and you end up out of the market when it recovers (where is the bottom).

This sort of thing is usually ok but problematic but prone to incorrect decisions when the market becomes more chaotic.
Saying that as a feeder to a more defensive portfolio it might be ok but that's just luck as to when you start it.

If it was that easy it would be priced out.

Malthusian

David_Evans wrote: »

I think it is possible to make general observations about the market.
eg 2009-10 was an obvious low point to buy equities.

No it wasn't. If it was an obvious low point then it wouldn't have been a low point in the first place.

In mid-2009 everyone agreed that the bursting of the debt bubble would take a decade to unwind, the corresponding recession would last for a decade, the Baltic Dry Index indicated a total shutdown of world trade, and the only investment worth investing in if you had any sense was cash or maybe AAA-rated government bonds if you were feeling adventurous.

If you don't believe me, pick up an actual newspaper from 2009 instead of viewing Google Finance through 2019-shaped glasses and saying "well obviously it was a no-brainer to invest when the FTSE was at 3,500".

Likewise the peak of the gold price and then the Bitcoin nonsense.

What specifically was obvious? To sell gold at its peak of £345 an ounce in 2006 and then watch as it went up to £1,160 five years later?

To sell Bitcoin at its peak of $2,800 in 2017 before the second round of nonsense started and drove it up to $17,000? It clearly wasn't obvious that you should sell Bitcoin at $17,000 because virtually nobody did. That's how the maths works.

I reduced my US equities in 2017 because the FAANGs looked expensive.

Since when, even if you sold at the peak of 2017, the S&P 500 is up 6%.

The two recent stock market drops (Feb 18 and Oct 18) were widely predicted.

So were the market drops of late 2009, 2010, 2011, 2012, 2013, 2014, etc etc etc.

HardCoreProgrammer

I saw the thread earlier this week but was too busy to comment.

It really gets on my nerves when people keep saying "it is time in the market, not timing the market" or "timing is everything" as if it is the 11th commandment.

For example, US stock markets is ridiculously high, and the country is led by an unpredictable madman. If you are coming up to retirement, would you keep all your money in US funds until retirement and hope for the best? I think most people would not.

Note that re-balancing (which I do annually) is a kind of timing the market as well. In effect, you are selling what has been doing well since the last re-balance, and buying what has not been doing well.

At the end of the day, you have to make a choice based on the risk you can stomach. I really wish that people are less dogmatic.

Thrugelmir

HardCoreProgrammer wrote: »

For example, US stock markets is ridiculously high, and the country is led by an unpredictable madman. If you are coming up to retirement, would you keep all your money in US funds until retirement and hope for the best? I think most people would not.

A better market than China. Where official statistics are massaged and therefore reality is clouded in a fog. Likewise a pile of debt.

Or Europe where growth has been spluttering for some time.

Personal view is that's time to be very selective with a focus on individual stocks rather than broader indices. .

JohnRo

The idea is very seductive, especially to the impatient.

It might even be successful short to mid term but eventually he will sell and get locked out and then have to decide when to buy back in at a higher price or wait.. and wait... and wait.

The dilemma at that point switches from getting out with a profit, which is easy, to one of deciding when to get back in at a higher price (with a relative loss) which is incredibly difficult because the mindset that led him down this path in the first place is to buy the lows which are always just around the next corner.

The wheels start to come off when there aren't any noteworthy dips to buy and prices are generally rising for a protracted period. Then just keep rising and keep rising and that blasted long overdue correction doesn't come.

All the time he is out of a rising market the 'lost gains' are mounting, at what point does he then capitualte and buy back in at a higher price, giving back all those earlier gains and potentially more.

Or does he just keep waiting for the big one which may never come?

There problem with piling into the big one is that the entire cause of it in the first place is because the reasons to avoid investing at that point are compelling. Which means he'd almost certainly miss the bottom and most likely by some distance.

It bears a striking resemblence to the tortoise and the hare fable. Far less risky, stressful, time consuming and costly to just hold fast and keep ploughing on steadily imo.

EdGasketTheSecond

I think it is more likely to work buying undervalued shares and selling them when they have recovered or look expensive compared to others. Timing the market as a whole is very difficult; probably impossible to get right. If that were not true then spread-bettors would not in general lose 90% of the time. (by which I mean that 90% of SB accounts make a loss).

Thrugelmir

EdGasketTheSecond wrote: »

I think it is more likely to work buying undervalued shares and selling them when they have recovered or look expensive compared to others.

How you determine when a share is undervalued. Share prices are driven by opinion. Based on known facts.

bostonerimus

Trading and market timing are great when they work and a fast way to poverty when they fail.
Your husband is emboldened by his success and that can be dangerous. The bigger issue might be your different approach to money and the friction that can cause in a marriage.