Recent BG losses, SMT etc. What's up?

adindas

Alexland said:

adindas said:
This phrase might be more suitable for people in the old days where there were less real time news, analytical tools were availbale for free. 

The whole point of 'time in the market' is to avoid such dross from leading investors into taking self destructive actions. Now there is more dross available it's even more important to remember most of us are investing not short term trading.

In reality many fund managers (if not majority of them) do timing the market

Yup and on average over the long term it produces a lower return. Very few fund managers can outperform over multiple decades.

The point here is that many reliable research surveys were done a long time ago, not very recent. You do not even need an acute hedge fund manager to beat the market. There are reasonable number of retailer traders beat the market since the proliferation of low fees trading platforms. These people are exploiting inefficiency in the market. I am not saying majority of people could do that and should be doing that especially if they do not have time to research.

And hedge funds are holding a lot of funds to be hedged against each other. If you just take one fund you could always find one of their funds are performing poorly. But what about their other funds ??

Over a few decades, how many percentage of hedge funds managers have you seen are poor? Compare it to percentage of many pensioners.

For those who do not have time to read the news, do not have time to do research the best option is probably the very well diversified index funds.

This thread is about SMT, not a very well diversified index funds. Those who do and know how to time the market with this sort of stock will outperform the one who just blindly buying it at any price when the price is high knowing that SMT contain a reasonable amount of high growth stocks. It does not need a particular skill to know that when there is recent bad news, high inflation figure is reported, interest rate hikes the high growth stock price, even the good one will drop significantly for a while before they recover.

adindas

Deleted_User said:

adindas said:

How many percentage of hedge funds managers have you seen are poor? Compare it to percentage of many pensioners.

lol ... how many poor pensioners are getting "2% and 20%" of some rich fools' money?

20% over a very long period ?? The performance of the average annualized return of S&P 500 since its inception in 1926 through 2021, a very long time is just 10.49%.

https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

masonic

adindas said:

Over a few decades, how many percentage of hedge funds managers have you seen are poor? Compare it to percentage of many pensioners.

Yes, fund managers make money whether markets are rising or falling, so they are generally quite wealthy. They make their money, indirectly, from investors buying their funds. There aren't many pensioners who could become fund managers.

Alexland

adindas said:

The point here is that many reliable research surveys were done a long time ago, not very recent.

Studies such as Dalbar get updated frequently but it's unavoidable that long term 20 year studies will requite the use of data that is up to 20 years old. Old data is the best long term data we have. Over shorter periods of time the results are more varied.

There are reasonable number of retailer traders beat the market since the proliferation of low fees trading platforms. These people are exploiting inefficiency in the market.

I doubt 'free' platforms has improved the underlying quality of investors and if anything removing the barriers to trade might only encourage more classic behavioural errors.

adindas said:

Over a few decades, how many percentage of hedge funds managers have you seen are poor?

They seem to get rich selling dreams and taking a high cut of other people's money.

adindas said:

This thread is about SMT, not a very well diversified index funds. Those who do and know how to time the market with this sort of stock will outperform the one who just blindly buying it at any price when the price is high knowing that SMT contain a reasonable amount of high growth stocks.

Strategies for timing the market can be refined to backtest to perfection and might work a few times but there's too much random noise to claim it as a skill and when economic circumstances change investment styles can be out of favour for a very long time.

london21

I get where you are coming from but if long term investment ride it out and might come out ok or sell now at a loss.

6 weeks is nothing. 

Thrugelmir

london21 said:

I get where you are coming from but if long term investment ride it out and might come out ok or sell now at a loss.

6 weeks is nothing. 

As I often say there's only two prices that matter. The one you buy at and the one you sell at.  Simply relying on long term performance is no guarantee of being highly successful. Too many variables to be factored into account when investing as an individual.

At the current time a lot could happen in 6 weeks. As there's a cloud of uncertainty that needs to clear. 

adindas

Alexland said:

adindas said:

This thread is about SMT, not a very well diversified index funds. Those who do and know how to time the market with this sort of stock will outperform the one who just blindly buying it at any price when the price is high knowing that SMT contain a reasonable amount of high growth stocks.

Strategies for timing the market can be refined to backtest to perfection and might work a few times but there's too much random noise to claim it as a skill and when economic circumstances change investment styles can be out of favour for a very long time.

It seems the discussion has turned to become the dialogue of the deaf. I  am talking about timing the market of SMT which contain a reasonable number of high growth stocks NOT a very well diversified fund. Just look at their top 10 holdings and the limited number of stocks in their portfolio.

I am not talking about timing the market in perfection, I never suggest people to time the market if it is a very well diversified fund, multi sectors, geographicaly diversified. There are too many variables to exploit the inefficiency in the market.

This is SMT thread. Buying HIGH GROWTH stocks when they are at the peak is insensible. You could hold it for a long time but you do not buy it when they are around the peak. With high growth stocks there a lot of news, catalysts that could help people to make an educated guess. People also time the market when they buy individual stocks. When you see the knife is falling and you are trying to catch it, when you know there is a sector rotation, when you hear an individual stock fail the drug test, not getting approval from authority, missing earning expectation and you buy it immediately it is stupidity.

Alexland said:

They seem to get rich selling dreams and taking a high cut of other people's money.

And it is only insensible person will buy a dream. This is a sort of person who would easily fall into a scammer. You will only use HF managers if they have a track record of beating the market consistantly. Why would you want to use them and pay for it if you could get a better result by doing almost nothing just throw your money into S&P 500 or Vanguard Total Stock Market ETF (VTI) (say).

masonic

adindas said:

This is SMT thread. Buying HIGH GROWTH stocks when they are at the peak is insensible. You could hold it for a long time but you do not buy it when they are around the peak. With high growth stocks there a lot of news, catalysts that could help people to make an educated guess. People also time the market when they buy individual stocks. When you see the knife is falling and you are trying to catch it, when you know there is a sector rotation, when you hear an individual stock fail the drug test, not getting approval from authority, missing earning expectation and you buy it immediately it is stupidity.

This is where armchair traders seem to have a blind spot. A peak is only evident with the benefit of hindsight. If you only have the benefit of past performance, then SMT will appear to be at or around its peak at most times since 2008. If you buy the dips and then sell when it returns to 'at and around its peak', you'd have briefly traded in and out of the share a couple of times in 2018-19 (missing the intervening 300% growth), then again for the Covid crash, but would you really have sold above the point it currently stands today? A 25-30% crash followed by a rapid 80% gain would look very much like another peak that should be avoided, yet that would still put you below today's price. And I don't think anyone can speculate whether today's price represents a good entry point, or there is further to fall.

That is not to say I disagree with you that going all-in on a high conviction fund like this after it has more than doubled in value in a short space of time would be highly risky. Building a position over time would be sensible in such a situation if you wanted to hold over the long term. Then allow rebalancing to do the market timing work for you.

Alexland

adindas said:

I  am talking about timing the market of SMT which contain a reasonable number of high growth stocks NOT a very well diversified fund. Just look at their top 10 holdings and the limited number of stocks in their portfolio.

I never suggested SMT was diversified - it's clearly a concentrated portfolio that has been riding the recent growth tech wave. There's nothing particularly special about SMT investors that make them immune to general behavioural errors. Think back to that anecdote about how the average investor in Fidelity's Magellan fund debatably might have managed to overall lose money despite the fund generating impressive returns. Studies such as Dalbar suggest that self destructive behavioural errors can reduce long term returns for the average investor by around 50%. As masonic says it's easy to look at a graph of SMT going up and down and convince yourself you have a strategy to buy and sell it that's going to work perfectly. It seems more likely this will be successful on something that has no overall upwards direction like the FTSE100 in recent years but overall market timing is not a great long term strategy.

adindas

masonic said:

If you only have the benefit of past performance, then SMT will appear to be at or around its peak at most times since 2008. If you buy the dips and then sell when it returns to 'at and around its peak', you'd have briefly traded in and out of the share a couple of times in 2018-19 (missing the intervening 300% growth), then again for the Covid crash, but would you really have sold above the point it currently stands today? A 25-30% crash followed by a rapid 80% gain would look very much like another peak that should be avoided, yet that would still put you below today's price. And I don't think anyone can speculate whether today's price represents a good entry point, or there is further to fall.

That is not to say I disagree with you that going all-in on a high conviction fund like this after it has more than doubled in value in a short space of time would be highly risky. Building a position over time would be sensible in such a situation if you wanted to hold over the long term. Then allow rebalancing to do the market timing work for you.

My reference here is about timing the market of SMT which contain a reasonable number of high growth stocks, or individual stock NOT a very well diversified fund. Also not to time the market in perfection where you have to get it right 100% at the very bottom.

People buy the dip and sell the rip and use the money for another trade or put the money into saving account for a while to re-enter later. Also I never say you will have to sell it when you believe in the long term prospect of that investment. The assumption that people are naive to sell it at random point just because the price drop without looking other factor such as news, doing their own analysis looking into wallstreet analyst price target is woefully irrational.

And using your suggestion above to keep it and the let the market do that for you, for SMT and individual stock buy at random point even at around the peak not to buy the dip, this is where you get people are holding the bag like you see some are here.

https://forums.moneysavingexpert.com/discussion/comment/78856126#Comment_78856126

masonic said:

. And I don't think anyone can speculate whether today's price represents a good entry point, or there is further to fall.

That is not to say I disagree with you that going all-in on a high conviction fund like this after it has more than doubled in value in a short space of time would be highly risky. Building a position over time would be sensible in such a situation if you wanted to hold over the long term. Then allow rebalancing to do the market timing work for you.

I correct it NOT EVERYONE, can speculate or want to speculate whether today's price represents a good entry point, or there is further to fall for individual stock. Again I am not refering to a very well diversified fund.

What about the news, catalysts, disruption from activists, missing earning expectation, fail the drug test, not getting approval from authority, new manager a person who get criminal conviction before, many insiders, whales are dumping their stocks, when you know many whales are shorting that particular stock, the FED are reducing their bond buying, higher Inflation than expected, the interest hike higher than expected you name it. When you know something like this and you just jump in buy it immediately just because you have money to invest at that time without investigating further, is a stupidity. It is entirely different if you do not know because you do not read the news before opening or adding new position. That is of course fine for that person as he is investing his own money. 

And in the previous link I have shown almost all hedge fund managers are timing the market when buying individual stock on particular day, not blindly enter at any point on that day. That is where the technical analysis, real time company news, real time stock market news, wallstreet analyst price target, etc are in used. Keep in mind the thing like technical analysis is a probabilistic model it does not have to be 100% right to get a better gain compare to those who do not time the market. In many M&A some people do time the market they withdraw some money from the acquiring company and add new position on the acquired company before the merger is completed. In many SPAC stocks some people do time the market they buy it before the merger if the price below NAV sell it when they are about to merge and re-enter again when they believe in that stock for long term holding after the ticker symbol change.