What Happens When You Try to Time the Market?

This is a discussion on What Happens When You Try to Time the Market? within the Educational Resources forums, part of the Commercial category; Originally Posted by petetrades Your first sentence in your previous post referred to "Odean", the second referred to "this individual", ...

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Old Jan 20, 2017, 11:45pm   #9
 
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Quote:
Originally Posted by petetrades View Post
Your first sentence in your previous post referred to "Odean", the second referred to "this individual", so it was not clear whom "this individual was". I think you're jumping to a lot of conclusions...which is making me consider jumping to the conclusion that your conflict of interest as a vendor is influencing your judgement.
What I said was "Odean's field of study, however, is behavioral economics, not market timing. Without knowing anything about the models used, the conclusions drawn by this individual are meaningless." Given that Odean's field of study did not include market timing, much less market timing models, the reference to the conclusions drawn by "this individual" re market timing clearly referred to the individual who wrote this article. My being a vendor is immaterial.
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Old Jan 21, 2017, 10:55am   #10
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The evidence has shown that market timing doesn't yield superior results. With that in mind, here are some quotes on market timing from some of the most astute minds in the industry.

Warren Buffett
"We continue to make more money when snoring than when active."

"The only value of stock forecasters is to make fortune-tellers look good."

"My favorite time frame is forever."

Peter Lynch
"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."

"I can't recall ever once having seen the name of a market timer on Forbes' annual list of the richest people in the world. If it were truly possible to predict corrections, you'd think somebody would have made billions by doing it."

Jason Zweig
"Whenever some analyst seems to know what he's talking about, remember that pigs will fly before he'll ever release a full list of his past forecasts, including the bloopers."

Charles Ellis
"'Market timing' is unappealing to long-term investors."

Jonathan Clements
"What to do when the market goes down? Read the opinions of the investment gurus who are quoted in the WSJ. And, as you read, laugh. We all know that the pundits can't predict short-term market movements. Yet there they are, desperately trying to sound intelligent when they really haven't got a clue."

Bernard Baruch
"Only liars manage to always be out during bad times and in during good times."

Mark Rieppe
"Market timing is impossible to perfect."

David L. Babson & Company
"It must be apparent to intelligent investors that if anyone possessed the ability to do so [forecast the immediate trend of stock prices] consistently and accurately he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public."

Financial Publications
"Let's say it clearly: No one knows where the market is going-experts or novices, soothsayers or astrologers. That's the simple truth." -- *Fortune.

"A decade of results throws cold water on the notion that strategists exhibit any special ability to time the markets." ---* The Wall Street Journal.
Quote:
Originally Posted by Mr. Charts View Post
As far as I can see, this article refers to "average" traders/investors and there is no further breakdown.
To demonstrate that the average is poor in relation to indices is fairly meaningless as there are plenty of us who do rather better than the "average". To put it another way, those who have developed and learnt enough to trade for a living, by a self-selecting process of consistent success, are rather better than indices and funds, the returns on which are laughable. Maybe ok for very long term investing if you are sufficiently diversified, but still the returns are poor in comparison.
It's a bit like those academics who believe in EMH and can "prove" it. Skills, knowledge and experience shatter the academic theories in the real world.
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Old Jan 21, 2017, 12:48pm   #11
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sigmund1 - Its an old story that the individual can't beat the market.

But the people who say this is impossible depend on borrowing money from those individuals. So naturally they're not going to say you can do it yourself, make more profit and save yourself a lot of commission.

After all, imagine Ford or General Motors or BMW suggesting we build our own cars.
And yet, people do......
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Old Jan 21, 2017, 12:49pm   #12
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Re: What Happens When You Try to Time the Market?

George Soros is widely considered to be the best trader ever. He lost 4% of his net worth trying to time the market after the Trump rally andclosed the large losing positions to avoid FURTHER losses from trying to time the market. dbphoenix, if you could share some of your personal statistics with trying to time the market it would be very helpful, as there is scant data available in the field of market timing. https://www.bloomberg.com/news/articles/2017-01-12/soros-lost-nearly-1-billion-after-trump-election-wsj-reports
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Old Jan 21, 2017, 1:17pm   #13
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For what my input's worth re George Soros, can there be any relation between the way one of the richest men in the world trades and the way I trade? Seems unlikely that if we just copy what he does we will become rich too.
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Old Jan 21, 2017, 2:34pm   #14
 
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Anecdotes and opinion are not evidence. One market timing model is provided in the Wyckoff thread, but there's little interest in it.

. . . there is little reason for the proponents of either fundamental or technical analysis to worry about the numberless traders speedily adopting the useful methods employed in selecting securities and timing commitments. At least 95% of those who enter the stock market (including the readers of this work) can never be stimulated to study it seriously and logically – the greatest proportion because they haven't the time, or are simply too lazy. The market opinion of this 95% is at heart the perennial human hope to make something for nothing; and the results are, and will continue to be commensurate with the reasonableness of the hope.

– H M Gartley


Market timing is not the chief concern of those who for example are highly leveraged and are unable to control risk. If one is interested in timing the market, he should first understand his market.
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Old Jan 21, 2017, 3:46pm   #15
 
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Promulgating well worn quotations of "wisdom" is convincing if you don't know otherwise from personal experience. FWIW, many years ago I was a dentist in general practice and worked hard to learn and gain the experience of how to be profitable trading the markets. After a few years I sold up in the year 2000 and have traded ever since, consistently profitably (no, I am not profitable on every single trade - no-one can be).
As a consequence I KNOW that trading the way I do is consistently profitable so the opinions of academics and any one else saying timing is useless are inapplicable - to use a polite word.
The years trading part time before 2000 and all the sixteen years since are not some statistical fluke, so I can smile at those quotes, which in fact belong to a different type of market activity.
Like a lot of things in life, method, method, method plus a good dollop of acquired experience resulting in a little bit of decent judgment equal success.
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Old Jan 21, 2017, 4:04pm   #16
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Originally Posted by dbphoenix View Post
Anecdotes and opinion are not evidence. One market timing model is provided in the Wyckoff thread, but there's little interest in it.
Anecdotes of market timing success or failure are evidence, just not quantitative evidence for a scientific study, which this discussion would not qualify as.
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