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; We've just published a new T2W article called " What Happens When You Try to Time the Market? " by ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jan 13, 2017, 1:00pm   #1
The Staff are paid members that perform various roles such as editorial, advertising, support or technical work.
 
T2W Bot's Avatar
Joined Dec 2004
What Happens When You Try to Time the Market?

We've just published a new T2W article called "What Happens When You Try to Time the Market?" by James D. Di Virgilio .

Quick Summary: James Di Virgilio discusses the performance findings for those who pursue a strategy that relies on predicting market timing.

PS. Don't forget to rate the article after you've read it and share your comments on this thread.
T2W Bot is offline   Reply With Quote
Thanks! The following members like this post: sigmund1 , foroom lluzers
Old Jan 13, 2017, 7:47pm   #2
Joined Feb 2002
Re: What Happens When You Try to Time the Market?

Interesting research, and I found some more interesting material from Berkeley online which supports Odean's conclusions.

I recognise some traits from my early days as a shareholder, before I committed to TA and spreadbetting. Needless to say, I don't invest that way any longer.
tomorton is offline   Reply With Quote
Old Jan 13, 2017, 7:49pm   #3
 
dbphoenix's Avatar
Joined Aug 2003
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.
__________________
Trading Price
dbphoenix is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Old Jan 15, 2017, 12:53am   #4
Joined Jul 2014
Quote:
Originally Posted by dbphoenix View Post
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.
Incorrect, there is no market timing field of study in academia and there is no evidence that he is ignorant of market timing data. Therefore it is a red herring and an ad hominem to suggest that Odean's conclusions are meaningless.
petetrades is offline   Reply With Quote
Old Jan 19, 2017, 3:08pm   #5
 
Mr. Charts's Avatar
Joined Sep 2001
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.
__________________
Mr. Charts
Full time US Share Trader
Follow me on Twitter twitter.com/MrChartsJoyson

Contributor to T2W's Trading FAQ Book
http://www.trade2win.com/books/trading-faqs

T2W interview

http://www.trade2win.com/knowledge/a...ichard-joyson/
Mr. Charts is offline Coach/Trainer   Reply With Quote
Old Jan 20, 2017, 3:09pm   #6
Joined Dec 2004
Quote:
Originally Posted by dbphoenix View Post
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.
I read a lot of the stuff Odean has done as part of my own PhD work. To call his conclusions meaningless is unfair. Yes, the methods matter and I have my own challenges to elements of what he's done. We have to keep in mind that he (and his research partners) have been among the first to look at trading rather than investing. The field of study is still in its relative infancy. As with any newer subject, the first step is to look at things in broad terms. Eventually more narrow exploration occurs - which is beginning to bubble up now. Lots of work yet to be done.
__________________
John Forman, PhD
Author - Trading FAQs, The Essentials of Trading
Rhody Trader is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Old Jan 20, 2017, 4:02pm   #7
 
dbphoenix's Avatar
Joined Aug 2003
Quote:
Originally Posted by Rhody Trader View Post
I read a lot of the stuff Odean has done as part of my own PhD work. To call his conclusions meaningless is unfair. Yes, the methods matter and I have my own challenges to elements of what he's done. We have to keep in mind that he (and his research partners) have been among the first to look at trading rather than investing. The field of study is still in its relative infancy. As with any newer subject, the first step is to look at things in broad terms. Eventually more narrow exploration occurs - which is beginning to bubble up now. Lots of work yet to be done.
I didn't say that Odean's conclusions were meaningless. I said that the conclusions drawn by the author of this article that were allegedly based on Odean's work were meaningless. Given DiVirgilio's shallow understanding of market timing, I suspect that he didn't get past Odean's study summaries, assuming that he actually read anything at all of the source material rather than others' opinions of it.
__________________
Trading Price
dbphoenix is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Old Jan 20, 2017, 10:31pm   #8
Joined Jul 2014
Quote:
Originally Posted by dbphoenix View Post
I didn't say that Odean's conclusions were meaningless. I said that the conclusions drawn by the author of this article that were allegedly based on Odean's work were meaningless. Given DiVirgilio's shallow understanding of market timing, I suspect that he didn't get past Odean's study summaries, assuming that he actually read anything at all of the source material rather than others' opinions of it.
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.
petetrades is offline   Reply With Quote
Old Jan 20, 2017, 10:45pm   #9
 
dbphoenix's Avatar
Joined Aug 2003
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.
__________________
Trading Price
dbphoenix is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Old Jan 21, 2017, 9:55am   #10
Joined Aug 2016
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.
sigmund1 is offline   Reply With Quote
Old Jan 21, 2017, 11:48am   #11
Joined Feb 2002
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......
tomorton is offline   Reply With Quote
Thanks! The following members like this post: Mr. Charts
Old Jan 21, 2017, 11:49am   #12
Joined Jul 2014
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
petetrades is offline   Reply With Quote
Old Jan 21, 2017, 12:17pm   #13
Joined Feb 2002
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.
tomorton is offline   Reply With Quote
Old Jan 21, 2017, 1:34pm   #14
 
dbphoenix's Avatar
Joined Aug 2003
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.
__________________
Trading Price
dbphoenix is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Thanks! The following members like this post: Mr. Charts
Old Jan 21, 2017, 2:46pm   #15
 
Mr. Charts's Avatar
Joined Sep 2001
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.
__________________
Mr. Charts
Full time US Share Trader
Follow me on Twitter twitter.com/MrChartsJoyson

Contributor to T2W's Trading FAQ Book
http://www.trade2win.com/books/trading-faqs

T2W interview

http://www.trade2win.com/knowledge/a...ichard-joyson/
Mr. Charts is offline Coach/Trainer   Reply With Quote
Thanks! The following members like this post: dbphoenix
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)