chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 14, 2022 5:27:14 GMT 7
You can't help yourself, can you! According to you, timing the market involves any change in holdings, no matter how small, as a result of changing conditions or needs, even conditions or needs over the long term. By definition this must mean that at least 50% of Fund Managers attempt to time the market. According to you, an increase in equities holdings from 40% to 50% at the expense of less risky bonds, is timing the market. It couldn't possibly be tweaking the strategy because once declared the strategy must never be adjusted because real men investors don't do that. Instead, they just grit their teeth and hold onto the rail as markets dive and afterwards they can tell everyone how they kept their nerve and years later be proved they were right to do so. oooo, brave they will say, a hero! You must be one of the dorks we see strolling around city center's in the pouring rain wearing only a cotton shirt and slacks! I define market timing as being closer to day trading type activity, ooo, that looks good, markets look buoyant, I'm in, (or the opposite). I further define it as investors who commit wholesale to a new approach based on changing market conditions and trade large portions, if not all of their holdings, as a result. Given your inflexibility on most things and your desire to see everything in a literal black and white sense, I understand why you think any change in holdings must fit your definition of market timing. I accept that's the way you are, it doesn't however make you correct, just that you have narrow vision. Now, where's that ignore button! If you are in the markets for the long term, what does the above approach actually achieve? Dont get me wrong, I understand the need for financial prudence, I understand that somcahis college funds should probably be invested elsewhere, I fully understand that widows and orphans probably shouldnt be in the markets. Are there any links you can provide that shows your approach actually works financially in the long term? The subject that's being discussed rgs is market timing. I believe that investors and FM's of all types, regularly make changes and tweaks to their portfolio's/asset classes for a whole host of valid reasons including rebalancing, changes in personal circumstances, changes to investor risk tolerance, changes to economic conditions, changes in markets etc etc. AyG seized on my statement that I could, "change (a particular holding) later for something with greater upside" as an opportunity to accuse me of trying to time the market and am an all round dunce. Not necessarily because he believes I am but because he's AyG and he's prone to being abusive and thinks that nobody apart from the God of Investing and Arrogance could ever hold an appropriate or accurate view on his specialized subject, about which he is always right. Your question asks about long term a couple of times. Clearly, a strategy that's right for a 72 year old wouldn't suit a 40 something year old hence I'm not sure what you want me to try and prove. What I can prove is that my current portfolio has only fallen buy 3.9% whereas others have fallen by over 35%. For a 72 year old that's a good result since they may not have the time to recover their losses fully. If you're asking whether an employed 40 something year old should hold the same mix, my answer would be, probably not but it depends on the extent of your wealth and your attitude to risk.
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chiangmai
Crazy Mango Extraordinaire
Posts: 6,232
Likes: 5,242
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Post by chiangmai on Jul 14, 2022 6:22:02 GMT 7
An article here that discusses market timing and of course, concludes that you can't. finance.yahoo.com/news/just-accept-cant-time-market-205603547.htmlWell, not completely at least! It says: "If your main concern is getting protection against a major downturn in the stock market, then maintaining or modestly boosting your allocation of bonds makes sense". This was my concern over a year ago and why I went risk averse. But wait, this is timing the market so it can't be right!!! And then there's this: "There are several reasons market timing usually fails. One reason is that very few can consistently predict short-term market movements. That goes for spotting a decline before it starts as well as knowing when the market will rebound. The decision to reduce stock exposure, moving these assets into money market investments or cash, not only means anticipating when to exit the market, but choosing when to reenter the market as well, Judity Ward and Roger Young of T. Rowe Price wrote in a recent article. In other words, it requires two acts of successful market timing". Note that the article says, "very few can consistently predict...", it doesn't say that nobody ever predicted! What can I say, I'm 50% of the way there and got out in time, talk to me in a year and we'll see how the other 50% did, even if it did nothing I'm still well ahead of the game.
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Post by rgs2001uk on Jul 14, 2022 20:56:28 GMT 7
My mind isnt closed to new investing ideas. All options are on the table.
It was your comment that grabbed my attention.
I'm still not drawing down this pension and probably never will,
If it aint broke dont fix it, I am in a similair situation, just means those that come after will get x instead of y, I am not going to knock myself out about it.
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chiangmai
Crazy Mango Extraordinaire
Posts: 6,232
Likes: 5,242
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Post by chiangmai on Jul 15, 2022 3:55:12 GMT 7
My mind isnt closed to new investing ideas. All options are on the table. It was your comment that grabbed my attention. I'm still not drawing down this pension and probably never will,If it aint broke dont fix it, I am in a similair situation, just means those that come after will get x instead of y, I am not going to knock myself out about it. This particular pension acts as a reserve or backup income stream in case one of my other income streams/pensions fails, my intention is to will it to my wife untouched. This is just as well since the US SSc people have decided not to pay me since I changed my bank from London to Bangkok in May and I don't know why. So this made me think that even the most robust income streams can fail so what then! On a related subject - 60/40 means equities to bonds/others/cash, I hold 43/57 at present, equities to bonds/other/cash. Part of the cash element is funds cash and in my case, 27% is my cash to invest or to hold or withdraw as I chose. Most people I think would look at the 43/57 and say that's a very risk averse strategy. But if I take 5% or 7% of my cash and invest in a hedge fund of funds, does that change my strategy and is that market timing? I say that's nothing more than adding some spice, adding a new asset type for the sake of diversity, whatever happens to that 5 or 7% holding doesn't materially change my portfolio. If I decide later that economic circumstances and the outlook have become more favorable I may take 10% of that cash and add say a risk level 5 fund that is more heavily equities based, does that change my strategy? I say nope, I'm still not up to 60/40 if I do! And is that trying to time the market? Yes, of course it is, I would be taking a 10% a calculated risk that things may improve, just in the same way that any 40 -60% or 40% - 80% equities fund manager would be doing. But that's not market timing in the way that market timing is understood or being implied here, it's not a wholesale switch from level 3 bonds into level 6 equities just because the wind seems to be blowing in the right direction. The problem here is one of definition and strict interpretation by many. A mixed assets fund doesn't necessarily mean just equities to bonds, many can and do include other things. Tweaking a portfolio with a fund that has far greater risk than the core portfolio holdings, or contains different asset classes, doesn't automatically mean that investor is trying to time the market and if they are, by 10% of their holdings, that it's a bad thing. An intelligent and experienced investor once said to me, "try to think of your portfolio as containing core assets and other things, primary and secondary holdings", and I think that's the right mindset. My core assets are my wealth preservation funds, my secondary assets are my higher risk equities funds. But they might just as easily have been a handful of high risk BG funds which were later supplemented by low risk bond/other funds, the effect is the same, better risk balance.
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Post by rgs2001uk on Jul 15, 2022 20:30:54 GMT 7
^^^ good man, like you I have mutliple income sources, they allow me to sleep at night and not worry about how my portfolio is doing.
My HSBC transfer arrived the other day, one less thing to worry about.
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