5 ms·

My point is that people have not been thinking “this is the top” for 40 years straight, not that people wouldn’t make money if they bought and hold through rece

by tempsy 7y ago

My point is that people have not been thinking “this is the top” for 40 years straight, not that people wouldn’t make money if they bought and hold through recessions.

deleted 7y ago
[deleted]
WalterBright 7y ago
> My point is that people have not been thinking “this is the top” for 40 years straight My point is the people who don't invest do think that way, and so don't invest. Most investors also think that way, which is why they sell their winners, and hence have below-market returns. Me, I never sell my winners. This seems to be a highly unusual strategy. I'm still holding stock I bought 40 years ago.
manigandham 7y ago
Those same people have trouble recognizing the bottom as well, and generally always have a reason to not invest. For them, I recommend investing after 3 years of a sustained market direction from an inflection point.
- JumpCrisscross 7y ago
  > I recommend investing after 3 years of a sustained market direction from an inflection point Defining an inflection point is subjective, particularly a few years after it. Late 2008 was a crash; 2011 featured lots of hand-wringing around QE, "green shoots" and the like.
  - manigandham 7y ago
    It's pretty clear 2008 was the inflection point and it went up for three years afterward. You'll find endless reasons to stay out of the market so I was offering at least one simple rule to follow.
    - JumpCrisscross 7y ago
      > It's pretty clear 2008 was the inflection point It's clear now. But (a) there are lots of starts that stall and (b) it's impossible to differentiate them 3 years afterwards. At the end of the day, timing the market is incredibly difficult. When one decomposes returns of the world's top investors, timing is pretty much random.
      - manigandham 7y ago
        Time in the market beats timing the market. You're describing all the rationalizations people use to stay out. 2008 was the bottom and it went up for 3 years. You would see that by 2012 so buy in. That's it. That's the entire rule/suggestion. There's no "timing the market" needed.
        JumpCrisscross 7y ago
        > That's the entire rule/suggestion. There's no "timing the market" needed. “Invest 3 years after an inflection point” is an attempt at timing the market. For every 2008, there are ‘54 and ‘57; ‘70 and ‘73; ‘80 and ‘81; et cetera.
        manigandham 7y ago
        Inflection points aren't timing, you recognize them after the fact. Literally when was the last time the market changed direction and what did it do for 3 years after. It doesn't matter if it goes down again, once you invest you stay invested. The rule was a simple guide on when to get in. Or you can just stay out forever.
        JumpCrisscross 7y ago
        > Inflection points aren't timing, you recognize them after the fact “Timing the market” means incorporating timing and/or peak-to-trough measures in investment decisions. When you’re not asking “which assets should I buy” and instead “when should I buy them,” you’re trying to time the market. Research is pretty consistent in showing almost all timing strategies are inferior to consistent investment, e.g. investing $X per month, regardless of your views on where the market is relative to what you believe to be an inflection point.

by tempsy 7y ago

My point is that people have not been thinking “this is the top” for 40 years straight, not that people wouldn’t make money if they bought and hold through recessions.

deleted 7y ago

[deleted]

WalterBright 7y ago

> My point is that people have not been thinking “this is the top” for 40 years straight My point is the people who don't invest do think that way, and so don't invest. Most investors also think that way, which is why they sell their winners, and hence have below-market returns. Me, I never sell my winners. This seems to be a highly unusual strategy. I'm still holding stock I bought 40 years ago.

manigandham 7y ago

Those same people have trouble recognizing the bottom as well, and generally always have a reason to not invest. For them, I recommend investing after 3 years of a sustained market direction from an inflection point.

JumpCrisscross 7y ago
> I recommend investing after 3 years of a sustained market direction from an inflection point Defining an inflection point is subjective, particularly a few years after it. Late 2008 was a crash; 2011 featured lots of hand-wringing around QE, "green shoots" and the like.
- manigandham 7y ago
  It's pretty clear 2008 was the inflection point and it went up for three years afterward. You'll find endless reasons to stay out of the market so I was offering at least one simple rule to follow.
  - JumpCrisscross 7y ago
    > It's pretty clear 2008 was the inflection point It's clear now. But (a) there are lots of starts that stall and (b) it's impossible to differentiate them 3 years afterwards. At the end of the day, timing the market is incredibly difficult. When one decomposes returns of the world's top investors, timing is pretty much random.
    - manigandham 7y ago
      Time in the market beats timing the market. You're describing all the rationalizations people use to stay out. 2008 was the bottom and it went up for 3 years. You would see that by 2012 so buy in. That's it. That's the entire rule/suggestion. There's no "timing the market" needed.
      - JumpCrisscross 7y ago
        > That's the entire rule/suggestion. There's no "timing the market" needed. “Invest 3 years after an inflection point” is an attempt at timing the market. For every 2008, there are ‘54 and ‘57; ‘70 and ‘73; ‘80 and ‘81; et cetera.
        manigandham 7y ago
        Inflection points aren't timing, you recognize them after the fact. Literally when was the last time the market changed direction and what did it do for 3 years after. It doesn't matter if it goes down again, once you invest you stay invested. The rule was a simple guide on when to get in. Or you can just stay out forever.
        JumpCrisscross 7y ago
        > Inflection points aren't timing, you recognize them after the fact “Timing the market” means incorporating timing and/or peak-to-trough measures in investment decisions. When you’re not asking “which assets should I buy” and instead “when should I buy them,” you’re trying to time the market. Research is pretty consistent in showing almost all timing strategies are inferior to consistent investment, e.g. investing $X per month, regardless of your views on where the market is relative to what you believe to be an inflection point.