5 ms·

I bought when it dropped 5% because I thought it was "a clear buy signal". Then it dropped even more and I couldn't spare any cash to buy more. How could you ha

I bought when it dropped 5% because I thought it was "a clear buy signal". Then it dropped even more and I couldn't spare any cash to buy more. How could you have known at the time that 20% was the bottom?

roland35 3y ago
Exactly the problem! When talking about market timing you can't just be correct in the direction but also be close to exact on the time!
fauigerzigerk 3y ago
I don't believe in buy signals. You never know whether any particular level is the bottom. But that doesn't mean the opportunity is the same when the market is down 5%, 20%, 40% and 60% respectively. Of course a massive crash is a greater opportunity than a small correction regardless of how much further prices fall. But the real question is whether it makes sense to keep cash on the side in order to wait for one of these relatively rare crashes. The answer is probably no.
shrimpx 3y ago
Anything on the way down in a steep selloff is a good buy, so you did good. Also WRT the pandemic it was pretty clear that there was going to be panic selling, as soon as a pandemic was announced. What wasn’t clear was where the bottom was and how long the recovery would be. Some waited for a deeper bottom and missed out on the vertical recovery.
- jatins 3y ago
  > Also WRT the pandemic it was pretty clear that there was going to be panic selling, as soon as a pandemic was announced. If you were this sure, did you take a short position when pandemic was announced? Hindsight is 20/20. Also not sure what you meant by when pandemic was "announced" but I guess you are referring to March 2020 broadly
  - shrimpx 3y ago
    Yeah March 2020. I was not actively trading stocks back then so I watched passively. I do think market timing is bad as a general strategy but sometimes the writing is on the wall. I have timed the market successfully since then though, when seeing glaring trends or decisions whose impact I thought was obvious. But that's small amounts of money at stake, and once in a great while.

roland35 3y ago

Exactly the problem! When talking about market timing you can't just be correct in the direction but also be close to exact on the time!

fauigerzigerk 3y ago

I don't believe in buy signals. You never know whether any particular level is the bottom. But that doesn't mean the opportunity is the same when the market is down 5%, 20%, 40% and 60% respectively. Of course a massive crash is a greater opportunity than a small correction regardless of how much further prices fall. But the real question is whether it makes sense to keep cash on the side in order to wait for one of these relatively rare crashes. The answer is probably no.

shrimpx 3y ago

Anything on the way down in a steep selloff is a good buy, so you did good. Also WRT the pandemic it was pretty clear that there was going to be panic selling, as soon as a pandemic was announced. What wasn’t clear was where the bottom was and how long the recovery would be. Some waited for a deeper bottom and missed out on the vertical recovery.

jatins 3y ago
> Also WRT the pandemic it was pretty clear that there was going to be panic selling, as soon as a pandemic was announced. If you were this sure, did you take a short position when pandemic was announced? Hindsight is 20/20. Also not sure what you meant by when pandemic was "announced" but I guess you are referring to March 2020 broadly
- shrimpx 3y ago
  Yeah March 2020. I was not actively trading stocks back then so I watched passively. I do think market timing is bad as a general strategy but sometimes the writing is on the wall. I have timed the market successfully since then though, when seeing glaring trends or decisions whose impact I thought was obvious. But that's small amounts of money at stake, and once in a great while.