$15,000 to spend on 1-5 cards...WWYD?

[G1911]

Originally Posted by Peter_Spaeth

Buying and holding blue chips and index funds is, I would absolutely agree, a winning strategy. I would doubt though that ex ante you can determine the optimal times to buy with any consistency. The vast majority of professionals out there can't do it, research shows.

Like I said, it is a fools errand to try and time exact peaks. But it is incredibly easy to buy when the market is having a bad time and prices are low and to sell when things are high. It takes maybe 20 seconds to open one's favorite stocks app and look at the indexes to know if things are generally high or low in the present to make buy decisions for blue chips and index funds. People can absolutely do this. I ain't special, and I ain't important enough to have insider information even if I was willing to commit the felony.

[Peter_Spaeth]

Originally Posted by G1911

Like I said, it is a fools errand to try and time exact peaks. But it is incredibly easy to buy when the market is having a bad time and prices are low and to sell when things are high. It takes maybe 20 seconds to open one's favorite stocks app and look at the indexes to know if things are generally high or low in the present to make buy decisions for blue chips and index funds. People can absolutely do this. I ain't special, and I ain't important enough to have insider information even if I was willing to commit the felony.

If it's that simple, more people would do it. See my challenge above.

You only know ex post if they're low or high because there are too many variables and uncertainties to predict short term direction..

[G1911]

Originally Posted by Peter_Spaeth

If it's that simple, more people would do it. See my challenge above.

You only know ex post if they're low or high because there are too many variables and uncertainties to predict short term direction..

I feel like I must be missing an element here. You are saying we don't know in real time if the market is generally high or generally low?

I think it's very simple to know when we are in a recession or a lower/generally bad market. When the S&P is down 20%, it's not a high. It is generally low, it may go lower next week, next month, or even next year (hence the fools errand of exact timing), but we are obviously not at a high. I cannot understand how anyone would think that we are. Things in the market are generally bad. I think basically everyone is aware of this right now.

When the market was setting new index records constantly, that was a high and things were generally good in the market, as everyone was aware of. I stopped my buying, not because I am a financial genius but because of basic common sense and the knowledge that while the market goes up over time, it behooves to actually put cash in at the lows to maximize my eventual returns in 30 years.

It's not a special skill to know that when the market is setting daily records, we're high and one should probably wait to buy the blue chips and indexes later. It's not a special skill to recognize the market has dropped a lot right now, and might be a good time to buy into indexes. Definitely a far better time.

[Peter_Spaeth]

After the market bottomed in 2008 early 2009 at under 7k Dow, and it came all the way back to 14K or so, people with your philosophy would have been screaming sell because the market is so far up it has to come back down. A guy who was advising me begged me to sell and on top of that to buy VXX. Guess what, it kept going up and up and up from there without any really steep decline until the pandemic. You just can't know.

And I wish I had bought AMZN at every record high it hit from 50 to 3000. No you can't tell in real time.

[G1911]

Originally Posted by Peter_Spaeth

After the market bottomed in 2008 early 2009 at under 7k Dow, and it came all the way back to 14K or so, people with your philosophy would have been screaming sell because the market is so far up it has to come back down. Guess what, it kept going up and up and up from there without any really steep decline until the pandemic. You just can't know.

My argument is to buy when the market is generally low and hold long term, not short term flip. Buy blue chips and indexes when the market sucks, hold it for the long haul. Don't let your cash get so low that you need to sell stock, sell it late in life when you don't have work income coming in, and sell it when the market is generally good. Don't retire with only a couple years cash on hand with a bad market.

Even in this example you have, the person doing this doubled their money buying at under 7 and selling at ~14K. They missed out on even greater gains, but they doubled their money in the short term using this basic strategy but as a short term hold instead of my long term hold. If only we could all double our money in the short term!

[Peter_Spaeth]

Originally Posted by G1911

My argument is to buy when the market is generally low and hold long term, not short term flip. Buy blue chips and indexes when the market sucks, hold it for the long haul. Don't let your cash get so low that you need to sell stock, sell it late in life when you don't have work income coming in, and sell it when the market is generally good. Don't retire with only a couple years cash on hand with a bad market.

Even in this example you have, the person doing this doubled their money buying at under 7 and selling at ~14K. They missed out on even greater gains, but they doubled their money in the short term using this basic strategy but as a short term hold instead of my long term hold. If only we could all double our money in the short term!

And by holding, or just investing at regular intervals not trying to time, I did much better. See my example. You cannot know if it's generally low in real time. It looks low today relative to 35K, but if it drops 5K, then it was in fact relatively high. I agree with WHAT you are buying, but I maintain just buying in at regular intervals in the long run is likely going to bet better than active management on timing.

[G1911]

Originally Posted by Peter_Spaeth

And by holding, or just investing at regular intervals not trying to time, I did much better. See my example. You cannot know if it's generally low in real time. It looks low today relative to 35K, but if it drops 5K, then it was in fact relatively high. I agree with WHAT you are buying, but I maintain just buying in at regular intervals in the long run is likely going to bet better than active management on timing.

We don't know where it will be in 3 months, but when the market is setting records and has already skyrocketed recently, it's not a good time to buy blue chips and index funds.

When the market has fallen 20-25%, your risk floor is way, way lower, especially factoring in the absolute risk floor. It's a much better time to buy. The market is not good right now and prices are way lower. Makes more sense to buy now than when it is setting records.

Of course, like I have said, it may be a better time to buy in 3, 6, 9, or 12 months from now. You can't time absolute lows or peaks beyond luck. But you can choose to buy when things are high or low. By buying this year instead of last year, that money is at 0% instead of -20%. All I'm gambling on when timing it, really, is that when in a new record high market, there will be a lower buying point in the future and I will just wait until it's lower. The odds of this strategy biting me in the rear are incredibly low. My gamble is simply that we will have periods of highs and lows and it is smarter to buy long holds during the lows, which the entire history of the market bears out.

[Peter_Spaeth]

Originally Posted by G1911

We don't know where it will be in 3 months, but when the market is setting records and has already skyrocketed recently, it's not a good time to buy blue chips and index funds.

When the market has fallen 20-25%, your risk floor is way, way lower, especially factoring in the absolute risk floor. It's a much better time to buy. The market is not good right now and prices are way lower. Makes more sense to buy now than when it is setting records.

Of course, like I have said, it may be a better time to buy in 3, 6, 9, or 12 months from now. You can't time absolute lows or peaks beyond luck. But you can choose to buy when things are high or low. By buying this year instead of last year, that money is at 0% instead of -20%. All I'm gambling on when timing it, really, is that when in a new record high market, there will be a lower buying point in the future and I will just wait until it's lower. The odds of this strategy biting me in the rear are incredibly low. My gamble is simply that we will have periods of highs and lows and it is smarter to buy long holds during the lows, which the entire history of the market bears out.

If you buy at regular intervals, and hold, you will end up taking advantage of the best times to buy and that will outperform your attempt to time, in my opinion. This is why nearly all investment advisers will tell you to put each month's retirement fund contribution to whatever your preferred allocation is, rather than putting it into cash and trying to self-manage when you invest it.

[Smarti5051]

Originally Posted by G1911

My argument is to buy when the market is generally low and hold long term, not short term flip. Buy blue chips and indexes when the market sucks, hold it for the long haul. Don't let your cash get so low that you need to sell stock, sell it late in life when you don't have work income coming in, and sell it when the market is generally good. Don't retire with only a couple years cash on hand with a bad market.

Even in this example you have, the person doing this doubled their money buying at under 7 and selling at ~14K. They missed out on even greater gains, but they doubled their money in the short term using this basic strategy but as a short term hold instead of my long term hold. If only we could all double our money in the short term!

Ahh, but I think the point is what did those people do to invest after they sold at $14K? Since the motive for selling was the perception the market was too hot and you were selling at a "high," presumably the advice would be to just hold cash. For the past decade, you would be lucky to get 1% on your money. Since there was a decade without any major declines, until Covid in 2020, you would have been on the sideline during a great run-up.

The other extreme could be true today. We are down 20%. You could invest today, but there is nothing to guarantee the market will not fall another 40%. You are better than the guy that is down 60%, but still far worse than the guy "smarter" than you who wait for the market to go down 60%.

If you have a windfall right as the market has a major downturn, then you have lucked into a great investing opportunity. But, if you are strategically trying to buy and sell based on where you think the momentum in the market is, you are going to get beat by the "buy and hold" guys 95% of the time.

[Peter_Spaeth]

Originally Posted by Smarti5051

But, if you are strategically trying to buy and sell based on where you think the momentum in the market is, you are going to get beat by the "buy and hold" guys 95% of the time.

Yes, this.

[G1911]

Originally Posted by Peter_Spaeth

And I wish I had bought AMZN at every record high it hit from 50 to 3000. No you can't tell in real time.

I am able to tell, within 10 seconds, that this might be a good time to buy blue chips (like Amazon, they're pretty stable nowadays) and index funds. They are all well off the recent peaks as the US economy is deteriorating in the short term. This is not a special skill.

Maybe I'm an idiot, but I'm really not seeing any rational argument that the market is high rather than low right now. I didn't buy in 2021 because the same data told me, and basically everyone in the world, that the market was high and not a good time to buy into a long-term hold strategy of 'safe' blue chips and indexes.

[Peter_Spaeth]

Well of course you're not an idiot lol. But if it was as easy as you think, then why isn't every fund manager in America just buying up AMZN? It could go up, it could go way down (antitrust risk for example, but 100 other reasons too.) Look at NVDA, I would have said it was a great buy 50 points ago and it keeps tanking. Buy low sell high is just not that doable in real time.

[G1911]

Originally Posted by Peter_Spaeth

Well of course you're not an idiot lol. But if it was as easy as you think, then why isn't every fund manager in America just buying up AMZN? It could go up, it could go way down (antitrust risk for example, but 100 other reasons too.) Look at NVDA, I would have said it was a great buy 50 points ago and it keeps tanking. Buy low sell high is just not that doable in real time.

Probably because hedge funds don't want a very conservative gradual growth for themselves, they need to set record numbers. I don't think hedge funds reward managers with those fat bonuses if they play a slow and safe game. But I'm not in banking, so I don't know. My strategy is for a normal dude trying to buy safe picks and hold for the long haul so that one day I won't have to sell my labor to another man to survive and may hopefully live out my last years in a modicum of comfort before death.

Some of my picks are down 3 months after I buy. Often, actually. Some are down 12 months later. But I'm doing a LOT better than if I'd bought those same stocks when everything was setting records, aren't I? We know at a glance when things are setting records its high, and when the market has plummeted 20%, things are relatively low. Probably not the absolute low, that's the fools errand, but I cannot possibly do better than I am now by buying these same stocks when they are setting records. Maybe I will lose, but I will lose a lot less when I actively manage and shave 20-25%+ off my buy-in price.

[Peter_Spaeth]

Originally Posted by G1911

Probably because hedge funds don't want a very conservative gradual growth for themselves, they need to set record numbers. I don't think hedge funds reward managers with those fat bonuses if they play a slow and safe game. But I'm not in banking, so I don't know. My strategy is for a normal dude trying to buy safe picks and hold for the long haul so that one day I won't have to sell my labor to another man to survive and may hopefully live out my last years in a modicum of comfort before death.

Some of my picks are down 3 months after I buy. Often, actually. Some are down 12 months later. But I'm doing a LOT better than if I'd bought those same stocks when everything was setting records, aren't I? We know at a glance when things are setting records its high, and when the market has plummeted 20%, things are relatively low. Probably not the absolute low, that's the fools errand, but I cannot possibly do better than I am now by buying these same stocks when they are setting records. Maybe I will lose, but I will lose a lot less when I actively manage and shave 20-25%+ off my buy-in price.

I am not sure you are using the correct but for world, but if it's working for you that's fine. For myself, I'm convinced trying to time isn't the best strategy.

[Peter_Spaeth]

Originally Posted by G1911

Probably because hedge funds don't want a very conservative gradual growth for themselves, they need to set record numbers. I don't think hedge funds reward managers with those fat bonuses if they play a slow and safe game. But I'm not in banking, so I don't know. My strategy is for a normal dude trying to buy safe picks and hold for the long haul so that one day I won't have to sell my labor to another man to survive and may hopefully live out my last years in a modicum of comfort before death.

Some of my picks are down 3 months after I buy. Often, actually. Some are down 12 months later. But I'm doing a LOT better than if I'd bought those same stocks when everything was setting records, aren't I? We know at a glance when things are setting records its high, and when the market has plummeted 20%, things are relatively low. Probably not the absolute low, that's the fools errand, but I cannot possibly do better than I am now by buying these same stocks when they are setting records. Maybe I will lose, but I will lose a lot less when I actively manage and shave 20-25%+ off my buy-in price.

I didn't limit my statement to hedge funds. There are tons of mutual funds that are not hedge funds.

[oldjudge]

Originally Posted by G1911

Like I said, it is a fools errand to try and time exact peaks. But it is incredibly easy to buy when the market is having a bad time and prices are low and to sell when things are high. It takes maybe 20 seconds to open one's favorite stocks app and look at the indexes to know if things are generally high or low in the present to make buy decisions for blue chips and index funds. People can absolutely do this. I ain't special, and I ain't important enough to have insider information even if I was willing to commit the felony.

Greg, if I understand what you are saying you buy when the market is weak and sell when the market is strong, or at least don’t buy then. Following that strategy you would have entirely missed the post 2008 financial crisis bull market. What am I missing?

[G1911]

Originally Posted by oldjudge

Greg, if I understand what you are saying you buy when the market is weak and sell when the market is strong, or at least don’t buy then. Following that strategy you would have entirely missed the post 2008 financial crisis bull market. What am I missing?

I am too young to have bought before the 2008 fiasco (I was 17 and broke as a joke in my dorm eating whatever I could scrounge up for $2 a day then), so all of my buying has been since this period.

We had a bull market, in the sense that it has gone up a lot from 2008-2021 and was very good overall when looking at the block of time. In 2031, we will probably say the same thing about the period after it. But within that period, there were dips and buying opportunities that were evident at the time. Obviously if I could see the future I'd do a lot better. Some times I have gone riskier than others. I bought in 2016, when there was a lot of doubt in the market though the year ended very well. I bought a lot in 2020, when Covid killed the market because I believed that the state would not actually commit suicide over the virus. This one was a very safe conservative bet.

There are some periods of time where things are stably going up year to year, and this was one of them. 2021 was very different; with records being set constantly, recovering quickly and then skyrocketing to be almost double the low in a year. Thus, I held off buying (I am speaking of blue chips and index funds, I have a relatively small amount in non-blue chip specific stocks I think will outperform and are less about the economy as a whole).

You can't always wait for a dip like the one we have right now (though most knew this particular one was coming and the incredible spike was not sustainable), but there are lots of periodic dips. When everything is breaking the record set last week, which broke the record set the week before, it's usually a bad time to buy.

That said, with blue chips and index funds, I have no doubt Peter's method will produce a fat profit in the end too. I'm just up 20% right off the bat by knowing the Trump boom wouldn't last forever. In 6 months I might be down 10%, it ain't a science but I think it's pretty easy to separate boom times from the normal times from the lows where everything is at a steep discount and you can buy in with a much lower floor risk.

*I am not a financial advisor or smart.

EDIT: Selling timeframe varies for everyone. I am 31, I intend to 'sell off' for retirement in addition to my IRA's, 401K and social security. I don't do stocks to feed myself tomorrow or next year, and keep more cash on hand than most financial advisors would probably advise. One should sell when times are good, not during bad times like right now, as a general rule. If I live long enough to retire and it is in an economic downturn, I won't sell them until we're recovered (and surely won't hit the peak, but I'll be selling in a better good time rather than a clear bad time). I do sometimes sell a specific stock because I see a bad future for that stock and I want to divest and pocket what I've made off it (or lessen losses, depending how well one picked). I usually don't manage to time the peak exact, but I try to know the specific stocks I own well to sell off when the red flags hit.