Going cash?

Blazin_sl said:

Many people were taught buy and hold meant you made money, the truth is that it helps but you could still get royally goat fucked depending on when you entered and left the market even if you held for a decade.

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Very few people are going to be entering and exiting the market with their entire investment at the same time. Which you agree with later in your post anyway, but I felt it worth pointing out.

There is something to be said for timing in terms of what blazin said. I made a decision to put my real estate endeavors on hold, and this turned up a ton of free cash. I had read a number of books, and I knew I was going for a straight S&P index fund with the smallest expense ratio possible. In this circumstance it was (is) Vanguard S&P Admiral index fund. I sat and watched for at least half a year, mostly worried with what would happen with Greece and in turn the EU and its impact on US markets.

I forget what the exact event was, I want to say it was an election that ended in a more partisan Greece government, and the odds of them accepting a bailout or some such reduced drastically. The markets took a shit. I jumped in then, I want to say S&P was at 1260 ish. This was May / June. Since then I put $500 every pay check into it, every pay day, no matter what, and I reinvest dividends. Logged in right now, and since inception I am up:

$8,184.91

So I timed to the best of my ability, and arguably lucked out, and since then I don't time shit and just go with it. I was tempted to "Go cash" (hence why I was following this thread) and i'm glad I didn't. That was a lesson I learned without having to feel the pain of it.

Nobody disputes that your entry and exit from the market can have a huge influence on your returns. The dispute is about whether the average joe should attempt to time them.

Yep, the fact that timing entry and exit has a huge influence on your returns is precisely the reason 99% of investors should avoid it. The effect on your future wealth is too big, and the learning experience is limited. The vast majority of market movements are caused by events that are unknown at the time of investment. Considering most of the money out there is managed by people with better information than you, the chance of you timing it correctly is less than 50%.

Playing around with buying/selling individual stocks is also unlikely to net excess returns for your average Joe, but as long as you stay diversified and don't get buried in fees, it won't make a massive difference either. That's why I tell friends that are interested in learning about investing to allocate a small part of their portfolio to do some medium-term trading, if they think it will be fun. Diversified stock picking is a cheap hobby that could potentially pay out a lottery ticket once in a while, and will teach you a lot about how companies work.

TLDR; Don't do macro bets / time your investments. If you want to play with the market, try stock picking with a small part (5-20%) of your portfolio. Just remember that even if you luck out and strike gold on those stock picks, you're still no more likely to do so in the future. Don't fall for the temptation of moving a larger part of your portfolio into the stock picking game.

Some basic stats showing that trying to time the market just isn't worth it unless you are a pro. And if you are that level of pro, you'll make more leveraging your skill on successful long/shorts than you will on market timing.

http://oninvesting.schwab.com/bottom...ng-time-market

I thought you rolled it over into the Glenn Beck 2040 Aggressive Growth fund and bought a 50cal and some assault rifles?