Time to get out of the market?

Investing in current market

Before the last bear market, that start at the end of 2000, I had always waited until it was considered that the bear market was over before starting to invest again. This did not work out well, as I never got any really great deals in stock. In the last bear market, I invested when the market was on it way down. When I found a stock I liked at a price I liked, I bought. This worked out very well for me. The main problem was dealing with stock I bought go further and further down. However, in all my time investing since the '70's, I got some of the best deals I ever managed. I have been investing in this market basically since January 2009. I have been doing this carefully and slowing, but I have been investing. Is this bear market over? Will we have another down leg? I do not know. But, eventually, the market will turn and my portfolio will continue to be in great shape.
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http://www.susanpbrunner.com/ -talking about Canadian Stocks

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I must admit when I when back to look at my entry and I was listed as a "Junior" member I was quite surprised. It is rather wonderful to be called "junior" at my age. I must admit I have not been called "junior" anything for some time.

Regarding "timing the market" - that phrase has become a catch all put-down to be used whenever someone strays from the advisor-friendly buy, forget, and hold philosophy that is laden with risk. Are you still holding the Nortel stock you bought years ago because to sell is "timing the market".? So where do you draw the line?

For some reason, being learned enough to scrutinize a stock to determine if it is worth buying is considered a good thing while having a strategy to sell the stock when most of the good times are over is considered a bad thing - timing the market. One must hold through the bad times instead of putting the money to better use.

If an investor is smart enough to understand from the fundamentals and technicals that a stock has a reasonable chance of advancing - why is using that same information to sell when the reasonable chance of advancing is over and buying another with a reasonable chance of advancing looked upon with derision?

Swerdoe's article is carefully crafted to deflect blame for portfolio losses from advisors and encourage clients to stay with them because only advisors have the wisdom to do nothing and not "time the market".

takingprofits said:

Regarding "timing the market" - that phrase has become a catch all put-down to be used whenever someone strays from the advisor-friendly buy, forget, and hold philosophy that is laden with risk. Are you still holding the Nortel stock you bought years ago because to sell is "timing the market".? So where do you draw the line?

For some reason, being learned enough to scrutinize a stock to determine if it is worth buying is considered a good thing while having a strategy to sell the stock when most of the good times are over is considered a bad thing - timing the market. One must hold through the bad times instead of putting the money to better use.

If an investor is smart enough to understand from the fundamentals and technicals that a stock has a reasonable chance of advancing - why is using that same information to sell when the reasonable chance of advancing is over and buying another with a reasonable chance of advancing looked upon with derision?

Swerdoe's article is carefully crafted to deflect blame for portfolio losses from advisors and encourage clients to stay with them because only advisors have the wisdom to do nothing and not "time the market".

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The real problem with timing the market is the investor make money mostly from other market timers. Therefore, it's a zero sum game.

Actively traded funds manage their funds, well actively. Therefore, it does not matter whether the client stay with them, the underline equities are changing constantly, thus timing the market constantly. They can do that because they are professionals. However, study have shown that very few actively traded fund can outperform the market more than its MER. Advisors rarely advice that client to buy passive index funds because there's nothing in it for them. Therefore, I'd say the advisor friendly way is timing the market rather than buy, forget and hold.

Nortel is a matter of diversity, rather than timing. For a diversified investor, Nortel should never make up more than a very small percentage of his portfolio. Therefore, whether he sticks with it or not, does not make any difference. There's always a chance that Nortel would recover and the stock price reflects that chance (which diminished over the years). In fact, another main problem with active trading is lack of diversification. It's a double edge sword. Bigger return = bigger risks. Unfortunately, a lot of investors only see the returns.

Again, I am not saying timing the market is a bad thing. By definition, half of the investments performs better than the market.

takingprofits said:

I would not agree with that. When you buy or sell a stock it is the same as any other purchase or sale. You are doing so because you believe it will benefit you - and it usually does based upon your own needs, time horizons, etc. The same applies to the person on the other end of the transaction.

The transaction usually ends up being an advantage to both parties - it is not a matter of one wins and the other loses. To not sell because of some belief that the buyer will be disadvantaged is wrong-headed. You should not project your own circumstances on the market in general.

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Subjectively, yes, different people have different needs. Objectively, the market doesn't really care. The fact is, you bought at $x/share an sold at $y/share. It doesn't really matter you took the loss to satisfy a debt repayment thus in reality saved money, that's outside the market. If the index value returned to the value of a particular point, I suspect the sum of the return of all the people participated in the market over the that period would be 0 (not counting commissions and dividends). Of course, the indexer's return would also be 0.

Of course, since indexers would be dollar averaging in (i.e. not pure buy and hold), you can potentially make money from them. However, I doubt that would be significant and should balance itself out over the long run. The majority of the gains above the market performance should be mirrored by other people who are under performing the market, for whatever reasons.

One can overthink this concept.

Today I sold some bank stock because I believe it is overdue for a correction. I intend on buying it back at a later date at a lower price.

It is unlikely the stock I sold was bought by a "market timer" as anyone who was "timing the market" would be aware of the current market conditions for that particular stock and would not be buying it.

It is more likely the stock was bought by someone who is buying for a long term hold and when the stock dropped after they bought the stock that does not mean they were a loser if they were buying for a long term hold as the stock will go up again and it will go significantly higher. The short term loss would be meaningless to the buyer.


"Market timers" do not buy from other "market timers" as you asserted earlier making it a zero sum game. Since the buyer and seller have different needs and time horizons both win.

Who do you think you bought the stock you currently own from? After all how can one person who believes in buy and hold buy from another since neither will ever sell

takingprofits said:

One can overthink this concept.

Today I sold some bank stock because I believe it is overdue for a correction. I intend on buying it back at a later date at a lower price.

It is unlikely the stock I sold was bought by a "market timer" as anyone who was "timing the market" would be aware of the current market conditions for that particular stock and would not be buying it.

It is more likely the stock was bought by someone who is buying for a long term hold and when the stock dropped after they bought the stock that does not mean they were a loser if they were buying for a long term hold as the stock will go up again and it will go significantly higher. The short term loss would be meaningless to the buyer.


"Market timers" do not buy from other "market timers" as you asserted earlier making it a zero sum game. Since the buyer and seller have different needs and time horizons both win.

Who do you think you bought the stock you currently own from? After all how can one person who believes in buy and hold buy from another since neither will ever sell

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When you buy back the stock at a lower price, who are you going to buy it from? Sure, it might be a retiree leaving the market, but chances are it would be somebody who think the price will drop (because the chart says this or the fundamentals says that). He would think you are a long term buy and holder since "anyone who was "timing the market" would be aware of the current market conditions for that particular stock and would not be buying it. " The guy who you sold it to definitely would not sell it back to you if he is a buy and holder.

Again, the sum of all people buy and selling a particular stock would be exactly the same as buy and holder over a particular time period. Of course, it could be paper loss or strategic loss or whatever, but the math is quite simple. Some people win, some people lose over that time period. Some people would care more, some people would care less, but that does not change the numbers.