The Stock Market, Investments, and Investing Thread
(09-07-2020, 02:47 PM)WombRaider Wrote: I don't understand why anyone tries to time the market. If any one of us could predict a pullback, a crash, etc., then 100,000 Wall Street traders and analysts could also predict it. And they could do it much more accurately than we could, with their state-of-the-art models and software. And yet, they can't predict the market. Overall, index funds consistently outperform actively managed funds.

I say put your money in index funds and don't mess with it. You take a beating every now and then, but in the long run that doesn't matter.

I agree with this, but I would also point out that most investing godfathers stress that you have to be able to sleep well at night. We're all only guessing at what "the long run" means for each of us, and unfortunately, stock market risk can be closely correlated with losing your work-related income (meaning your stocks tank shortly before you discover you need money). Everybody has to take the measure of their own situation.

For me, I'm ahead of my goals and can't figure out how much of this is looming inflation or mass hysteria. I made a ton of money off the downturn earlier this year (in part because I had the shits for three days in Buenos Aires and there was nothing else to do but look for deals) and feel better knowing I might miss another couple of percentage points than I would entering a prolonged downturn with those gains wiped out and no free cash to invest. I continue making my regular allocations of new money at 80/20 but pulled the rest of it back to 50/50 incrementally over the last few weeks.

With that said, I'm talking about reviewing a strategy a couple times a year. That's a different thing from trying to market time daily/weekly or paying an active manager. (Most of the research showing that there's no edge to active management is driven heavily by the costs of active management, rather than the results of the underlying investment.) Three or four hours a season to review my goals and the landscape is worth it to me even if it doesn't outperform, where doing that daily - or worse, paying somebody else to pretend they're thinking about me every day - is just a waste.
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RE: The Stock Market, Investments, and Investing Thread - by Jetset - 09-08-2020, 12:42 PM

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