Time in the market vs Timing the market

[brattzz]

My 5 cts,

1) Right now the economic situation is under-going fundamental changes, interests rates WILL go up,
2) Companies that gets by on debts will be stress-tested,
3) Even companies that are zero debts, will also suffer from biases selling,

So it's the "timing the market" mentality for me right now, (2022-2023/24),
In bear, choose the correct companies to buy-buy-buy!

[CY09]

An interesting article related to timing vs time in

https://seekingalpha.com/article/4544273...ting-china

No doubt, Alibaba and Tencent have been undervalued for a long period of time (about 1 year now). However, value investors who thought it was in the value zone are suffering a -50% loss. Will "time in the market" work out? I am not sure

[Corgitator]

Two ways to study for an exam: you study all the topics and have a decent understanding of all of them, or you try to spot questions by studying only selected topics and have a very deep understanding of the ones you chose.

Rather than asking which method is better, the better question to ask is: are you able to spot questions with reasonable accuracy, such that you end up scoring higher than you otherwise would have by studying all the topics?

I think the question of time in the market vs timing the market is somewhat similar. It goes without saying that if you are able to analyze market cycles with good accuracy, timing the market will give you higher risk-adjusted returns. But how many people can actually do that?

If you have long-run actual (not theoretical) track record that proves that you are able to improve returns by timing the market, I would say go ahead and continue with the good work. What I disagree with are people that blindly believe that they could time the market, tries to do it, and do not keep proper records to verify if they are indeed any good at it. Worse, they try to entice others to join them. Think about the classmate of yours that egg you on to only study for some topics that he is certain will come up in the exam, only to be proven wrong time and time again. These kind of people do more harm than good.

End of the day, it's about self-awareness. There are many different ways to achieve good returns in investing, but each individual is probably suited for only a few ways. Being self-aware of your limitations is itself a strength.

[MOV]

Why would value investors time the market? Rather than watch the weather, better to focus on the value.

Market cycles can be long, previous bull is more than a decade long.

[¯|_(ツ)_/¯]

below is just my thought process (and what I will do).  It's not a call to action.

Initially, I thought that this is just a simple discussion topics to stimulate our mind.

As I read thru, I sense that something is not correct.  I read all valuebuddies posts and OP does not seems to be the one who would asked this type of question - unless he really wanted some clarity.

To address his immediate question, I'm (almost) fully vested. 

Being a valuebuddies, I practice Time in the market and hence seldom keep any spare cash around.  100% of my spare cash would be going into stocks/ideas with reasonably good MOS.

At current situation, if you're not able to find stocks/ideas with reasonably good MOS, then something is wrong with you being a valuebuddy.

---

Having says that, just wanted to fill in the blank that although I don't keep cash, I had a reasonable pool of liquid assets that could be mobilise rather quickly plus having a constant stream of regular incomes.

---

To answer OP immediate question, I'm 100% vested.

With this out of the way, I wanted to say something about why OP raise this question.

And, after some thinking, I'm actually very glad that he raise this question now.

OP could ask when the stock market dropped further and further.  By then the same question is asked but the response and urgency to take action might be different.

What come in to my mind immediately is one of my mantra - sell to sleeping point.

Let me take a step back.  To me, investing and investment journey is nothing but a game.  It's my interest and it keep me entertained.  The value I gotten from my investment journey could not be measured by $$$.

So, one of my early learning which turned up to be my mantra that saved a lot of sleepless night is: when ever I had doubt, I could sense that I'm having trouble (eg. in sleeping or resting), then I just sell my lousy stocks to my sleeping point.  I seldom sell my good stocks.  

With OP asking the question, I'm not exactly sure why, but my mantra shout at my face - loud and clear - sell to your sleeping point.

Enjoy: A global recession is coming-what are you going to do?



Credit: https://www.wealthacademyglobal.com/5-co...ke-part-1/

Gratitude!

[Shiyi]

To value investors, I'm just wondering if the "intrinsic value" of a stock changes when the circumstances are different. For instance, isn't the cap rate of a property a function of the rentals? Likewise, for the valuation of a piece of propery based on the discounted cash flow?

If so, time the market makes a lot of sense.

[Behappyalways]

US market was up 3.1% yesterday. Guess how would Singapore STI index perform today. Guess how would your stock perform today....

By the way, why has your stock performance got to do with US.

So...
When the stock market is in a bull stage, most stocks will go up and vice versa

Is stock picking important? Definitely yes but in a stock market downtrend, it will also have to 'follow' the crowd...

Look at the pic...in a bull market, it does not take a lot to be a 'guru'....

https://finviz.com/map.ashx

https://mobile.twitter.com/WallStreetSil...4860371970

[ghchua]

To value investors, I'm just wondering if the "intrinsic value" of a stock changes when the circumstances are different. For instance, isn't the cap rate of a property a function of the rentals? Likewise, for the valuation of a piece of propery based on the discounted cash flow?

If so, time the market makes a lot of sense.

Hi Shiyi,

Interesting points that you bought out. I will try to address them.

If the cap rate of the property goes up, valuation goes down. But why cap rate goes up? Inflation? Then your rentals should go up due to inflation as well right? So no concern as a long term investor.

Valuation of property fluctuates year on year. As a long term investor, I am not concerned on short term movements. For example. if I buy a company with hotels sitting on freehold lands across a few countries at a decent discount from NAV. Why would I be concerned about property valuation changes? The gem is in the freehold land and not the valuation of the property sitting on top of it.

[ksir]

Obviously most people would love to time the market (I for one would be totally devoting myself into that pursuit).
The problem is, I don't think I have the skills to get the timing right (maybe half of times as per random chance)!!
I bet nobody else here could (at least if the person can, he is unlikely to be here).
But of course most people think they can!
Our skill is always far over the average haha

[BlueKelah]

Obviously most people would love to time the market (I for one would be totally devoting myself into that pursuit).
The problem is, I don't think I have the skills to get the timing right (maybe half of times as per random chance)!!
I bet nobody else here could (at least if the person can, he is unlikely to be here).
But of course most people think they can!
Our skill is always far over the average haha

For a regular rate rise environment followed by recession its quite easy to time the bottom or be near it. Usually you will see PE drop as PRICE corrects due to rate rises. This has happened so far this year. later on there will be capitulation as price drops even more and recession starts to get priced in. 

As the economy rolls over and recession is well underway, the PE will suddenly shoot up as earnings go down. For eg. if earnings of most companies drop by half and price is same, then PE suddenly doubles. a combination of skyhigh market PE(not due to a bull market)/ recession/rate rise reversal would indicate a very likely bottom and be a good time to buy. 

At the moment we are still far from the bottom as US has not officially announced a recession yet. In 2008 the recession was only formally announced in Dec 2008 and market did another dip till the march 2009 rebound. I believe we could see a similar pattern this year. 

It will be a good time to start accumulating when STI drops at least below 2600 levels