Market Timing Potentials and Pitfalls 101
- Market Timing 101 Potentials and Pitfalls
- KEY Market Timing Long Term FACTORS
Market Timing 101 Potentials and Pitfalls
BTFD TONS ARE Waiting around
- "I Just want another market crash so I can buy again! "
Just Hold for 3rd Time Recovery
- After 3 crashes, everyone knows to HOLD and market will recover on Fed Put - Who cares if the bottom falls out, it will be back in a few years anyway.
AGILITY IS HARD TO DO!
- Get tactical instead of long only. The market has already shown us that it doesn't need fundamentals, so why would that be the basis for support in a sell-off?
Nearly everyone agrees that the current market is totally overvalued. And yet we all keep participating because we believe that when the bubble finally bursts we'll be able to get out safely. In reality, many will be stuck with positions that will take years to recover or they'll be forced to sell for pennies on the dollar.
SOLUTION: Keep flexible Trailing stop losses - tighten TSL when SERIOUS!
DCA vs Market timing
KEY Market Timing Long Term FACTORS
1% Very good at Market Timing!
The uber-rich have 80%-95% wealth tied up in company stock (Bezos 95%, Zuck 99%)
They keep getting MORE stock options but sell it all - esp "sitting fat and lazy" CXOs/boards
- $11/$14b of HPE mcap bought back (issued to top mgt) yet # shares fell -15% in 5years! insider hold<0.2%
The 90% CATCH FALLING KNIVES, but share of ownership declines rapidly on REAL rise
Is it because they just don't have the cash to really buy stocks at bottoms, they are just DCA or are they just stupid ie stio buying at market bottoms?
- They get too happy with little gains, they sell out to 1% as market REALLY rises!
In the Goldman chart below, we can see that the share of equities owned by the 90% jumps just as recession begin.
TELEOLOGICAL PRO-CYCLICAL 1% buy stock RAPIDLY and EARLY on recoveries, accumulate high ownership
The 1% dump their stock to MCapWeighted 401k for lcap, and "At-any-price-get-rich-on-partials" daytrading Robinhood millennials The rich dump their stock to the poor just before the market crashes.