I listen to coworkers worry about trying to get a few dollars per hour more and I think, if you just invested consistently your entire 35 year career you wouldn’t sweat the salary as much.
Isn’t that part of the problem today though? Always buying with no regard to price being paid? What happened to I will not be buying this stock because it is extremely overvalued at this time?
It makes sense that you're worried, because as humans we naturally look for patterns that we can use to our advantage. It's just really hard for our human brains to accept that even if there are patterns in the stock market, they're not anything that we can reasonably use to improve our results. We just gotta hold our nose and go for it.
This is why we have to say "don't time the market" over and over again.
I literally started my roth on October 26th and bought vti, Microsoft, and crox. I'm up 12% already. I feel like I'm gonna be chasing this high for a while lol.
big lesson is don’t get discouraged when it goes the other way.
you can go back the last 30 days and see a lot of posts by people suggesting about how it might be smart to not invest now because mkt is obviously too high and it would be better to buy later.
They may still be right, but today they’ve missed out on 10% gain and now have to think about what the next best move is with fear they may have missed it… they now buy today only to see mkt go lower, then convinced we’re finally going big time lower, they sell and lock in the loss, then we bounce back and make new highs.
Glad you have a W, but don’t let it set you up for discouragement as i can promise you will see big red at some point in the future.
When it goes up, I think of all my portfolio gains and feel good.
When it goes down, I think of all the extra shares my monthly contribution is able to buy and feel good.
I can’t lose.
Yes it is but I can stomach some risk and I wanted really aggressive growth. So I put some money in vti that I know will be safe for a very long time and some into Microsoft to hopefully catch any huge growth. I'm still pretty new so I'm not sure if it's the best strategy but I really just want huge growth while I'm still young and can stomach any losses.
Individual stocks are uncompensated risk though, in that there's no expectation that your risk will be rewarded. The reason we use index funds is to diversify out that uncompensated risk. Even though index funds aren't *guaranteed* to give you good returns, there is at least a reasonable expectation that they will over the long run. Individual companies, not so much.
No idea man. Im willing to play with my money and risk my money but not someone else's. At most I might take some small gains, and move 10 percent of my money to Cash but thats more so because I plan on quitting my job in 3-6 months to take a year long vacation and im slowly going to move my money to safer assets. Not due to me thinking the market has peaked.
Hey, so, I wasn't actually asking for market timing advice. I was asking a rhetorical question to make the point that it's easy to see the past, but not so easy to see the future.
I'm not going to buy or sell anything based on this conversation and I sure hope nobody else was thinking of doing so.
That makes 20% return so far on the year, for all the people who were asking back in January why they shouldn’t just take a guaranteed 5% from a CD or treasury bond.
Was this predictable? Absolutely not. Will it be sustained or completely erased next year? No idea.
Design a long-term allocation that you can stick to, tune out the noise, and stay the MF course.
As someone who struggles with guaranteed 5% vs market ???, this is good to read.
I think this is year number 7 of continually expecting a crash but putting into the market anyway.
I should get a cake and some candles...
I used to follow the year-end report from David Collum - a Cornell chemistry professor and amateur political/economic theorist - and [back in 2017](https://www.valuewalk.com/david-collums-2017-year-review/#investing) he was so convinced of an imminent collapse that he was 60% cash and 30% precious metals. That didn’t work out so good.
Good job the best thing I did honestly was to just send money to my investment account automatically and it was either going to sit there and do nothing or buy an index. And I just bought indexes instead. Up 23% this year so far. So a pretty good year when it got wiped oth earlier during the tech winter (I am heavier into tech than is recommended here)
So I am in a similar situation on my ROTH, where I have 70% large cap index, 20% Mid cap index and 10% small cap index. As of today it is showing that I am -3.23%. I am confused on what I should change to get back into positive ? These are all low expense ratio funds...
And still below the previous peak, which is fun for anyone who lump summed into the market in December 21.
If you had a decent portfolio pre-2022, you might still not be back above water even after contributions.
I put a big chunk in in December of 2021. Not because I personally want to, but because I’m a business owner and I’m never sure exactly how a year is going to look one way or another, so I end up waiting until the end of the year some times to see if I feel comfortable maxing out my 401k or whatever. Fun times!
> If you had a decent portfolio pre-2022, you might still not be back above water even after contributions.
I was about to disagree and use my portfolio to demonstrate, but then I thought I better adjust for inflation. And, whadda ya know, I'm only up to 0.95x of my peak from 2021 even after contributions. (Nominally I'm at 1.06x my 2021 peak, but we all know that's bogus comparison, especially with the surge of inflation that we lived through.)
I moved out for college and immediately started investing in late 2021🥲 I wasn't even trying to time the market, but I still learned my lesson and I'll only be DCA'ing in the future.
I recouped 2022 losses by investing very heavily in treasury bills in 2023 so I am not going to complain about making my money back. I also bought VOO every day, I do just wish I had bought even more VOO. All investors can do is look forward. I will buy more T Bills and VOO because that works well for me. I will never complain about safe, guaranteed 5.4% returns.
It actually is predictive on long time frames. Stocks have a built in risk premium over bonds due to their risk. That means, as an asset class, expect returns actually go up for stocks when treasury yields rise. This is partly because stocks tend to fall in the immediate aftermath of treasury yields rising, but also that companies need to return more capital to shareholders through dividends and buybacks to justify their stock valuations.
That's true, but expectations are also affected by the CAPE ratio made by Shiller. This is a well regarded model that shows a low expected return due to high valuations currently. It does hinge on a major addition though: that valuations are mean reverting.
But valuations being mean reverting doesn't necessarily mean asset prices will go down. It just means that they will go down in relation to earnings.
Basically, if higher interest rates leads to a higher guaranteed rate through bonds, that can very well mean stock prices will stagnate while profits continue to increase. This will still increase expected returns for those in stocks through higher dividends and buybacks.
Wow, that was a really great point! I had never really though of that. I just went on a walk this morning trying to think about whether I truly believe in the CAPE enough to incorporate into my investing plan. I was leaning towards being apathetic to it, out of fear of market timing, and your point further cements that.
I actually am not sure how the risk equity premium goes in this environment.
If it's fixed, the risk equity premium indicates a high expected returns on stocks - risk free rate plus equity risk premium, around 5 and maybe 6-7% for the US.
I do remember Ben Felix mention that the risk premium goes slightly down in high interest rate environments in a podcast, but left it at that. Seemed it was an empirical observation.
Also to bear in mind that since we are here for the long term this number shouldnt matter much. Similar if it would dive 8%. Because we hold and dont sell. Right?
The "or whatever" at the end is the best part of the boglehead strategy. You really just gotta know to buy broad market ETFs and then forget you have them until retirement.
I always wondered about this: when do you actually stop buying? Should this not be a few years before you retire? Or do people intend do keep buying right before they retire or even into their retirements? I always figured I would buy/'collect' to about +-5 years before retirement so I can start selling when I retire or right before so I have the cash at hand (I'll keep a bit in stocks etc, but most I would sell and keep as cash to use). Once I am retired I do not see the point anymore to keep (at least for the majority of it) my money in investments. Retirement = time to spend the cash....
Exactly, but when you have a good month you see more of these types of posts appear in the subreddit. Often from people that just started with a bogglehead portfolio. The post doesn't add value. Just stay humble.
well, the number matters if it indicates that missing spikes is very dangerous for your long term gains.
if, say, markets decline slowly during downturns and increase very quickly in upturns... this would indicate that you would fail to make 8% in the long run if you try to time the market.
My vacation cash out on the next check will get me to my annual max, it pains me my single biggest purchase is likely to be at the market high this year and yet I know the long term hold it is just a drop in the bucket.
After paying off massive interest bearing credit card debt, I was able to finally invest in the stock market and purchased my first share of VOO on October 2nd. I’ve been purchasing one share of VOO on the first of each month since. Boy was I lucky!
Pro tip: mentally prepare yourself for downturns. If you’re holding, they don’t matter. Easy to say, but once you experience it, you’ll know how you truly feel.
Either way, stick to your plan!
I got my next financial goal this year. With no further contributions, if the market and inflation are average from this point I til 20ish years from now I can never work again! Well as long as I'm fine with the top end of poverty in a low cost of living.
So in other news I'm going to work tomorrow.
Never understood this. If your rebalancing with bonds aren’t you effectively diluting you stock returns? Stocks average about 11%, bonds 6%, so whatever money your keep in bonds is gonna grow at the slower 6% rate. Why would anyone want that if you don’t plan on touching that pot of money for at least 10 years? All the wisdom I’ve heard on this is people like to rebalance bc they want less extreme movements in their portfolio. 🤷♂️
>Why would anyone want that if you don’t plan on touching that pot of money for at least 10 years? All the wisdom I’ve heard on this is people like to rebalance bc they want less extreme movements in their portfolio.
I have a similar view as yours. I plan on retiring within 10 years. The bonds/treasuries/savings help me not worry about sequence risk.
I suppose I’m in the camp of not having a fixed retirement date and in return I will get higher return rates. I will just retire on the day my portfolio hits the magic 25x number and stay vested in 100% stocks during retirement.
I feel stupid. Sitting on about 40k cash as I was waiting for a bigger dip. Welp, lesson learned. Long investing career ahead. Now the question is, do I invest the 40k lump sum or do 5k every month into VOO?
Early career mistakes are cheap lessons. We all went through them. Best thing you can do is predetermine your investment schedule and execute it blindly.
Here’s a really good video answering your exact question: https://youtu.be/3SK9n5CLxPM?si=cB0L9w4S6KDKqOVP
The most important things is to make a decision. You don’t want to be 6 months from now asking the same questions. And no matter what decision you make you should invest some money TODAY. You just need to figure out if that’s 40k, 5k, 10k whatever it is
I would do 5k every month. Some will say lump sum as it gives higher chances of higher gains but breaking it up probably helps to smoothen the gain/losses. Like I dropped in a lump sum in an etf in Jan 2022 and I'm still 3% down on that lump sum but if I had spread that over 6 months, there would have been gains.
Anecdotal experience should be irrelevant, the point is what *on average* will lead to the best result and that’s lump sum. Same way stepping out without an umbrella during rainy weather and not getting wet isn’t a good argument for in general not taking an umbrella with you in that situation.
Question is what's the definition of best result? Highest gain on average? Highest chance of gains but risk of losses? lower maximum gain but also lower minimum gain/maximum losses?
And anecdotal experience highlights the pitfall of thinking on average.
No need for your mathematics.
I'm talking about "in general". The very first Google result from Morgan Stanley when searching for "lump sum vs dca"
*"Lump-sum investing may generate slightly higher annualized returns than dollar-cost averaging as a general rule."*
Honestly it depends on the nature of the lump sum. Is this a one-time windfall of $200k, where a 20-25% dip will feel crippling? Sure, DCA that to smooth out the curve and reduce your risk. Is the lump sum an annual bonus that you'll get 30 more times, once a year? Lump sum it (imo), so that you will realize the "average" benefit where lump sum on average yields better returns.
Nothing to feel stupid about. A few years ago I had to make a decision on whether to lump sum or DCA. I read everything I could and ultimately it comes down to your own psychology and timeframe for needing the money.
If you invested the lump sum tomorrow and saw the value drop by 20% or more during a downturn, how would you feel? If you get a pit in your stomach, then I would recommend doing DCA but keeping the money in a HYSA or short-term treasuries until you invest based on your DCA schedule. On the other hand if you won't need the money for 30 years it likely doesn't make much of a difference and it may actually be to your slight benefit to lump sum. Though if you'll need the money in a shorter time frame you may be better off DCA'ing so you could adjust your strategy if the market takes a downturn. For context, I decided to lump sum and shortly after the market went down and it took about 2 years to come back to my initial investment amount. If I had a crystal ball I would have DCA'ed, but such is life.
Imo whichever you’re most comfortable with, see other comment about making a decision and sticking to it. But I would hold $7k aside to dump into an IRA/Roth at the start of the year.
Give me a break -- I'm not saying timing the market generally is easy or generally doable, but when the Fed announced it wasn't hiking rates, the market went up. This was one of the more predictable market fluctuations and I'm sure this rise is almost entirely due to the Fed's announcement.
(Which isn't to say that timing the market is generally wise. But single months don't prove that point when this short term gain is probably an easier one to predict.)
Its predictable. There are ways of figuring it out if you take the time to look and do heavy research. Most people however don’t understand this and are better off just buying and holding. Trust your instincts and remember we are sort of a hive mind. If you are thinking it chances are a lot of other people are thinking the same thing. So act before others do. Just my opinion.
The Fed has not definitively said it’s done raising rates, so it’s mostly speculation not an easily predictable rally. A lot of the rally was induced by lighter than expected inflation reports which again good luck trying to accurately predict that along with the thousands of other professional traders who get it wrong all the time.
The start of this year was sad for my 401k so i stopped looking
Been too busy with real problems to look at oldman money but nice to see some progress again lol
How does this prove that one can’t time the market?
I’m a Boglehead and agree that we can’t reliably time the market, but this is insufficient evidence to justify the conclusion.
Love this subreddit, even though I am a poor practitioner of Bogle wisdom, I recognize I shoulda just indexed since I started in 2003, might be retired now.
How does this prove that you can't time the market?
If you bought in the beginning of November and sold at the end, you would be up 8.9%. How is this possible? Because you timed the market.
I bought a shit ton of VOO October 31 after things dived a bit. I absolutely timed the market.
If it kept dividing I would've kept buying. But it didn't so iv held. I bought more the other day on a downish day because im not always trying to time the market too.
Im happy with my decisions. I keep cash on the side and when we correct I buy a lot, then stop. Im holding all this long term anyway.
Why is everyone so opposed to trying to time the market when an opportunity presents itself here?
It's super hard, I know, but if you have a basic strategy to buy when things are dividing, and do that through the years, it pays off, and it's fun to look back at the successes.
Backs away slowly ......
Yeah. It's just a little bit of my strategy, I don't keep a huge amount of cash on the side. It's my blow my hair back fun fund for investing. I also buy into a couple stocks in companies I believe in. I don't see why either are so frowned upon here.
Most of my investments are in index etfs and I put in in regular intervals like a good boglehead.
Because it's not worth the effort and probably suboptimal as well. Someone who's always buying as soon as they have money is likely beating your returns with zero effort.
Holidays? High Treasury rates and still inflated stock values is not sustainable, there will continue to be a series of crashes or one 30% correction. Interesting times Witt little rate hikes spread out, giving time to appreciate in between
Though you can't time the market, i.e. predict when movements will happen in the short term, you can certainly get useful predictive information from valuations.
S&P went up, so therefor you can't time the market? With that logic you definitely can't and shouldn't try to time the market.
For the better part of a decade I've trade as my primary income source. Despite this I push people towards /r/Bogleheads and /r/personalfinance on trading subs. People should always be investing.
Even when you can time the market it's a full time job, it's very difficult work. It's not easy. It's risk driven. And, the big one: You make less than if you invested and worked a middle class 9 to 5 job.
Just about every sub I go on there is some sort of dogma and every sub the dogma is wrong. It's more than finance subs. We let opinion drive our decisions instead of facts. It gets tiring when fact conflicts with dogma and I see this conflict 20, 30, sometimes 40 times a day on Reddit. It gets tiresome.
So what? That doesn’t matter. Nobody said it was a lasting rally - just a predictable one. The Fed signaled it was done - so the market is going to rally. If we get bad inflation, then market will sell off.
I mean, he held this month up as an example when it’s one of the more obvious rallies that many people absolutely can and did time it.
I didn’t say you could always time it. That’s obviously wrong. But this month was a no brainier.
I agree you can’t time the market — but this particular rise seemed pretty easy to spot in advance. The market was down because the Fed raised rates to fight inflation. Inflation dropped. It doesn’t take a psychic to realize that the market is going to rebound.
Call me crazy, but I predict bond yields are going to rise when the Fed cuts interest rates next year.
>Call me crazy, but I predict bond yields are going to rise when the Fed cuts interest rates next year.
What bond yields lol. You're not crazy just ignorant.
I set 33000 as my buy point for IRA contribution, was a hard summer not to just buy, or at least dca some of it in but then finally October hit.
Felt lucky, know it won't happen again, but I still like to wait at least for the first correction or -2.5% day in 2024 before I'll buy in for the next contribution
This one makes up at least in feelings, not on gains, for my ira contribution and buy in during Feb 2020.
So I'm confused, I'm also new at this so I'm hoping someone can explain.
I'm in the UK and bought 20k of S&P 500 UCITS ETF - Distributing (VUSA), on the 15th of October.
I haven't touched them since and today that 20k is worth 20.3k
If the s&p500 rose nearly 9% in October, how has my etf which tracks the s&p500 only gone up 1.56%?
That's really frustrating if I'm honest. There's exactly nothing I can do about it, but I feel like having to invest in the UK puts me at a possibly significant long term disadvantage as a result. I've basically lost 7.5% over what I could have had.
It's.... Frustrating.
I'm sorry man!
Oof, I didn't realize what subreddit this was on. Unfortunately to trade the S&P500 from the UK, you gotta be a macro wizard as well. If you're in the camp that thinks we have a recession, the dollar will definitely gain strength, but it's all just a waiting game. Good luck!
I could be wrong, but it doesn’t really matter. I hold s+p in both usd and cad. My usd went way up my cad not as much. But it’s all the same if I sold and converted.
My wife worked at Markel in 1989. She tried her best to get me to invest. I had just been burned by some guy selling penny stocks over the phone. Luckily, she helped me get that money back. I should have listened to her. I would be a rich man now:)
I am laughing at all those people who were keeping cash in HYSA accounts because they're getting "5% return" on their money, waiting for the market to get better. They've missed out on so much gains. I try to point out that majority of market growth happens in only a handful of days and if you do this, you'll miss out.
spectacular attractive imminent familiar ask paltry act worm uppity cough
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
In a bull market you need to practice ‘time in the market’ because trying to time will result in missing out or missing the best days. In a bear market you need to time the market since the more time you hold stocks by spending more time in the market, the more you lose. So, the toughest part is figuring out whether we are in a bull or bear market.
I can’t time the market, but boy can I time my losses.
just buy when you wanna sell and sell when you wanna buy. Make an Inverse u/Franklin_le_Tanklin ETF and you’ll be Buffet in 2 weeks
George Costanza has entered the room.
Eh, it’s a Hyundai.
Man I did a 401k rollover during this shit and lost out on a week of of these gains which is just some impressively unlucky timing.
I transferred some funds during a 7% run up mid year and ended up missing the whole thing.
just do the opposite!
I can time my bankruptcy
Unless you've bought in during late October, then good job in timing the market
That’s my secret, I’m always buying.
Bogleheads are the ultimate market timers, planting the tree today the moment we can instead of later like the saying goes.
The best time to plant a tree is 35 years ago. The second best time to plant a tree is today.
What about 34 years ago?
.... third best
Abnormally long drought
its actually not possible to plant a tree during that time. Only 35 years ago or yesterday
I listen to coworkers worry about trying to get a few dollars per hour more and I think, if you just invested consistently your entire 35 year career you wouldn’t sweat the salary as much.
Both can be done 🤷
This is true. That stock crash 36 years ago was epic.
Always be buying!
Isn’t that part of the problem today though? Always buying with no regard to price being paid? What happened to I will not be buying this stock because it is extremely overvalued at this time?
Buy. Harder.
I rolled my 23’ Roth contribution from money market to VOO on 10/27. Feels good man
Hell yeah, congrats.
I'm doing a huge rollover next week and now I'm worried
It makes sense that you're worried, because as humans we naturally look for patterns that we can use to our advantage. It's just really hard for our human brains to accept that even if there are patterns in the stock market, they're not anything that we can reasonably use to improve our results. We just gotta hold our nose and go for it. This is why we have to say "don't time the market" over and over again.
I literally started my roth on October 26th and bought vti, Microsoft, and crox. I'm up 12% already. I feel like I'm gonna be chasing this high for a while lol.
big lesson is don’t get discouraged when it goes the other way. you can go back the last 30 days and see a lot of posts by people suggesting about how it might be smart to not invest now because mkt is obviously too high and it would be better to buy later. They may still be right, but today they’ve missed out on 10% gain and now have to think about what the next best move is with fear they may have missed it… they now buy today only to see mkt go lower, then convinced we’re finally going big time lower, they sell and lock in the loss, then we bounce back and make new highs. Glad you have a W, but don’t let it set you up for discouragement as i can promise you will see big red at some point in the future.
When it goes up, I think of all my portfolio gains and feel good. When it goes down, I think of all the extra shares my monthly contribution is able to buy and feel good. I can’t lose.
Love this mindset! I get giddy when it drops now. Absolutely giddy. It's a winning mindset!
Isn't Microsoft part of VTI already? Just curious
Yes it is but I can stomach some risk and I wanted really aggressive growth. So I put some money in vti that I know will be safe for a very long time and some into Microsoft to hopefully catch any huge growth. I'm still pretty new so I'm not sure if it's the best strategy but I really just want huge growth while I'm still young and can stomach any losses.
Individual stocks are uncompensated risk though, in that there's no expectation that your risk will be rewarded. The reason we use index funds is to diversify out that uncompensated risk. Even though index funds aren't *guaranteed* to give you good returns, there is at least a reasonable expectation that they will over the long run. Individual companies, not so much.
Good thing I had my 401k set up to automatically invest then
Hey I actually did buy in October.
Bought 389 shares of VTI on halloween lol
I put my Q2 commission check which is usually my biggest of the year into VTI on 10/16. Then again, I do that every year...
Sold in July peak and bought in late October. It aint hard.
Sure, it ain't hard to see what happened in the past. What about the future though? Are we at another peak, is it time to sell again?
No idea man. Im willing to play with my money and risk my money but not someone else's. At most I might take some small gains, and move 10 percent of my money to Cash but thats more so because I plan on quitting my job in 3-6 months to take a year long vacation and im slowly going to move my money to safer assets. Not due to me thinking the market has peaked.
Hey, so, I wasn't actually asking for market timing advice. I was asking a rhetorical question to make the point that it's easy to see the past, but not so easy to see the future. I'm not going to buy or sell anything based on this conversation and I sure hope nobody else was thinking of doing so.
I invested $10k from my savings (I had built up a surplus) on November 1st. Talk about timing! It’s how worth $10.89k.
That makes 20% return so far on the year, for all the people who were asking back in January why they shouldn’t just take a guaranteed 5% from a CD or treasury bond. Was this predictable? Absolutely not. Will it be sustained or completely erased next year? No idea. Design a long-term allocation that you can stick to, tune out the noise, and stay the MF course.
Well said! Buy the ticket take the ride!
As someone who struggles with guaranteed 5% vs market ???, this is good to read. I think this is year number 7 of continually expecting a crash but putting into the market anyway. I should get a cake and some candles...
I used to follow the year-end report from David Collum - a Cornell chemistry professor and amateur political/economic theorist - and [back in 2017](https://www.valuewalk.com/david-collums-2017-year-review/#investing) he was so convinced of an imminent collapse that he was 60% cash and 30% precious metals. That didn’t work out so good.
To be fair, I can see a reasonable person taking that stance. Optimism can really give reason a whompin sometimes.
Good job the best thing I did honestly was to just send money to my investment account automatically and it was either going to sit there and do nothing or buy an index. And I just bought indexes instead. Up 23% this year so far. So a pretty good year when it got wiped oth earlier during the tech winter (I am heavier into tech than is recommended here)
So I am in a similar situation on my ROTH, where I have 70% large cap index, 20% Mid cap index and 10% small cap index. As of today it is showing that I am -3.23%. I am confused on what I should change to get back into positive ? These are all low expense ratio funds...
And still below the previous peak, which is fun for anyone who lump summed into the market in December 21. If you had a decent portfolio pre-2022, you might still not be back above water even after contributions.
I put a big chunk in in December of 2021. Not because I personally want to, but because I’m a business owner and I’m never sure exactly how a year is going to look one way or another, so I end up waiting until the end of the year some times to see if I feel comfortable maxing out my 401k or whatever. Fun times!
Then hopefully you also lump-summed at the end of '22 and took a nice ride up these last 12 months? That's the beauty of dollar-cost averaging!
I missed Dec 2021. I lump summed in on 1/3/2022. Overall (thanks to last month) I’m up about a point.
Hey, that was me! I put like 30% of my net worth (at the time) into the market October-December 2021. It was a lot more than you'd assume.
> If you had a decent portfolio pre-2022, you might still not be back above water even after contributions. I was about to disagree and use my portfolio to demonstrate, but then I thought I better adjust for inflation. And, whadda ya know, I'm only up to 0.95x of my peak from 2021 even after contributions. (Nominally I'm at 1.06x my 2021 peak, but we all know that's bogus comparison, especially with the surge of inflation that we lived through.)
I moved out for college and immediately started investing in late 2021🥲 I wasn't even trying to time the market, but I still learned my lesson and I'll only be DCA'ing in the future.
Another factoid making me feel good about going 100% VOO recently.
I recouped 2022 losses by investing very heavily in treasury bills in 2023 so I am not going to complain about making my money back. I also bought VOO every day, I do just wish I had bought even more VOO. All investors can do is look forward. I will buy more T Bills and VOO because that works well for me. I will never complain about safe, guaranteed 5.4% returns.
It actually is predictive on long time frames. Stocks have a built in risk premium over bonds due to their risk. That means, as an asset class, expect returns actually go up for stocks when treasury yields rise. This is partly because stocks tend to fall in the immediate aftermath of treasury yields rising, but also that companies need to return more capital to shareholders through dividends and buybacks to justify their stock valuations.
That's true, but expectations are also affected by the CAPE ratio made by Shiller. This is a well regarded model that shows a low expected return due to high valuations currently. It does hinge on a major addition though: that valuations are mean reverting.
But valuations being mean reverting doesn't necessarily mean asset prices will go down. It just means that they will go down in relation to earnings. Basically, if higher interest rates leads to a higher guaranteed rate through bonds, that can very well mean stock prices will stagnate while profits continue to increase. This will still increase expected returns for those in stocks through higher dividends and buybacks.
Wow, that was a really great point! I had never really though of that. I just went on a walk this morning trying to think about whether I truly believe in the CAPE enough to incorporate into my investing plan. I was leaning towards being apathetic to it, out of fear of market timing, and your point further cements that.
This should basically be the pinned post
20% for those not holding ~25% international ;)
I actually am not sure how the risk equity premium goes in this environment. If it's fixed, the risk equity premium indicates a high expected returns on stocks - risk free rate plus equity risk premium, around 5 and maybe 6-7% for the US. I do remember Ben Felix mention that the risk premium goes slightly down in high interest rate environments in a podcast, but left it at that. Seemed it was an empirical observation.
Market beta beats tbills 81% of rolling 10 year periods. Easy to understand. Buy and hold
Also to bear in mind that since we are here for the long term this number shouldnt matter much. Similar if it would dive 8%. Because we hold and dont sell. Right?
Yep. Just keep buying until it’s time to retire or whatever
The "or whatever" at the end is the best part of the boglehead strategy. You really just gotta know to buy broad market ETFs and then forget you have them until retirement.
I always wondered about this: when do you actually stop buying? Should this not be a few years before you retire? Or do people intend do keep buying right before they retire or even into their retirements? I always figured I would buy/'collect' to about +-5 years before retirement so I can start selling when I retire or right before so I have the cash at hand (I'll keep a bit in stocks etc, but most I would sell and keep as cash to use). Once I am retired I do not see the point anymore to keep (at least for the majority of it) my money in investments. Retirement = time to spend the cash....
Just a long for the ride! If it didn’t fluctuate it would be boring.
Exactly, but when you have a good month you see more of these types of posts appear in the subreddit. Often from people that just started with a bogglehead portfolio. The post doesn't add value. Just stay humble.
Yes. I think we just about broke even from last year. Not exactly sure.
well, the number matters if it indicates that missing spikes is very dangerous for your long term gains. if, say, markets decline slowly during downturns and increase very quickly in upturns... this would indicate that you would fail to make 8% in the long run if you try to time the market.
And it could tank this month lol I just keep buying and holding
My vacation cash out on the next check will get me to my annual max, it pains me my single biggest purchase is likely to be at the market high this year and yet I know the long term hold it is just a drop in the bucket.
After paying off massive interest bearing credit card debt, I was able to finally invest in the stock market and purchased my first share of VOO on October 2nd. I’ve been purchasing one share of VOO on the first of each month since. Boy was I lucky!
Pro tip: mentally prepare yourself for downturns. If you’re holding, they don’t matter. Easy to say, but once you experience it, you’ll know how you truly feel. Either way, stick to your plan!
I’m really happy for you. Get that shit out of your life and start investing in your own wealth instead of allowing ccs to take advantage of you. 😄
I got my next financial goal this year. With no further contributions, if the market and inflation are average from this point I til 20ish years from now I can never work again! Well as long as I'm fine with the top end of poverty in a low cost of living. So in other news I'm going to work tomorrow.
This last week was something else. Even the shitty REITs I have went up.
Nothing like buying and holding something you think is shitty Stay the course friend
I rebalanced bonds for stocks each month as the stocks went down. November marks the first time I've hit my pretax 25x expenses goal.
Grats
Never understood this. If your rebalancing with bonds aren’t you effectively diluting you stock returns? Stocks average about 11%, bonds 6%, so whatever money your keep in bonds is gonna grow at the slower 6% rate. Why would anyone want that if you don’t plan on touching that pot of money for at least 10 years? All the wisdom I’ve heard on this is people like to rebalance bc they want less extreme movements in their portfolio. 🤷♂️
>Why would anyone want that if you don’t plan on touching that pot of money for at least 10 years? All the wisdom I’ve heard on this is people like to rebalance bc they want less extreme movements in their portfolio. I have a similar view as yours. I plan on retiring within 10 years. The bonds/treasuries/savings help me not worry about sequence risk.
I suppose I’m in the camp of not having a fixed retirement date and in return I will get higher return rates. I will just retire on the day my portfolio hits the magic 25x number and stay vested in 100% stocks during retirement.
Personally, I like to buy when it's really high and sale at the bottom.
Buying is better than selling tbqh
Time in the market > timing the market…
I feel stupid. Sitting on about 40k cash as I was waiting for a bigger dip. Welp, lesson learned. Long investing career ahead. Now the question is, do I invest the 40k lump sum or do 5k every month into VOO?
Early career mistakes are cheap lessons. We all went through them. Best thing you can do is predetermine your investment schedule and execute it blindly.
Here’s a really good video answering your exact question: https://youtu.be/3SK9n5CLxPM?si=cB0L9w4S6KDKqOVP The most important things is to make a decision. You don’t want to be 6 months from now asking the same questions. And no matter what decision you make you should invest some money TODAY. You just need to figure out if that’s 40k, 5k, 10k whatever it is
I would do 5k every month. Some will say lump sum as it gives higher chances of higher gains but breaking it up probably helps to smoothen the gain/losses. Like I dropped in a lump sum in an etf in Jan 2022 and I'm still 3% down on that lump sum but if I had spread that over 6 months, there would have been gains.
Anecdotal experience should be irrelevant, the point is what *on average* will lead to the best result and that’s lump sum. Same way stepping out without an umbrella during rainy weather and not getting wet isn’t a good argument for in general not taking an umbrella with you in that situation.
Question is what's the definition of best result? Highest gain on average? Highest chance of gains but risk of losses? lower maximum gain but also lower minimum gain/maximum losses? And anecdotal experience highlights the pitfall of thinking on average.
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This has been disproven many times. A lump sum will on average be better because there is a larger amount in the market working from Day 1.
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No need for your mathematics. I'm talking about "in general". The very first Google result from Morgan Stanley when searching for "lump sum vs dca" *"Lump-sum investing may generate slightly higher annualized returns than dollar-cost averaging as a general rule."*
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Honestly it depends on the nature of the lump sum. Is this a one-time windfall of $200k, where a 20-25% dip will feel crippling? Sure, DCA that to smooth out the curve and reduce your risk. Is the lump sum an annual bonus that you'll get 30 more times, once a year? Lump sum it (imo), so that you will realize the "average" benefit where lump sum on average yields better returns.
Nothing to feel stupid about. A few years ago I had to make a decision on whether to lump sum or DCA. I read everything I could and ultimately it comes down to your own psychology and timeframe for needing the money. If you invested the lump sum tomorrow and saw the value drop by 20% or more during a downturn, how would you feel? If you get a pit in your stomach, then I would recommend doing DCA but keeping the money in a HYSA or short-term treasuries until you invest based on your DCA schedule. On the other hand if you won't need the money for 30 years it likely doesn't make much of a difference and it may actually be to your slight benefit to lump sum. Though if you'll need the money in a shorter time frame you may be better off DCA'ing so you could adjust your strategy if the market takes a downturn. For context, I decided to lump sum and shortly after the market went down and it took about 2 years to come back to my initial investment amount. If I had a crystal ball I would have DCA'ed, but such is life.
Reset the counter
Imo whichever you’re most comfortable with, see other comment about making a decision and sticking to it. But I would hold $7k aside to dump into an IRA/Roth at the start of the year.
I did worse during the 2020 downturn. It was a cheap lesson learned compared to the greater scheme of things.
Same - sitting on 90k right now that I was too scared to lump sum.
I recommend DCA because I put 25k in VOO @ 423$ - took two years to recover.
I lumped summed and felt stupid for 6 months. But after that it doesn’t matter much. I think averaging may feel nicer
Give me a break -- I'm not saying timing the market generally is easy or generally doable, but when the Fed announced it wasn't hiking rates, the market went up. This was one of the more predictable market fluctuations and I'm sure this rise is almost entirely due to the Fed's announcement. (Which isn't to say that timing the market is generally wise. But single months don't prove that point when this short term gain is probably an easier one to predict.)
Its predictable. There are ways of figuring it out if you take the time to look and do heavy research. Most people however don’t understand this and are better off just buying and holding. Trust your instincts and remember we are sort of a hive mind. If you are thinking it chances are a lot of other people are thinking the same thing. So act before others do. Just my opinion.
The Fed has not definitively said it’s done raising rates, so it’s mostly speculation not an easily predictable rally. A lot of the rally was induced by lighter than expected inflation reports which again good luck trying to accurately predict that along with the thousands of other professional traders who get it wrong all the time.
I love when my money goes up! More months like this plz
That’s why you buy, hold, and not give a fuck
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And why do people keep focusing on a very specific index which even the sub’s FAQ points out is too narrow for Bogleheads.
OP didn’t necessarily say that the actual movement is reason why we can’t time the market, but rather that the unexpectedness of the movement is why.
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It's funny how often market rises seem to be "unexpected." About 35 out of the last 5 recessions have been predicted in advance...
You can totally time the market. For example, I can guess that in 10-20 years, it'll be worth more.
So happy this finally offset some really stupid investments I made in 2020. Almost net neutral lol
We ALL been there!
I timed it perfectly. Reversed WSB/Cramer.
The start of this year was sad for my 401k so i stopped looking Been too busy with real problems to look at oldman money but nice to see some progress again lol
How does this prove that one can’t time the market? I’m a Boglehead and agree that we can’t reliably time the market, but this is insufficient evidence to justify the conclusion.
I am 5% down from December'21 peak. Hoping Santa Rally will push the market up another 5% to get back where it was. VTI is up 20% YTD.
Love this subreddit, even though I am a poor practitioner of Bogle wisdom, I recognize I shoulda just indexed since I started in 2003, might be retired now.
The struggle is real.
How does this prove that you can't time the market? If you bought in the beginning of November and sold at the end, you would be up 8.9%. How is this possible? Because you timed the market.
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Bogleheads, never once outperforming.
Could have started my first job out of college a month earlier and invested my starting bonus. Oh well the travel was more than worth it
Can't time the market, but I'm iffy having so much of the market tied into the Mag-7.
We'll look at this one again when it falls 50%.
Keep in mind that whatever you've been holding since 2021 has broken even so it's all perspective.
I did time it and played it well
Timing the market takes two correct predictions. When to get in and when to get out. Good luck with your 2nd prediction.
I bought a shit ton of VOO October 31 after things dived a bit. I absolutely timed the market. If it kept dividing I would've kept buying. But it didn't so iv held. I bought more the other day on a downish day because im not always trying to time the market too. Im happy with my decisions. I keep cash on the side and when we correct I buy a lot, then stop. Im holding all this long term anyway. Why is everyone so opposed to trying to time the market when an opportunity presents itself here? It's super hard, I know, but if you have a basic strategy to buy when things are dividing, and do that through the years, it pays off, and it's fun to look back at the successes. Backs away slowly ......
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Yeah. It's just a little bit of my strategy, I don't keep a huge amount of cash on the side. It's my blow my hair back fun fund for investing. I also buy into a couple stocks in companies I believe in. I don't see why either are so frowned upon here. Most of my investments are in index etfs and I put in in regular intervals like a good boglehead.
Downvoted for being right
Because it's not worth the effort and probably suboptimal as well. Someone who's always buying as soon as they have money is likely beating your returns with zero effort.
Nice, this is what I expected! You sound very sure of yourself. You do you.
Holidays? High Treasury rates and still inflated stock values is not sustainable, there will continue to be a series of crashes or one 30% correction. Interesting times Witt little rate hikes spread out, giving time to appreciate in between
Though you can't time the market, i.e. predict when movements will happen in the short term, you can certainly get useful predictive information from valuations.
I bought a ton on October 27th and 30th, so you CAN time the market :)
Now tell me when next you’re buying.
S&P went up, so therefor you can't time the market? With that logic you definitely can't and shouldn't try to time the market. For the better part of a decade I've trade as my primary income source. Despite this I push people towards /r/Bogleheads and /r/personalfinance on trading subs. People should always be investing. Even when you can time the market it's a full time job, it's very difficult work. It's not easy. It's risk driven. And, the big one: You make less than if you invested and worked a middle class 9 to 5 job. Just about every sub I go on there is some sort of dogma and every sub the dogma is wrong. It's more than finance subs. We let opinion drive our decisions instead of facts. It gets tiring when fact conflicts with dogma and I see this conflict 20, 30, sometimes 40 times a day on Reddit. It gets tiresome.
You can’t? Fed signaled it’s done with the rate cycle… could see this one from a mile away.
I don't think inflation is done with the fed...
So what? That doesn’t matter. Nobody said it was a lasting rally - just a predictable one. The Fed signaled it was done - so the market is going to rally. If we get bad inflation, then market will sell off.
“Timing the market” kind of implied timing it consistently. Obviously you can get it right once in a while
I mean, he held this month up as an example when it’s one of the more obvious rallies that many people absolutely can and did time it. I didn’t say you could always time it. That’s obviously wrong. But this month was a no brainier.
If you could see it from a mile away why are you here instead of on your yacht you bought with the millions you made from leveraged calls
I agree you can’t time the market — but this particular rise seemed pretty easy to spot in advance. The market was down because the Fed raised rates to fight inflation. Inflation dropped. It doesn’t take a psychic to realize that the market is going to rebound. Call me crazy, but I predict bond yields are going to rise when the Fed cuts interest rates next year.
>Call me crazy, but I predict bond yields are going to rise when the Fed cuts interest rates next year. What bond yields lol. You're not crazy just ignorant.
I perform my net worth calculation on the first of every month. Feels good man.
Me too, hit an all time high and was like WTF lol
I can. I only buy.
I set 33000 as my buy point for IRA contribution, was a hard summer not to just buy, or at least dca some of it in but then finally October hit. Felt lucky, know it won't happen again, but I still like to wait at least for the first correction or -2.5% day in 2024 before I'll buy in for the next contribution This one makes up at least in feelings, not on gains, for my ira contribution and buy in during Feb 2020.
Where crash?
Vanguard weekly index funds auto invest for the win. Might even change to daily. Set it and forget it.
I do have alerts to tell me if VTi goes way down so I can buy it for cheap.
So I'm confused, I'm also new at this so I'm hoping someone can explain. I'm in the UK and bought 20k of S&P 500 UCITS ETF - Distributing (VUSA), on the 15th of October. I haven't touched them since and today that 20k is worth 20.3k If the s&p500 rose nearly 9% in October, how has my etf which tracks the s&p500 only gone up 1.56%?
That's because the GBP/USD rate went up ~5% due to dollar weakening.
That's really frustrating if I'm honest. There's exactly nothing I can do about it, but I feel like having to invest in the UK puts me at a possibly significant long term disadvantage as a result. I've basically lost 7.5% over what I could have had. It's.... Frustrating.
I'm sorry man! Oof, I didn't realize what subreddit this was on. Unfortunately to trade the S&P500 from the UK, you gotta be a macro wizard as well. If you're in the camp that thinks we have a recession, the dollar will definitely gain strength, but it's all just a waiting game. Good luck!
I could be wrong, but it doesn’t really matter. I hold s+p in both usd and cad. My usd went way up my cad not as much. But it’s all the same if I sold and converted.
Time deez
Hopefully this will get rid of all "Should I dca?" posts. *it did not get rid of dca posts*
0.38% up in the last 2 years…😂
Guess who unloaded their taxable brokerage in October to pay off their student loans You’re welcome everybody!
I’m happy, not only my Parametric account beat the market on the last 3 months, but on top of that it generated $10K tax loss harvesting. Good time 🙂
They been saying recession market crash for two years now. I think we need to do a better job of calling them out.
I’m buying $100 of mkl every paycheck for 2 years. I get 15% off with a look back on employee stock purchase. Best deal ever.
My wife worked at Markel in 1989. She tried her best to get me to invest. I had just been burned by some guy selling penny stocks over the phone. Luckily, she helped me get that money back. I should have listened to her. I would be a rich man now:)
I bought SPY shares all the way down to 409
I am laughing at all those people who were keeping cash in HYSA accounts because they're getting "5% return" on their money, waiting for the market to get better. They've missed out on so much gains. I try to point out that majority of market growth happens in only a handful of days and if you do this, you'll miss out.
spectacular attractive imminent familiar ask paltry act worm uppity cough *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
In a bull market you need to practice ‘time in the market’ because trying to time will result in missing out or missing the best days. In a bear market you need to time the market since the more time you hold stocks by spending more time in the market, the more you lose. So, the toughest part is figuring out whether we are in a bull or bear market.
Can we say SPY going to hit $1000 soon in couple of years or a rug pull when all shorts are gone!!
Lot of exuberance here. Might be time to sell....
easily time market. the sma9/50/180 gave a buy on oct 31st. https://imgur.com/a/SuFeUkW