Market Timing: Should You Attempt It?
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- KLR
- Kirk
- Will_L
- Rande
- Mark_J
- Rande
- Mark_J
- Rande
- Kirk
- Mark_J
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» KLR - Buy and hope
Buy and hopeMarket timers bet on the stock market's direction
By Thomas Kostigen, CBS.MarketWatch.com
Last Update: 1:00 AM ET Aug. 30, 2001
LOS ANGELES (CBS.MW) -- Trying to beat the market and time the market are two different things.
Stock market timing is a disciplined approach to investing. But it preys on volatility - which there's no shortage of nowadays.
Market timers bet on the direction of the market and which sectors will outperform. They concentrate holdings in a certain sector until their analysis shows another group is more ripe for investment. Then they'll shift holdings, and so on. Some market timers will even sell short sector holdings, believing that area will take a nosedive.
"Market timers can do extremely well in times of market volatility," says financial adviser Tom Lydon at Global Trends Investments in Huntington Beach, Calif. "The trick is being right."
At a time when benchmark indexes are all down, some market timers are generating positive returns this year. Stock Market Forecaster, for example, has returned 3 percent year-to-date, while the Standard & Poor's 500 Index is off more than 12 percent.
Investing when the market is rising and selling it short when it's falling positions an investor for the most investment return the stock market can give.
And that's what market timers shoot for.
"What we all need is a mechanical method to give us an emotionless way to keep us in the market when the odds of a run up are in our favor, keep us on the sidelines when things are uncertain and allow us to profit during market declines when the odds indicate a weakening market," says JB Capital Management, a market timing firm.
Getting technical
Some get it right. JB, for example, says it has bested the S&P 500 Index every year since1982 by using a technical asset allocation model.
Many firms engage in the technical practice of market timing. The Society of Asset Allocators and Fund Timers in Littleton, Colo., represents 200 firms with $14 billion under management. This group believes in active market management to produce higher adjusted returns.
The current market environment, the unstable in history, offers opportunity, but it's not without some pitfalls.
"You can never guess the market and get it right all the time," says long-time buy and hold investor Martin Whitman in New York. "That's dumb luck."....
-- posted by KLR
» Kirk - MSDW Phil Roth
...says to sell Nasdaq now if you don't like what you hold.Amazing.. He is on CNBC saying that DOW could reach Spring lows but he thinks many stocks won't and odds are the DOW stocks won't or they might set a minor new low.
Seems to like Value Stocks as a good place to be, but he just doesn't like tech.
Hmmmm.... I wonder what he was saying to do March 2000? 
-- posted by Kirk
» Will_L - Re: MSDW Phil Roth
In response to message posted by Kirk:Yeah Kirk. I don't know what's gonna happen but I suspect that many folks will read a lot of articles saying small cap and value or 'small cap value funds are the place to be, having out performed this last year. They will then set their fingers to work moving money out of large cap and tech funds into that "great new idea".
They'll get their clocks cleaned as they watch what they sold outperform what they bought.
Flannigan had an interesting piece one weekend. Those that buy load funds outperform investors in no load funds while the funds themselves underperform. Why? Load fund buyers are not as likely to switch to the fund dejour.
-- posted by Will_L
» Rande - Re: MSDW Phil Roth
In response to message posted by Kirk:...I wonder what he was saying to do March 2000?
Wonder no more mon ami:
CNNfN, March 2, 2000
ROTH: I'm certainly not advising investors sell technology stocks unless they have a vastly overweighted position, unless they had a big concentration, unless they needed the money, unless they didn't have any cash at all. If investors have a moderate overweight in technology, they really should hold those positions. They're going to have to suffer through consolidations from time to time, but you don't want to be selling your biggest winners. You sell all your winners you only end up with losers.
CNN Moneyline, March 14, 2000
PHIL ROTH, MORGAN STANLEY DEAN WITTER: That's a normal pull back, so investors must be prepared to see this kind of volatility, but I'd look for the stocks to begin to grab around these levels.
CNBC, March 30, 2000
Analyst Phil Roth says the NASDAQ could fall to at least 4,030. That would be a decline of 20 percent off the index's highs. In a worst case, he says the index could fall to 3,780. That would be a fall of 25 percent.
___________
He's a technical analyst, so whaddya expect? Remember when 4,000 was "support?"
-- posted by Rande
» Mark_J - Re: Re: MSDW Phil Roth
In response to message posted by Rande:Back then, the host of a weekend financial program who shall go nameless on threads outside of the thread named after him, said that he didn't see the bottom of the Nasdaq going below the 1400-1700 range. Many thought that was ridiculous back then; but, that was then, this is now.
-- posted by Mark_J
» Rande - Re: Re: Re: MSDW Phil Roth
In response to message posted by Mark_J:
Uh, Mark....if you think harder you might remember that around early March (and during most of the nearly 55% run for QQQ from early January through the third week of March) Brinker was saying stuff like "It's impossible to time the Nasdaq," or "If you want advice on the Nasdaq I'm the wrong person." He was still commenting on the rest of the market, however. Right before that first post from Roth up there, the last weekend in February actually, Brinker said there was "no chance" that the S&P would return to its highs in the foreseeable future. Of course, that's exactly what the S&P did, and within just a few weeks to boot as it had the best month in its long history during March of 2000.
-- posted by Rande
» Mark_J - Re: Re: Re: Re: MSDW Phil Roth
In response to message posted by Rande:Oh, exactly, and we know how the analyst whose name you used outside of the thread named after him fared on short-term calls in that sector. Nevertheless, when talking about the overall size and duration of the bear market, he predicted that the bottom would be in the 1400-1700 range.
That analyst could be wrong on that one, because the market will do what the market will do. We shall see in the fullness of time how close he is on that bottom prediction.
-- posted by Mark_J
» Rande - Re: Re: Re: Re: Re: MSDW Phil Roth
In response to message posted by Mark_J:Mark,
Have to ask Kirk, but it's probably okay to refer to Brinker here on the Market Timing thread. After all, what better place to point out the failure of market timing and what better example than Brinker? It would be a good idea to knock off the stooge routine here though. There might be a lot of people out there who are looking for serious information and don't understand about the garbage that seems to follow Brinker around the Internet.
-- posted by Rande
» Kirk - Mark
Please take your garbage to your thread. Stop wasting people's time here. We are sick and tired of your childish nonsense.Brinker suggested people buy QQQ, the proxy for the NASDAQ, with up to 50% of their cash reserves (about 1/3 their portfolio for his agressive investors) on 10/16/00 when QQQ was at $83. Calls to his office said he was "comfortable with $86" for QQQ that week.
Well, today QQQ closed at $36. Brinker is an ummitigated bust and now talks about GNMAs and Bonds on his show as he now knows better than to pretend he knows what the market will do in the short term.
Yeah, he got people out with a good chunk of money but he also advised them to jump back into the nasdaq just before it was crushed.
Problems with market timing is you have to get all your calls right or you look a fool.
-- posted by Kirk
» Mark_J - Re: Mark
In response to message posted by Kirk:One of the things I like about that post, is your pointing out how well GNMAs have done the past year. You nailed it! They have been a stellar investment. Congratulations to those who have been in GNMA funds the past year. I mean, the performance difference between that and a diversified, total stock market fund, has been mind shattering.
But yes, Brinker did mention on his program last year that he thought it would be difficult for the Nasdaq to get below the 1400-1700 range during this bear market. I just throw that out there as food for thought. I'll post that on this thread, or any other thread you like. I'm here to help, Kirk. I think investors should have the whole universe of information out there with which to base their financial decision on. That's always been my position on that one.
Thanks for the post, Kirk! And good luck in the job hunt! I was listening to CNET this AM, and they were saying that one of the bright job spots in this market is for engineers. I know a man of your talents and capabilities will find work with no problems whatsoever! (Just make sure to negotiate a free afternoon or two here and there for windsurfin'...)
Rock on!
-- posted by Mark_J
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