Investing

Market timing step 2: going back in

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  • Oct 28th, 2020 11:08 am
[OP]
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Aug 4, 2014
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@TuxedoBlack , don’t want to clutter your DGI thread, but would love your opinion on yet another often repeated/quoted statement that had me dubious - glad someone finally tries to debunk it! :)
But... What kind of meaningless statement is that to make people fear the impact of being out of the market?

Okay, so here's why that statement is meaningless and totally biased. I downloaded S&P 500 daily prices from 1990-09-01 to 2020-09-01 (today), that's 30 years, 5776 trading days. I calculated the daily return from the prices.

Result : +8.27% CAGR for those specific 30 years.

Oh, but wait, what if you've missed the 10 best days? Result : +5.49% CAGR for those 30 years. Ouch!

Then, let's make it scarier, as they do it :

If you've missed the 20 best days? +3.65% CAGR
If you've missed the 30 best days? +2.10% CAGR
If you've missed the 40 best days? +0.72% CAGR
If you've missed the 50 best days? -0.56% CAGR
If you've missed the 60 best days? -1.75% CAGR

Wow, that's scary! Therefore, you should always be fully invested in the market and never miss a day.

Ok... What if... But what if you've missed the 10 worst days? Result : +11.48% CAGR for those 30 years. Nice!

Let's make it funnier this time :

If you've missed the 20 worst days? +13.69% CAGR
If you've missed the 30 worst days? +15.56% CAGR
If you've missed the 40 worst days? +17.26% CAGR
If you've missed the 50 worst days? +18.80% CAGR
If you've missed the 60 worst days? +20.23% CAGR

So... using the same logic, the more days I miss, the better is my return?

There's no logic to try to prove a point by using the outliers, the extreme values! The 10 best days are the 10 least probable days out of 7556 days, so you have 0.13% chance of missing out on all of the 10 best days in 30 years, as you have 0.13% chance of missing out on all of the 10 worst days in 30 years.

Most days are average days so if you miss an average day, what will happen to your overall return on 30 years? Barely nothing!
If you've missed the 10 best days... Scary things happen? (Debunked)
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freilona wrote: @TuxedoBlack , don’t want to clutter your DGI thread, but would love your opinion on yet another often repeated/quoted statement that had me dubious - glad someone finally tries to debunk it! :)



If you've missed the 10 best days... Scary things happen? (Debunked)
Great thread. Funny and informative.

What should be emphasized is that the worst days are *often* followed by the best days. During market turmoil, there are tons of sharp declines but also crazy sharp increases as well.

That is the main reason why market timing does not work. You may be able to time the top, but when do you get back in? There are few posters here who got out of the market in March when it was near the bottom, and they still have not gotten back in. I feel for them.

At the end of the day, no matter your style of investing, you have to stay the course. You cannot be switching different strategies. If you keep on switching your plan, you are likely to not reach your financial goals.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: XIC

It's really that simple.
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TuxedoBlack wrote: Great thread. Funny and informative.
...
At the end of the day, no matter your style of investing, you have to stay the course. You cannot be switching different strategies. If you keep on switching your plan, you are likely to not reach your financial goals.
I haven’t checked CMF in a while (as it seemed even more stale there than here 🤪), glad to have found some like-minded posters now (who also weren’t happy with mediocre XAW & Co. - and are exploring newer factor ETFs :))
So the portoflio, oriented for growth, is composed of (by weigting position):

DXG - Dynamic Active Global Dividend
ZGQ - BMO MSCI All Country World High Quality Index
CMAG - CI Munro Alternative Global Growth

ETHI - Horizons Global Sustainability Leaders Index

Ecxited to see how it perform.
...
It might be a good idea to buy them only on the dip. Depends of your strategy.
ZGQ - BMO MSCI All Country World High Quality Index ETF
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freilona wrote: I haven’t checked CMF in a while (as it seemed even more stale there than here 🤪), glad to have found some like-minded posters now (who also weren’t happy with mediocre XAW & Co. - and are exploring newer factor ETFs :))



ZGQ - BMO MSCI All Country World High Quality Index ETF
Do you know what I'm really looking forward to? I'm looking forward to the actual returns over the next years for all of the funds, to compare and see if a low-maintenance index fund would have been better than all these new, cool-sounding funds. :)

Hit me up in 5 years from now so we can compare performance from 2020 to 2024. I promise I will not switch my funds (XAW, VEQT, VAB, XIC).
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: XIC

It's really that simple.
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Not doing anything yet and not in a hurry, but IF the rout continues, will be adding to AQN for the USD investment account, and BTE.to in the gambling account.

Keeping in mind that the average seasonality for stocks is that September has the largest drops, and October marks the low of the correction if there is one.

https://stockcharts.com/freecharts/cand ... O|C|B14|-1
[OP]
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TuxedoBlack wrote: Hit me up in 5 years from now so we can compare performance from 2020 to 2024. I promise I will not switch my funds (XAW, VEQT, VAB, XIC).
I held XAW for 5 years in my TFSA (basically, soon after it first came out :)) - and was looking for its replacement for the last two I think.. lol Settled on ZGQ (just bought first 300 shares @$41.14) as I’ve been watching it since May and it seems like the best long-term hold to me (nope, I don’t particularly like jumping in and out of ETFs, hence decided against Nasdaq 100 ETFs and went for something less volatile)

In ZGQ’s first few years (it’s actually a year older than XAW ;)), the performance was similar to XAW and then higher US exposure started paying off. Will be happy to compare if it outperforms XAW in the next 5 years or I had yet another unsuccessful fit of “chasing the performance” :)
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freilona wrote: I held XAW for 5 years in my TFSA (basically, soon after it first came out :)) - and was looking for its replacement for the last two I think.. lol Settled on ZGQ (just bought first 300 shares @$41.14) as I’ve been watching it since May and it seems like the best long-term hold to me (nope, I don’t particularly like jumping in and out of ETFs, hence decided against Nasdaq 100 ETFs and went for something less volatile)

In ZGQ’s first few years (it’s actually a year older than XAW ;)), the performance was similar to XAW and then higher US exposure started paying off. Will be happy to compare if it outperforms XAW in the next 5 years or I had yet another unsuccessful fit of “chasing the performance” :)
Good one. ZGQ can also outperform if USD$ outperform CAD$, but this ETF will underperform if vice-versa.

Also note that XAW is more of an all-rounder, as it has ~60% in US equities rather than 70% in ZGQ. You're betting on US to be a power-house which is not a bad bet by any means.

We shall see! Will you remember our bet? Will you still be around RFD? LOL.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: XIC

It's really that simple.
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Aug 16, 2015
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sorry. what is the point of it exactly? It appears to be another SPY clone basically. interesting that bmo put in cigarette stocks for some reason. glad they are considered high quality. lol.
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kilburn305 wrote: sorry. what is the point of it exactly? It appears to be another SPY clone basically. interesting that bmo put in cigarette stocks for some reason. glad they are considered high quality. lol.
Hubby’s had VFV in his TFSA for years and is happy with it. I wanted some world exposure in mine (on an off chance some say Australian company becomes a new Apple in my lifetime :)) And BMO is using MSCI Quality Index (not theirs): https://www.msci.com/eqb/methodology/me ... dology.pdf

Why we’re still holding XEF in both RRSPs and is there something better is my next “something to ponder about” question.. Face With Tears Of Joy
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Nov 27, 2019
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@freilona

Hello Bond Lady :) do you plan any shopping soon?
If the dips continue I'll consider to go in shopping with my new "Bond Debit card".
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@florenntina I still have <30K CAD in my TFSA (slated for ZGQ, just bought the third last Friday) and 3K+ USD in my RRSP with 110K+ in GICs maturing post US elections, so hopefully won’t have to touch bonds Grinning Face With Smiling Eyes
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TuxedoBlack wrote: Great thread. Funny and informative.

What should be emphasized is that the worst days are *often* followed by the best days. During market turmoil, there are tons of sharp declines but also crazy sharp increases as well.

That is the main reason why market timing does not work. You may be able to time the top, but when do you get back in? There are few posters here who got out of the market in March when it was near the bottom, and they still have not gotten back in. I feel for them.

At the end of the day, no matter your style of investing, you have to stay the course. You cannot be switching different strategies. If you keep on switching your plan, you are likely to not reach your financial goals.
I like the logic for broad-based indexes or ETF's. I switched back to JFL Canadian Equity on a Friday and the index bounced back 10% after a 10% fall the prior day. I could have easily gotten another 10% return but I had a conference to attend and forgot I could switch to equities before the 4pm cut-off haha. Just imagine a mutual fund's NAV dropping by 10% only to almost recover everything the next day.

=====

I wonder if that is also true with individual stocks or if individual stocks are more likely range-bound (barring the high flyers and massive droppers), I know tuxedoblack doesn't invest in individual stocks.

I am feeling like a sub-monkey throwing darts at the target. May switch to tuxedoblack's investment style in a few years.
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alanbrenton wrote: I am feeling like a sub-monkey throwing darts at the target. May switch to tuxedoblack's investment style in a few years.
I used to define my strategy as “indexing with the elements of market timing”. But yeah, after this crazy year can’t wait to go back to buy & hold & DCA Face With Tears Of Joy
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freilona wrote: For how long? :) I can see that for retirees who downsized and need to invest the proceeds for income in the non-reg Account. But if your main goal is portfolio growth with years till retirement, I’d do what @Shaun80 advocates and go all in US tech instead - at last until the techno music lasts.. :)
techno music didn't last too long. I was thinking of shorting it via leveraged inverse when the RSI hit overbought but was gun shy :(.... fail.

You buying techno here? I wont be. maybe at nasdaq 9500 if it gets that "low".

Interestingly my ZDV barely moved and VRE went up.... so far...

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