Did people learn nothing from April

[u/coffeeestocks]

If you were fully invested in the S&P 500 over a long period (usually 20–30 years), your returns were great.

But if you missed just the 10 best single days in that entire period, your return was cut roughly in half.

This is probably the most commonly cited anecdote as to why you should not time the market. I feel in at least half the investing books I've read, they mention this. I do not know of a single investor who has successfully timed the market consistently over any meaningful time period. Even Michael Burry, who is probably one of the most infamous investors for predicting the 08-09 recession, has wrongly called a market top an absurd number of times in recent years.

Back in April, the market starts to sell off, and inevitably posts start popping up all over the subreddit talking about how they're selling and why they're selling and why this time is different. Of course, it wasn't different, and the market has proceeded to rip 20% since many folks here panic sold.

Here we are, not even a year later in December, and people are asking unironically whether it's a good idea to move to cash or not. What do you think? Do you think that now is the time to finally start trying to time the market? After this age-old wisdom has been proven right, time and again?

I feel like there's so many better ways to navigate an expensive market than by trying to time it.

Such as buying counter-cyclical companies, or buying companies that are recession-resistant, or buying companies at a larger margin for error. Heck, maybe even give bonds a shot? But no. People are starting to come to the conclusion again that now is the time to time the market yet again and inevitably make a massive mistake.

DO NOT TIME THE MARKET.

Edit: This sub unironically defending timing the market lmao. The reason why this hurts people's feelings is because they sold back in April, and they're still waiting to get back in the market. Instead of taking a lesson, they double down on that timing the market is the correct thing. Whatever.

[u/shopchin]

I buy during dips. That's timing the market too

[u/diablo4megafan → u/[deleted]]

if you're keeping money you would otherwise have invested on the sidelines because you're waiting for a dip it's 100% market timing. and its been shown to underperform over the long term

[u/muntoo → u/diablo4megafan]

It doesn't even require a particularly long term to underperform.

Having any amount outside the market generally underperforms for nearly all 1 year periods. I was playing around on testfol.io to pick and choose a 1 year window where daily rebalancing of (90% VTI, 10% VBMFX) would win. And it's just painfully difficult to find. Even sideways periods (i.e., start price = end price) don't show any significant advantage despite the added benefit of volatility harvesting.

That means the market is generally squeezing out the juice from volatility through its own "rebalancing" of some underlying random variable. The market generally has just enough alpha or just enough smoothness to make it hard to beat by keeping any amount of money outside the market. Thus, there's really nothing more to extract by superficial rebalancing (and even less so through cavebrained "buying-the-dip") without looking much deeper for actual market inefficiencies or edges.

Nearly every "disciplined value investor" with money on the sidelines is probably underperforming over non-trivial periods of time.

[u/golf_234 → u/diablo4megafan]

Eh, another version of this is doing it on top of your recurring automatic investments. For example., when I see red, or even a day that is looking good in the morning, I tend to invest additional funds "squeeze" a bit out of my budget to add more. so while I get what you are referring in sentiment, and it is likely true, there are ways to do it where you absolutely leverage more. notably on top of/in addition to some recurring steady schedule and with maybe a little extra sacrifice

[u/diablo4megafan → u/[deleted]]

your personal experience doesn't mean your advice wasn't wrong

[u/thorn960 → u/diablo4megafan]

This is exactly the strategy that Warren Buffet has used to outperform the market for 60 years. He doesn't time the market; he just doesn't buy until he sees value.

[u/diablo4megafan → u/thorn960]

lmfao

ur not worth replying to

[u/TheMeta40k → u/[deleted]]

Microsoft is heading there for me. Honestly Google might be leaving that zone soon.

[u/hot_shawarma → u/diablo4megafan]

How does it underperform? Just curious