As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Click to email CW8888 or Email ID : jacobng1@gmail.com



Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Wednesday, 26 August 2020

Time in the Market > Timing the Market???


Someone in BIGS World FB asked this :

 "It's often said that time in the market > timing market. Are there concrete studies done on this & what were the returns assumption on the non-invested capital?"

But, received no response yet!

Read? Is Time in the Market and Timing the Market mutually Exclusive??? (2)

Hmm .. okay!

No concrete studies ! Just data points of two to check on curiosity of favorite quote at personal level.

 Time in the market  or Timing the market?

Uncle8888's two recently traded rounds for DBS and SGX

DBS

1. Time in Market i.e. Buy and Hold for Panadols/Golden Eggs

Hold for 17 years since SARS in 2003. TSR over 17 years is 355%




2 Timing the Market

After Round 3, TSR is 344%. Buy and hold win at the current moment!




SGX

1. Time in Market i.e. Buy and Hold for Panadols/Golden Eggs

If still holding SGX, TSR over 5 years is 45%



2 Timing the Market

The initial position in SGX sold at $7.46 was split into 2 Rounds for buying back as follows

TSR for Round 5 and 6 is not much different at 41% and 46%  between Time in the market and Timing the market






Personal observation over this quote : Time in the Market or Timing the Market

It is never about the Method and which one is superior!

It will always be the person behind executing the 3Ms - Method, Mind and Money Management that matters most!





 

5 comments:

  1. From experience, both are needed.

    Imagine when your portfolio is down 40 to 50 %, U need to sel
    l because U need cash flow.

    This is BHSL lol!

    ReplyDelete
  2. Hi Uncle8888,

    Hmm many many studies on this leh. Maybe all too busy riding the boom in tech stocks to bother replying? Hoho!

    Morningstar has been doing this for 6 years, and reporting annually. Their study is more accurate (realistic?) than Dalbar's. By 2019 what they found is the average stocks market timer loses out to long-term buy-and-hold by 0.56% annually. Not too bad lah. Kekeke.

    This article more critical. It says market timers lose 2% annually. That's a big difference.

    Dalbar is the granddaddy of this type of studies, for over 25 years. Their latest 2020 study shows 80% of average investors will do better by simply buy-and-hold. However Dalbar works mainly with the finance industry & has been criticised for conflict of interest. In particular, exaggerating average investor losses by applying time-weighted returns when dollar-weighted returns will be more accurate.

    I've mentioned a few times that unless you're a day trader or swing trader, market timing systems main purpose is not to outperform markets, but instead to minimise drawdowns. By minimising drawdowns, the average investor is psychologically better able to stick to the plan for 20-40 years, instead of panic selling during crashes & staying out for a long time. E.g. a -25% drawdown compared to -56% during GFC. Or -15% drawdown versus -35% in March 2020.

    Personally, comparing my equity portion with my wife's ... my market timing is mixed. My timing of tech etf loses to her passive in tech etf, while my timing in Asia etf has better results than her passive holding of Asia etf. Kinda confirms that for assets in strong bull, buy-and-hold will obviously win. That never stops people from trying to time the counter-trend moves in a 1-way bull (or 1-way bear) though! Humans are short-term by nature.

    ReplyDelete
    Replies
    1. Think we have a mixed of both - time in the market for recurring income and growth if any and some excitement over timing the market when we get them right. Shiok!

      Delete
  3. Too complicated for me.

    i only know trying my best to buy low and sell high; which is quite difficult to do at times.

    i keep on thinking if i only buy and never sell from day one until now what happens?

    Remember my days were most if not all blue chips were IPOs and KeppelCorp and Sembcorp were at a lower price than what CW8888 paid for it and hold.

    But Spur confirmed that even buying ETFs can time one. Which i always think so.

    ReplyDelete
  4. Think I've mentioned the below method 3 years ago...

    If you trust past history & a very simple timing method: sell S&P500 if month-end is below 10-months moving average. Buy or hold S&P500 if month-end is >= 10-months moving average.

    Compare to buy and hold. Simple timing method worst full year is -6% and max drawdown is -16%. Versus worst full year of -36% and max drawdown of -50%.

    But look at end result as of 31 July 2020: $1.2M versus $1.1M ... only about 8%-9% difference over 27 years.

    ReplyDelete

Related Posts with Thumbnails