We are often talked down to, "Don't time the market, its a fool's game..."
Its like throwing shit on to the wall; throw enough, some of it will stick...
Have you noticed what we "believe" in investing/trading, often they conflict with what we EXPERIENCE in REAL LIFE?
For Chinese readers, you may straight away think of our 5,000 years of China wisdom:
天时地利人和
Timing; Location; People
Funny how "timing" is placed at the front...
How about relationships?
Some of us know how it is to meet the "right" person at the "wrong" time...
And when we are ready at the "right" time, the "wrong" person turned up...
Or do you just "capitulate" and don't "time the market" - just grab anyone will do?
Career?
This most of us can relate!!!
Of course competence and talent are important. However, being at the RIGHT place at the RIGHT time can equally be important. Some may argue its even more crucial!!!
Property?
If you got married in your mid 20s instead of focusing on your career first; you know and I know. Wink.
Yup, that's how your peers who got married in their mid 20s can afford to upgrade to condo (after 2 bites of the HDB cherry) at the same time you are applying for you first HDB flat in your mid 30s...
Timing is EVERYTHING.
At current WTI crude prices, Hyflux and Hin Leong would be still around and thriving!!!
This is something you may want to take note.
Even if you don't practice Timing the Market (head in the sand), the vehicle you're riding on cannot ESCAPE the effects of Market Timing!
Smol,
ReplyDeleteMore due to luck (and long patience) to get a timing exactly right, when all the stars & planets are aligned.
Anything that requires sitting on your hands & doing nothing for > 6 mths is tough for humans, due to our evolutionary short-termism nature & the need to "do something", as well as short life spans in the past. Our longevity has increased a lot in the last 500 years, but our mental DNA has not.
A more practical approach is to be roughly right than precisely wrong, as Keynes noted.
Hence scaling in/out, tranching, bucketing, and diversifying when it comes to investing;
Relationships (including jobs & companies)? That's where communication, dating, meeting of minds, common interests/activities, diversification (wide network) comes in useful. Worse comes to worst, there's job hopping & pivoting! No wonder divorce lawyers are getting more plentiful in S'pore!
As for property, if it's for own stay, rather hard for timing unless you & partner are ok with either renting or staying with in-laws, keke!
Hyflux & Hin Leong are more failures of corporate management, company operations, and risk mgmt than timing. Even if they got lucky in their timing of the events that saw their downfall, as long as they persist in the way they do things, bad stuff will eventually occur.
GLCs have much bigger buffers for poor risk mgmt than SMEs thanks to Big Daddy & benefit of doubt from markets! Look at Keppel, Sembcorp, Semb Marine with the oil crash & bear market from 2014 to 2020.
On this note, I'm tickled at what's happening in SIA.
Back in May 2020, they lost over $1B in oil hedging when oil futures went negative at -US$37/bl, but SIA had locked in futures contracts all the way to 2025 for jet fuel at S$78/bl and Brent at ... get this ... S$58/bl or US$42/bl.
Today, Brent is now struggling at US$106/bl in the face of recession fears.
The latest that SIA reported is current Brent futures hedging of US$60/bl. Not bad lah! But airlines are terrible long term investments. ;)
Spur,
DeleteYup, that's why institutions practice trading around a core position ;)
Then again, its also probably to protect their careers!?
I mean if they don't at least give the "illusion" of doing something, sooner or later their landowners may question if all they do is Buy-and-Hold, like that might as well switch to passive funds at much lower costs?
Hyflux and Hin Leong have one thing in common - debt (or leverage if you prefer).
Once we have debt, we have given up the option to Buy-and-Hope...
That's something yield hogs (including institutions) in dividend stocks and cryptos have found out the crash got sound way...
No such thing as diamond hands if you can't meet your margin calls...
Whether its corporate management or failures in risk management, they were all caught on the wrong side of Market Timing...
As for airlines, Warren Buffett sold ALL his airlines stocks in 2020 due to the Wuhan virus.
I mean who would want to invest in an industry LONG TERM if it can be brought to its knees if we have another virus wave and we shut down globally again?
For SIA, without big daddy's "support" to pump in fresh funds to prevent liquidating those underwater hedging bets, who is to say SIA won't go the same path with Hyflux and Hin Leong?
Now those "failures" in risk management look like genius hedging bets!!!
Hi Smol, a portion of my investment is used to time the market so that this part of the investment can stay longer in the market due to a good margin of safety. If timing is off how? Either reduce, maintain or add more. Never a dull moment in investment.
ReplyDeleteWhen major oil counters will dropping like flies in 2020 covid, it's nerve racking to have 50% mark to market loss where outlook is bleak for next 2 years. I hold with the belief that humans will create the next oil crisis, history rhymes. My satisfaction is not just the profits but getting right at a certain stage.
AT_AT,
DeleteAm I right to say those underwater major oil counters you held were without leverage?
Its not just profits isn't it?
The intellectual "highs" in getting it right can be the reason we are still investing/trading even though we have "enough"...
That meant we are investing/trading to achieve ;)
P.S. Reduce, maintain, or add more - that's trading around a core position ;)
I do not leverage and i love the blood in the street due to margin calls. When the sharks go for the kills, as an ikan bilis, I will pick up the crumbs. I learnt so much from you guys unselfish sharing, thanks!
DeleteAT_AT,
DeleteJust verifying ;)
Climatic buying tops and capitulation flushes to the downside are both opportunities to the patient ones who practice Market Timing.
Most people are too "precise" at 2 decimal places when it comes to Market Timing... If this is the definition, of course I agree no one can do Market Timing!
However, if I can buy 20% off the cycle low, and sell 20% off from the cycle top, I'll be very pleased! I mean capturing 60% of a market move is good, better, best oredi!
Craftsmanship is continuous improvement to be better in the next cycle - maybe improve to 15% off the low and high?
I'm more grey and forgiving to myself ;)
Is Timing the Market also mean lump sum investing? That why don't time the market and invest slowly over time?
ReplyDeleteCW,
DeleteMarket Timing need not be "precision".
Its not about picking EXACT market tops or bottoms.
I see it more as the art of buying near cycle lows, and selling near market tops ;)
Lump sum investing is when we are super CONFIDENT on our entries. Its all about high CONVICTION!
(That Warren Buffett 100% exit on airline stocks in 2020 is example of lump sum run road!)
To use Texas Hold'em Poker analogy, lump sum investing is akin to all-in or show hand in poker.
However, when we are not 100% "male-chicken" sure, scaling into a position in investing is no different from adding to our bets after each flop, turn, and river rounds - that's if the cards are in our favour!
Folding our hands is cutting loss when its clear (after the turn or river) we don't have the winning hand anymore...
There's a lot to learn from gambling books and watching poker matches on YouTube.
If one is weak in risk management at gambling, you won't survive as a professional!!!
If need not be precise, I think most people practice market timing already.
ReplyDeleteI think most people hold cash of varying degree and varying points of market. There is a time to show hand too ( without debts)
Those who insist no need to time market are like God of gambler, every rounds also show hands.
Sillyinvestor,
DeleteWhen our portfolios or trading accounts were small starting out, its all-in each time we enter into a position....
That's how youths beat veterans (old fogeys) in percentages! Youths' edge is they don't know what cannot be done... LOL!
After the Nasdaq crash of 2000, its only then that I discovered it was beginner's luck all along for my case...
Oops. Never read the comments carefully. I said the same things as u. Ahahaha.
ReplyDeleteSillyinvestor,
DeleteYou know my "bawu", I know your "bawu"...
LOL!
Talking about Timing,
ReplyDeleteI realise I do spent much lesser fine crunching numbers before I buy or sell now.
Last time, got spread sheet, have thesis.
Now. Is like a few days of reading. I think I sort of know what I want to see and what is the catalysts I expect to get.
The selling part is sorely missing... Still trying to figure out that part.
I have sell to cut loss, reduce damage, run road successfully a few times, but sell to take fat profits are more rare.
Exactly like what u say, I let 50 percent profits turn into loss, especially those that I know when I am buying, is not for those hold for recurring dividends type.
When they hit my target, I have no conviction to sell, afraid that it will become the next venture.
Sillyinvestor,
DeleteI can share a common technique used by traders:
Once a trade hits their price targets, they'll sell half their position.
Then the rest of the position can be "let winning positions run" ;)
Of course there are other variations. Some traders have 1st price target, 2nd price target; etc.
Its the REVERSE of what we often see when it comes to buying by retail investors - when a stock/index drops to this level, I'll buy X%, and at that level, I'll buy Y%.
Recommend if you interested to sharpen your saw when it comes to selling, do read some trading books ;)
Tip: Any trading authors that focus mainly on buying, you can safely put that book down. That's a "retail" investor (never traded with institutions) pretending to be a trader ;)
Hi SMOL,
ReplyDeleteYou so lucky in SERS. The upcoming Aug AMK BTO seems to be release at a bad timing with AMK SERS just announced recently. A precedent of a SERS with 50 years lease option! A hint of what is coming in next decades.
AT_AT,
DeleteEven after choosing the most expensive SERs replacement top floor flat, I don't have to fork out any cash at all. Compensate $398K, I buy $398K.
Which means for my BTO, if affected residents choose the SAME floor and flat size as their existing ones, sure got cash left over one!
I'm a bit surprised that this is not the case for this AMK BTO???
Why do the affected residents fear they have to fork out extra cash???
My Tanglin Halt flat is 8 years older than the AMK BTO flats some more, but the difference is that my BTO was announced 8 years ago...
Then again, HDB resale flat prices have gone up higher since 8 years ago...
This has implications as for future BTOs on super older HDB flats; its not a "guaranteed" jackpot anymore if residents have to choose the 50 year lease to "afford" the replacement flats.
This does not make sense.
We may need more info to be released.
I suspect its a case of affected residents wanting the option to have MORE cash after choosing their replacement flats. (Don't want to move to Choa Chu Kang or Jurong West?)
Yucks. I hope residents don't be suckered into the 50 year lease option. And I thought my intention to tap the Lease-Buyback-Scheme was bad when I hit age 65 ... (Necessary evil as I want to enjoy the top floor view)
SMOL,
ReplyDeleteMinister LW previously reminded us that the HDB after 99 years lease ended will go back to state at zero value. The alternative is VERS to refresh the lease.
The elephant in the room is what is the market value of HDB in a lease decay model and at VERS stage.
We may have a canary in a coal mine for above 40 years old HDB. HDB fundamental purpose has not changed which is an asset for retirement. Retirees can rent out rooms or apply leasebuy back to supplement CPF savings.
However, likely people perception of fundamental may change on lease decay model.
Refer to Minister Desmond sharing of the model of SERS and the address to AMK SERS residents concern.
https://fb.watch/e2sDTVK2Sr/
Thanks for the link!
DeleteThen I'll consider myself lucky again!
Talk about blur dumb luck Market Timing!
Some elderly have no savings, impossible to top up unless family help or they can downgrade. Govt needs to face the reality that we mostly have asset rich but cash poor elderly segment. We need to give them the option and not induce stress in their golden years. VERS will be even more challenging time.
ReplyDeleteAT_AT,
DeleteThe whole idea in compensation for SERs is so that we don't have to fork out one single cent if we moved.
And for my case, its true. I would have gotten extra cash (hence jackpot for most people) in my pocket if I chose a replacement at the same floor as my Tanglin Halt one.
The only scenario where we have to fork out cash is if we want to renovate our new replacement flats into "palaces"!
If the AMK BTO is the canary going forward, then its clear big daddy slowly removing the "HDB jackpot" effect.
We can see it with the Prime Location Public Housing (PLH) implementation too...
Pincer movement.