tag:blogger.com,1999:blog-5465015914589377788.post7028391631288312965..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Buy Low, Sell High Market Timing StrategiesMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-5465015914589377788.post-4300666126890706132011-05-26T00:26:30.073-04:002011-05-26T00:26:30.073-04:00@Alex: Everyone dreams of getting out before a cr...@Alex: Everyone dreams of getting out before a crash and back in at the bottom, but almost nobody is able to do this.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-46755984730212235412011-05-25T14:04:12.142-04:002011-05-25T14:04:12.142-04:00I think all investment strategy tests are dependan...I think all investment strategy tests are dependant on the start/end dates used. In this test, for example, what would happen if we used 1990-2009 (after the market crashed)? Buy-and-hold investors may not have better results than those who got out before the crash and got back in after the crash...Alexhttps://www.blogger.com/profile/15532205219573327875noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-16133497274467578532008-04-04T15:42:00.000-04:002008-04-04T15:42:00.000-04:00Thanks! I think that should put market timing to r...Thanks! I think that should put market timing to rest for me... at least until I get that time machine figured out.Potatohttps://www.blogger.com/profile/18157102363273750204noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-40967091527989365322008-04-04T08:34:00.000-04:002008-04-04T08:34:00.000-04:00Potato: The data I have are monthly. I ran a two...Potato: The data I have are monthly. I ran a two simulations where $1000 is invested each month. In one simulation, the money is always invested immediately. In the other, the money stays in cash (generating 3%interest) until the return over the previous month is negative or zero. The results were very close. The "immediate" investor ended up with $442,000, and the market timer ended up with $437,300.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-87045273940679524922008-04-04T02:02:00.000-04:002008-04-04T02:02:00.000-04:00I have one more variation that I was wondering if ...I have one more variation that I was wondering if you could test out for me. It's where you start with nothing, and regularly save some amount per month (let's say $500) and then keep it in cash until there is a down or flat day (or week or month, if that's the sampling you have the market at) to put it in the market. Once it's in the market, it stays there forever.<BR/><BR/>My hypothesis is that this strategy might be slightly better than buying immediately on the first of the month if one is able to use the noise of fast sampling (i.e.: waiting for a down day or week shouldn't take very long, but a down month might take too long and one would miss out on a lot of gains). With longer time periods (waiting for a down quarter) I guess this would probably lag the buy immediately strategy. I suspect that market timing may still be a bad strategy, but at least this way you're only guessing once, and might be able to take advantage of some of the noise.<BR/><BR/>Looking at the past 6 months by hand, this doesn't look like a bad strategy... but then again, each of the last 6 months had a down day in one of the first two days. The strategy might not be good with sampling at even a week, and if I picked starting at the last day of the month, instead the 1st day, there's at least 2 months where this would have been worse than buying immediately at the last day's close (though waiting for a down day would be very slightly better than buying immediately on the last day overall).Potatohttps://www.blogger.com/profile/18157102363273750204noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-35354562473953254822008-04-02T10:19:00.000-04:002008-04-02T10:19:00.000-04:00Michael: All I can say is WOW ... Thinking about i...Michael: All I can say is WOW ... Thinking about it, it actually makes a lot of sense. This kind of strategy would make someone to sit on the sidelines for too long, and we all know there are a lot more up days than down days. Hence one would miss a lot of up days.<BR/><BR/>Again, thank you for your detailed work and for a very enlightening post. I look forward to reading your next post.Anonymousnoreply@blogger.com