Long Term Investing Valuation and Timing Strategies

Discussion in 'Share Investing Strategies, Theories & Education' started by Nodrog, 2nd Jan, 2017.

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  1. Redwing

    Redwing Well-Known Member

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    The problem with Timing, is that no one gets in consistently correct

    Market drops 20% what actually happens to mortgages

    Think also Mining Town investors with regards to timing, People buying in at the top of the Market just before the GFC etc..

    Bogle famously said “Nobody know nothing”, however that double negative infers somebody knows something, my guess is the illuminati

    upload_2017-10-8_20-59-43.png
     
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  2. MTR

    MTR Material Girl Premium Member

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    But there are ways that can improve your chances with property, only buy when the market is rising and not before. You don't need a crystal ball you just need to find out whether volume is down, not enough supply to meet demand. Plenty of leads on PC, just a matter of verifying this information.

    Lots of investors also made money in the mining booms. At the time there was plenty of information available that warned investors that this market was close to peak. Lots of stock was flooding the market. Many investors just ignored the signs.

    I think most property investors don't consider market conditions when buying property because the focus is long term growth. But the easiest way to make money is to time the market, would you believe we have had at least 3 property booms since 2013, and another now in play.

    MTR:)
     
    Last edited: 9th Oct, 2017
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  3. SatayKing

    SatayKing Well-Known Member

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    I fully agree with you @MTR. It isn't about property v shares or any other asset class. As long, and I emphasis that, understand what they are doing and are comfortable with that, including any the potential for any adverse outcomes on them and/or their family should they have one, go for it. Obviously, I've no idea if people sit back and quietly contemplate the What If aspect. Tempering one's enthusiasm can be both good and bad. Good if it resolves doubts. Bad if it prevents you actually making a decision.

    In my case, it's a matter of knowing everything about nothing. In other words, You think I know nothing, well let me tell you I know F&@k ALL!
     
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  4. Zenith Chaos

    Zenith Chaos Well-Known Member

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    I have a question that has never been posed, is it time to buy in Sydney?
     
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  5. MTR

    MTR Material Girl Premium Member

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    Lol
    Is it time to buy Telstra?
     
  6. sharon

    sharon Well-Known Member

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    MTR - You and your ability to time markets - is AWESOME. You have done so consistently and I admire what you have done.

    I have no faith in my ability to do like wise. I know that I know nothing. Hence I am not going to try and time anything.
     
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  7. PJ1

    PJ1 Well-Known Member

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    Im on my L's and following the principal "be greedy when others are fearful" I paper traded 10k of Volkswagen in sept 2015 when news of their emission scandal broke.The dust settled and Volkswagen is now up 38%. MQG purchased back in 2011 for $22 now at $93.
    The ASX webpage shows prices grouped by sector or company not direction.
    Is there a way to find stocks within the ASX that are declining in price?
     
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  8. Redwing

    Redwing Well-Known Member

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    Some sites shows stocks at 52 week lows
     
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  9. Redwing

    Redwing Well-Known Member

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    Robert FREY - 180 years of Market Drawdowns



    Frey discusses the many changes that have taken place in the stock market over the years — the creation of the Fed, monetary policy, fiscal policy, the end of the gold standard, tax rates, valuations, the industry make-up of the markets and a number of other things.

    But there has been one constant going back all the way to the early 1800s — risk. More specifically, drawdowns or losses. Frey presented a couple of different charts on the market to make his point.
     
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  10. dunno

    dunno Well-Known Member

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    Thanks for posting the video Redwing. You post a great diversity of links.

    I like Frey's point about being in draw down and as he puts it a "state of regret" for 75% of the time
    (50% of the time in a major draw down) in order to achieve the beleow long term US return.

    upload_2017-10-26_13-29-5.png

    People's lack of capacity to suffer in the short term and a seemingly unquenchable thirst for instant gratification from their investments seem to be the biggest barriers to long term success.
     
  11. Redwing

    Redwing Well-Known Member

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    Lesson for investors: don't count just on market returns to boost your portfolio

    The year 2017 for investors is one of impressive figures: Wall Street is up 20 per cent, emerging market shares have surged by more than a third and bitcoin has gone exponential. These numbers are big, but they are not the most important ones.

    After such a solid year it's easy to fall into the trap of "recency bias", where we change our long-term investment settings to chase recent performance. To help combat this behavioural quirk, I present a few other data points to keep in mind.

    To begin with, there is a strong sense that our stockmarket has lagged its offshore peers. And it is true. A still respectable 13 per cent total return in 2017 from our shares falls short of the MSCI global developed market benchmark's return of 16 per cent (in Aussie dollar terms) and the emerging market version's 26 per cent. Time to make a big switch?

    This is where it's worth taking a slightly longer view. You might be surprised – I know I was – that Aussie shares have actually beaten other major asset classes over the past decade or so.
     
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  12. Alex Straker

    Alex Straker Financial Life Coach Business Plus Member

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    Absolutely agree!!! I am constantly saying to clients the biggest mistake I see is simple lack of patience and always trying to go where grass is greener - this simply wont work long term!!
     
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  13. Nodrog

    Nodrog Well-Known Member

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    Suffering is good. It’s what contrarian investors look for. As far as long term investing goes our best results have come from going against the crowd that with them. Uncomfortable at times but very rewarding. After awhile it becomes addictive. It’s gotten to the point I almost feel despondent when the market is doing well:(. As Alex said, patience is the key.
     
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  14. Redwing

    Redwing Well-Known Member

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    Possibly posted previously in one of the threads, it's the drunkard's random walk

    What if You Only Invested at Market Peaks?

    Meet Bob.

    Bob is the world’s worst market timer.

    What follows is Bob’s tale of terrible timing of his stock purchases.

    Bob began his career in 1970 at age 22. He was a diligent saver and planner.

    His plan was to save $2,000 a year during the 1970s and bump that amount up by $2,000 each decade until he could retire at age 65 by the end of 2013 (so $4,000/year in the 80s, $6,000/year in the 90s then $8,000/year until he retired).

    He started out by saving the $2,000 a year in his bank account until he had $6,000 to invest by the end of 1972.

    Bob’s problem as an investor was that he only had the courage to put his money to work in the market after a huge run-up.

    So all of his money went into an S&P 500 index fund at the end of 1972 (I know there were no index funds in 1972, but just go with me here…see my assumptions at the bottom of the post).

    The market dropped nearly 50% in 1973-74 so Bob basically put his money in at the peak of the market right before a crash.

    Yet he did have one saving grace. Once he was in the market, he never sold his fund shares. He held on for dear life because he was too nervous about being wrong on both his sell decisions too.

    Remember this decision because it’s a big one...cont.....
     
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  15. asw1

    asw1 Well-Known Member

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    .... is there an end to this story?!?
     
  16. pippen

    pippen Well-Known Member

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    You have to click on the blue hyperlink! ;):(
     
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  17. asw1

    asw1 Well-Known Member

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    Hahah. Oops, thanks!
     
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  18. Nodrog

    Nodrog Well-Known Member

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    It would be nice if time healed all wounds equally. But have a read of Bob Bernstein’s booklets. The unfortunate fact of life is that luck pays an important role in the final outcome. Two investors, same capital but started investing at different times. Very different outcomes.
     
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  19. Nodrog

    Nodrog Well-Known Member

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    Speaking of Timing Strategies @Alex Straker has kindly shared with me advanced technical analysis / charting techniques developed by Gann.

    I traded for a number of years when younger using technical analysis and charting including the use of Gann’s swing trading approach. But despite years of trying along with huge amounts of education I was not that successful. Like most traders I was really just relying on the law of probability hoping to catch a trend then using position sizing and money management including stop losses in the hope of the few winners exceeding the high number of small losses. Essentially cut your losses (quickly) and let your winners run (as long as possible using trailing stops). But truth be told despite all the analysis the ability to time the market was no better than random.

    This is where the technical strategies used by Alex are a whole different ball game. They are based predominantly on the techniques of Gann and Elliot Wave theory. But after 20 years of intensely studying this stuff he was able to find the missing piece of the Gann puzzle which is why most of us who used Gann techniques had limited success.

    Fortunately Alex is only using those elements of Gann based on science particularly maths and geometry. None of the esoteric astrological stuff.

    The numerous examples Alex shared with me involved none of the usual selective backtesting and trying to make the charting tools fit the data etc. The ability of these techniques to pick turning points in the market was extraordinary and way beyond what one would expect from randomness. And combined with the Relative Strength analysis shown in Alex’s examples on PC the win rate is improved even further.

    Some of you have likely been following Alex’s examples in other threads where he’s put his balls on the line so to speak. Not many so called market timers would be willing to make their calls and provide the analysis behind it in advance.

    But if anyone thinks this is an easy road to riches they’re kidding themselves. There will still be some trades that go against you but dramatically less using Alex’s system compared to most others that are no better than random. Hence the study of psychology, money / risk management etc is still crucial. And it will take study to reap the rewards.

    The failure rate of traders is rediculously high so if one wants to go down this path it would be very wise to get the best education and support available.

    I get no kickbacks or rewards for any of this. In fact Alex shared some of his course and other videos with me quite some time ago. To be honest I really didn’t want to spend the time watching them given some of my earlier bad experiences with trading and loss of faith in it. I reluctantly viewed the videos and info provided by Alex because I like to do the right thing by people.

    However the information provided is like nothing I’d ever seen before during my trading days despite an enormous amount of time and money spent on education. Quite extraordinary to say the least. If only this was available to me when I tried trading for a number of years I’m confident the results would have been vastly improved. I’m certainly glad now I took the time to view some of the course material.

    If any of this is of interest then PM Alex so you can see for yourself then make up your own mind.

    Not liscenced to give advice, personal view only.
     
    Last edited: 31st Dec, 2017
  20. dunno

    dunno Well-Known Member

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    Australian market capitalisation to GDP ratio.

    In the boring zone.

    Not low enough that current buying is likely to add to long-term equity returns.

    Not high enough to warrant stock piling cash.
    upload_2018-1-3_12-11-39.png

    In comparison, I note from various charts posted around the internet that USA Mkt Cap / GDP would seem to be somewhat more extended.
     
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