Stock scream room

[MachineGhost]

I just keep wondering if we're really in a QE / ZIRP pumped secular bear market that began in 2000, with massive sucker rallies...

It does have that feeling.  Burned once, shame on me.  Burned twice, shame on you.  Burned thrice, kill 'em all.  Retail is very skeptical about the stock market after getting burned twice, but I don't think sentiment is where it would be at a true secular bottom.  Stocks have to be completely reviled, loathed, cause people to puke and not be acceptable for polite dinner table conversation first.  I wonder if that's even possible anymore in this day and age of defined contribution pensions?

[ochotona]

I just keep wondering if we're really in a QE / ZIRP pumped secular bear market that began in 2000, with massive sucker rallies...

It does have that feeling.  Burned once, shame on me.  Burned twice, shame on you.  Burned thrice, kill 'em all.  Retail is very skeptical about the stock market after getting burned twice, but I don't think sentiment is where it would be at a true secular bottom.  Stocks have to be completely reviled, loathed, cause people to puke and not be acceptable for polite dinner table conversation first.  I wonder if that's even possible anymore in this day and age of defined contribution pensions?

Russian equities. Brazilian equities. Now we're talking!!!

[Pointedstick]

Burned once, shame on me.  Burned twice, shame on you.  Burned thrice, kill 'em all.

- Staff Sergeant MachineGhost

[mathjak107]

phew , after we already went up 1700 points it is first  back in  today ? 

Thats the price paid for avoiding 1700+ points to the downside.  Worry less about the gains and more about the losses.  The gains will take care of themselves.

it doesn't look like the ivy-10 avoided it though . it still shows down . if you went to cash on 8/31  with that signal  vti was at 102.21 , if you bought back in yesterday you bought in at 107.93. a loss of about 5%

[ochotona]

it doesn't look like the ivy-10 avoided it though . it still shows down . if you went to cash on 8/31  with that signal  vti was at 102.21 , if you bought back in yesterday you bought in at 107.93. a loss of about 5%

Trend following does not purport to never lose money. By it's very nature (trailing moving averages), it will be late to issue signals. The point is to stay out of major bear markets. You will have bad trades, though.

In geophysics, we have the luxury of apply moving average and other filters with zero time lag... because we recorded the data already, and we're just trying to clean it up! Can't do so with the financial markets, unfortunately... 

[mathjak107]

even going back to fabian days and his moving average system i never  saw it really pay off .  trying to avoid the drops historically has not worked so well in the end  ala the 1,000 point drop we saw that can happen in minutes . while some may be happy using the various trading indicators  i have not been impressed with these in or out schemes long term .

but , heck if you are happy with it that is all that matters .

[ochotona]

but , heck if you are happy with it that is all that matters .

At least with the moving average systems, the pain comes to an end. With the PP, the pain never comes to an end. 

[mathjak107]

well everything eventually cycles around . it is just certain cycles like interest rates and commodity's tend to run long cycles .

there are just certain things  like commodity's and gold that tend to do better timing the markets then time in the markets .

[Jack Jones]

The Meb Faber Ivy-10 ETF portfolio is back in US Large Caps and US REIT as of today. And bonds.

US Small Cap, all non-US stocks, non-US REIT, commodities are all not in play.

phew , after we already went up 1700 points it is first  back in  today ? 

Can we collectively decide to stop feeding the troll? I feel like it should be pretty clear by now that this guy fits the bill:

In Internet slang, a troll (/?tro?l/, /?tr?l/) is a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory,[1] extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the deliberate intent of provoking readers into an emotional response[2] or of otherwise disrupting normal on-topic discussion,[3] often for their own amusement.

[dualstow]

this year has been even more of a stock pickers market than the last 7 years have been .

ugh, it's sad to see these novice words on the pp forum.

get used to it , you could have almost thrown a dart at any fidelity large cap fund the last 6 out of 7 years and beat the s&p 500 .

Get used to inane comments like "It's a stock picker's market" or recency bias & mining the past? I don't think so. I got that out of my system in the early aughts aka early 2000s.

[Jack Jones]

Get used to inane comments like "It's a stock picker's market" or recency bias & mining the past? I don't think so. I got that out of my system in the early aughts aka early 2000s.

(emphasis added)

That's how I know this guy is trolling. You can tell that he's relatively intelligent, so he clearly knows that pointing out that a strategy is having a bad day doesn't mean anything. However, he does it anyway because he's trying to push buttons.

[MachineGhost]

it doesn't look like the ivy-10 avoided it though . it still shows down . if you went to cash on 8/31  with that signal  vti was at 102.21 , if you bought back in yesterday you bought in at 107.93. a loss of about 5%

You overly concerned about missing a measly 5%?  That is practically noise when we're talking about multi-year moves with gains or losses that easily trump 5%.

[MachineGhost]

In geophysics, we have the luxury of apply moving average and other filters with zero time lag... because we recorded the data already, and we're just trying to clean it up! Can't do so with the financial markets, unfortunately...

Why not?  There are close to zero lag and may actually be zero lag indicators available.  The problem is they'll just hug the data closer and not be as useful for timing.  The lag is needed to act as a filter to get rid of the noise or whipsaw signals you don't want.

Moving averages are really just a cyclical analysis filter and eliminate all of the lower moment data.  But in practical terms, they are momentum indicators.

[mathjak107]

it doesn't look like the ivy-10 avoided it though . it still shows down . if you went to cash on 8/31  with that signal  vti was at 102.21 , if you bought back in yesterday you bought in at 107.93. a loss of about 5%

You overly concerned about missing a measly 5%?  That is practically noise when we're talking about multi-year moves with gains or losses that easily trump 5%.

with the outlook for stocks being in the 6-8% range as an average per year that is a whole lot to mis .

[MachineGhost]

even going back to fabian days and his moving average system i never  saw it really pay off .  trying to avoid the drops historically has not worked so well in the end  ala the 1,000 point drop we saw that can happen in minutes . while some may be happy using the various trading indicators  i have not been impressed with these in or out schemes long term .

but , heck if you are happy with it that is all that matters .

I don't think it would have worked back then due to the commission costs.  And taxes were a lot higher than they are now also.  But its not because the concept doesn't work intrinsically, it does, so long as you stick to it which Fabian Jr. did not.

But over the last 15 years, any kind of active strategy has killed the S&P 500.  That's the value in avoiding bear markets or crowded trades.

I do think it can be a very tight race between getting the same net return with "market timing" after commissions and taxes vs buy and hold with no downside risk management.  But consider this.  Gold had a 70% peak to trough maximum drawdown in nominal terms.  Japan had a 90% peak to trough maximum drawdown after inflation.  ANYTHING would improve on those, literally.

[MachineGhost]

In Internet slang, a troll (/?tro?l/, /?tr?l/) is a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory,[1] extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the deliberate intent of provoking readers into an emotional response[2] or of otherwise disrupting normal on-topic discussion,[3] often for their own amusement.

By that logic, I am Troll Extraordinaire.  He's not off topic, though.  Debate is welcomed around here unlike on the Boglehead cult.

[MachineGhost]

That's how I know this guy is trolling. You can tell that he's relatively intelligent, so he clearly knows that pointing out that a strategy is having a bad day doesn't mean anything. However, he does it anyway because he's trying to push buttons.

No, he's getting us to challenge our premises in the potential propaganda that we all believe.  No one does dirty hands-on with the raw data verification for everything before adopting beliefs wholesale.

[MachineGhost]

with the outlook for stocks being in the 6-8% range as an average per year that is a whole lot to mis .

Now you're definitely trolling. j/k  What is the volatility of that 6-8% range?    Give me a break.

[mathjak107]

with the outlook for stocks being in the 6-8% range as an average per year that is a whole lot to mis .

Now you're definitely trolling.  What is the volatility of that 6-8% range?    Give me a break.

no one knows what the ups and downs will be but for the next 5-10 years there is a good chance returns will be below average in the 6-8% range for equity's . .

[Jack Jones]

That's how I know this guy is trolling. You can tell that he's relatively intelligent, so he clearly knows that pointing out that a strategy is having a bad day doesn't mean anything. However, he does it anyway because he's trying to push buttons.

No, he's getting us to challenge our premises in the potential propaganda that we all believe.  No one does dirty hands-on with the raw data verification for everything before adopting beliefs wholesale.

I'll quote it again:

phew , after we already went up 1700 points it is first  back in  today ? 

MG,

What premise is he challenging here? That we should be more concerned about short term movements within arbitrarily defined timelines?

[MachineGhost]

What premise is he challenging here? That we should be more concerned about short term movements within arbitrarily defined timelines?

Hes challenging that downside risk management works.  So, naturally from that perspective, missing out on the big upside days that occur right after big downside days feels like a huge opportunity cost.

But in another thread he said he was uncomfortable with the absolute value that a 5% move represents (9 years of maxing out the 401(k) at the limit or something like that), so ultimately it is an irrational behavioral bias response, because he's ignoring the order of magnitude more downside risk that a 50/50 portfolio still has vs a missed 5% upside gain.  It's all about what you choose to focus on/believe.  There's facts for every angle, but there can be only one that trumps.

[mathjak107]

what i am saying is it likely is a better choice and a simpler choice to just float with the market cycles at a level you are comfortable with then try to time your ins and outs .

i may go from 90-100% equity's which worked well for my pucker factor in my accumulation stage . but now because of the dollars involved i am more comfortable to cycle the markets with a 50/50  mix . but that does not mean i would attempt to time my in's and outs of the market side of the investments trying to time  out smart the market cycles .

i am saying i will gladely accept the market cycles in  portfolio that i am comfortable with .  big difference to trying to outsmart the cycles .

[MachineGhost]

what i am saying is it likely is a better choice and a simpler choice to just float with the market cycles at a level you are comfortable with then try to time your ins and outs .

i may go from 90-100% equity's which worked well for my pucker factor in my accumulation stage . but now because of the dollars involved i am more comfortable to cycle the markets with a 50/50  mix . but that does not mean i would attempt to time my in's and outs of the market side of the investments trying to time  out smart the market cycles .

i am saying i will gladely accept the market cycles in  portfolio that i am comfortable with .  big difference to trying to outsmart the cycles .

That I agree with, but I think it just merely reflects different life stages.  You are going to drawdown your portfolio which will specifically induce maximum drawdowns (both nominal and real) above and beyond that of the market cycle, buffered only by the historical backtesting that it will work for almost 30 years and no longer at 4% SWR.

I actually think using portfolios that have proven to be sustainable for withdrawal drawdowns is good strategic allocation, but it is in conflict with having the best possible risk-adjusted return (i.e. that each dollar you risk is the most efficient possible) and are not diversification robust to non-Prosperity regimes.  I am used to thinking in terms of the optimality, not achieving goal targets.

And unlike in your days, you can actually outsource the downside risk management now to quantitative algorithms and not have to bother with doing it all yourself.  I think that is the biggest breakthrough in investing since sliced bread.

[Jack Jones]

What premise is he challenging here? That we should be more concerned about short term movements within arbitrarily defined timelines?

Hes challenging that downside risk management works.

You don't do that by saying, "Hey look, your strategy missed out on last month's gains." You know that, I know that, he knows that.

[mathjak107]

i am questioning as to whether the ivy will end up any different then any of the other moving average systems in the failed strategy grave yard . . it seems like a lot of  motion , timing and trading to just try to outsmart the normal  market cycles which end up going up any way and on to new highs . .

seems to me just cut allocations to a level you are comfortable with , ride the normal  cycles and at the end of the day likely have a bigger  balance with a whole lot less effort .

my feeling is if you can't handle the normal market cycles and have to resort to try to outsmart and time them then you are to aggressively invested for your pucker factor