Timing The Market - Proof it is Not a Joke
Many people have taken aim at market timing stategies in these turbulent markets saying that no one has a crystal ball or can avoid the pitfalls of large market declines. I disagree and have some favorable results to backup my belief that there absolutely is a place for the individual investor to move in and out of equities and cash positions based on market conditions.
If you review the trading logs below, the decisions to buy and sell was based on news and events, daily market performance, but most of all, by developing reasonable assumptions that guided the strategy by writing it down in the blog. Many moves were correct, some were incorrect, but the overall positioning resulted in capital preservation and appreciation.
Final Stats on the Aug and Sept Market Timing Experiment:
Rallycry Aug Return 4.43%
S&P 500 Aug Return -6.04%
Large Cap Value Aug Return -5.56%
Rallycry Sept Return 1.53%
S&P 500 Sept Return -7.75%
Large Cap Value Sept Return -7.96%
Aug 1-Sept 30 Rallycry Total Return 6.02%
Aug 1-Sept 30 S&P 500 Total Return -12.46%
Aug 1-Sept 30 Large Cap Value Total Return -12.25%
Aug 1-Sept 30 Rallycry outpaced S&P 500 by 18.48%
Aug 1-Sept 30 Rallycry outpaced Large Cap Value by 18.27%
I feel these numbers show the experiment was an overwhelming success!
I would agree there is an element of luck to this timing strategy but the principles of selling into strength, buying the rumor and selling the news worked over this volatile 2 month period. Another key principle was showing a willingness to change course even at a loss to prevent bigger loses. I think staying nimble is extremely important especially when swings of 2-3% are commonplace. Lastly, staying accountable to your thesis and discussing with others your take on the markets helps to keep your approach grounded and consistent.
August Trading Log + Stats
September Trading Log + Stats
Rex Moore article criticizing market timing
My rebuttal defending market timing