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Garmin Ltd. Message Board

  • anastasiakeys anastasiakeys Feb 10, 2007 1:12 PM Flag

    Timing the market vs. time in the market

    I read your comments spoiler, I felt it was necessary to comment. Ive been in the Investment profession for 24 years. Every study Ive read says that only 2% of all investors (even the most savy) have the ability to time the market. Are you one of those 2%?

    Its funny that in the last 20 years the average mutual fund investor has averaged a 4% return while those SAME funds have averaged 12%. Where's the disconnect? Its easy, people can't time the market.

    Since 2000 the S&P had cummulative earnings of $34 per share. The S&P this past summer was virtually flat over the past 6 years, yet S&P eanings are around $90 plus (almost a triple yet the market has done nothing.

    As long as we have global expansion earnings can easily grow at 10% for the next 10 years.

    We have record cash in money market accounts, a severely overvalued, oversupplied housing market. A 30 year treasury thats at 4.9% (after tax and inflation your lucky to break even in terms of real dollars).

    China has begun to buy our stock market in lieu of their frantic ourchasing of US TREASURIES.

    By the way...we have had a very methodical correction within this rally. Goog down 12-13% from highs, Intel down 20% plus, the list can go on and on.

    Its time in the market vs. timing the market! Scott

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    • I never claimed that I can time the market. I also never said that I belong in that pool of top 2 percent savvy investors that can time the market. In fact, my point was exactly the opposite that no body can perfectly time the market. Hence my reason why you must buy in increments in weakness and sell in increments in strength. You run this bandwagon around your core long-term positions along with covered calls and you will know what I am talking about when you see the returns.

      • 3 Replies to spoiler79
      • Spoiler I agree with you. The reason 50 day and 200 day moving averages, bollinger bands and mean average convergence/divergence are popular is because they measure "relative highs and lows". The best an investor can do is to lose less in a down market and make more in an up market.

        That would suggest that a good investment strategy would be to pick a stock that you thought would out-perform the market. Buy at relative lows and sell at relative highs. Keep a core position until you lose confidence that your pick will out-perform the market.

        I don't mean to imply that diversification isn't important. Given a single stock portfolio, Spoiler is right.

      • What does a covered call do to your tax basis date? I generally hold long enough to qualify from long term cap gains rates, and I wouldn't want to mess that up.

      • spoiler, my whole point is that if you are an INVESTOR, cash should be your LOWEST allocation! Investors don't hold much cash, they invest because a properly constructed portfolio will ALWAYS beat cash if your investment time horizon is greater than three years. Sure, you can find points in time where cash outperformed, but theyre MINIMAL time frames.

        Have you ever purchased closed-end covered call portfolio's? Have you ever purchased closed-end convertible bond funds? Have you ever heard of Floating Rate Bank Loans? Have you ever purchased an International REIT fund? My clients are fully diversified in these products, the past three years have averaged 14%. All of these funds produce income. They did not need to be in cash.

        SAVERS, have the greatest percent of their assets in cash and cash equivalents.

        Are you a saver or investor? I just commented on the fact that you stated you were in good old cash right now.

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