DISQUS

Dan · 1 year ago

I have been trying to do the same as you since mid-September, buying on the dips from my money market at Vanguard.

Meanwhile, my girlfriend doesn't have a money market. She ACH's from her checking to Vanguard, which takes two business days, which eliminates the possibility of trying to time buys with the dips.

Guess which one of us has managed to buy at the lower prices?

Apparently, a monkey throwing darts could do better than I've done. I buy on days when the equivalent ETF's are all going down, and immediately after I place my order they recover at least somewhat. Then the next few days they sink more.

She buys on a day the market's roaring, and I'm like, "You missed it, baby..." But then the market tanks for two days straight and she gets a way lower price.

EN · 1 year ago

^That's hilarious Dan! I guess that's why they say what they say about market timing.....

Writer's Coin · 1 year ago

Why not wait until there is a consensus "comeback" in the market? You won't buy in at the precise bottom (no one can), but you'll be in near the bottom and you won't feel bad about losing a few points right after your purchase. Either way, buying right now is a good call.

Dan · 1 year ago

A "consensus comeback" would be wonderful! Unfortunately, how does one define exactly when that is?

Some might have thought the Election Day rally was it, but nope.

Maybe a 10% one-day gain is the comeback signal? No, wait, that already happened on 10/28, and then 10/13 before that. That's not it.

I've got it - how about three straight days of gains? Darn, that happened too. Nope.

The good and bad thing about the market is, when it comes to a consensus, it's priced in immediately. Once a consensus has been established, it's reflected in the price, and the once-cheap price is gone.

One of these days, there will finally be some good news, and I mean good news that sticks about the potential for companies to make money in this economy. When that happens, the market will react immediately and not turn back for any who missed the buying opportunity.

Probably best to keep investing at your normal pace and accept the average share price over any given period rather than trying to time things perfectly. (But I still feel like I gotta try to catch the dips though! I'm my own worst enemy...)

Jim · 1 year ago

Can you do a "buy limit" order on your Vanguard account? If so then you should be able to use that to set it up to buy only when the fund drops to a specified level. So with VTSMX trading at 21.85 right now you could set a buy limit order at 20.75 to catch it when it drops 5%.

I'm guessing you probably are aware of it but they just don't allow this on Vanguard for some reason.

Dan · 1 year ago

Jim, it sure would be nice if you could do a limit order. But with any mutual funds (not just Vanguard) you either buy or don't buy at the price of the close of day NAV.

However, many ETF's (even from Vanguard) follow the same indexes as index funds. These trade like stocks, so limit orders can be used.

Shadox · 1 year ago

It's really tough to time the market - as Dan's experience shows - that's why I am following a different strategy: buy on the 15th of every month, always the same amount, rain or shine.

Writer's Coin · 1 year ago

@Dan: I agree that defining a "consensus comeback" is tough, but I was thinking something much broader than any one-day gains or string of days. I'm thinking more along a month of stability where, not only the stock market, but important numbers like job data and earnings start to take a turn for the better. Sure, it may be tempting to try to jump in beforehand and buy as low as possible, but you'll still be buying low when you compare to where the market was a few weeks ago.

GE Miller · 1 year ago

I have never 'timed the market' before, but now really seems like the time to do it with volatility being so high. There is room to make some games. I recently opened an account that gets me 10 free trades so that I can hone in on a volatile, yet solid stocks and buy and sell with every 10% movement. Not the most 'sound' strategy, I realize, but I have some cash to play with.

Ian · 1 year ago

My opinion is that it is way too early to be looking for a consensus comeback, or even capitulation. The way the economy looks to be going, we're in for several years of tough economic times. The market will stagnate, people will get bored, we'll slog along for a year or so, and then we'll get some good news and it will go back up. The markets have just now hit fair value on the basis of cyclically adjusted PE, and they're only "fair value" because they've spent half the time below this mark, so we can expect to see some further losses. People are way too eager to buy the bottom. I say throw small chunks of money into a passive fund over the next few years, and you won't have to worry about market timing.

Jim · 1 year ago

Thanks Dan. I figured I was missing something.

Another alternative is to setup an "alert" on the value of the mutual fund so that you get an email or cell phone text message notice if the fund hits a certain level. You can use Yahoo to do so at alerts.yahoo.com I'm sure there are other services out there that will send you a notice. At least that way you won't have to watch the prices every day and you can get an automatic notice if the fund hits a certain trigger point (high or low).

Jim

Katie · 1 year ago

I used Ameritrade for a while, and you can set trade triggers to buy ETFs or individual stocks when they hit certain points. There are several ETFs that trade like very liquid index funds, including Powershares QQQ (or QQQQ, I forgot!), amongst others. There are more commissions, but you gain liquidity and easier trading.

Dan · 1 year ago

@ Writer's Coin, I hear you. But consider this.

If you look up VTSMX on finance.yahoo.com and click on the graph, and then change the dates to display from 2000 to 2004, you get a pretty good look at the bottom of the last bear market.

I'm not sure there was such a point in early 2003 - even if you consider looking at broader time periods - that I would have been able to distinguish the genuine comeback from all of the upward "dead cat" bounces that had occurred from 2000-2002.

And by the time we'd have had the advantage of hindsight to know a bottom really had passed, (1) we'd already be a good part of the way back to 2000 numbers and (2) there still would never be a guarantee the market wouldn't just drop back down at any point. In fact, you could say that the market did just that in 2008, several years later.

My personal opinion is that I will do better regularly investing and accepting the average price over the entire period the market falls rather than trying to wait for some signal. Others may be better at finding the "consensus comeback" signal than I am, but my preference is to take that average price on the way down.