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Message
I know market timing is typically frowned upon....
Posted on 1/9/14 at 2:28 am
Posted on 1/9/14 at 2:28 am
But is there merit in holding off opening a new mutual fund with a probable correct imminent?
If it was an already standing investment I would just DCA right through it, but the fact that it is new, and would represent a good size of my portfolio gives me pause.
If it was an already standing investment I would just DCA right through it, but the fact that it is new, and would represent a good size of my portfolio gives me pause.
8
Posted on 1/9/14 at 4:50 am to Volvagia
Not a finance guy, and I agree with your thoughts completely. Timing the market is bad, but putting it all in now doesn't sound great. Of course, sitting on your money is going to deflate it away...that is guaranteed. Maybe just put some in? Maybe be slightly more conservative than you should be relative to your age?
Posted on 1/9/14 at 6:03 am to Volvagia
If that's what you think, buy some gold stocks or etfs.
Posted on 1/9/14 at 6:15 am to I Love Bama
quote:
If that's what you think, buy some gold stocks or etfs.
Uhhh why? Gold vs the S&P are pretty uncorrelated...
Posted on 1/9/14 at 6:57 am to jso0003
Just dollar cost average for 6 months or so
Posted on 1/9/14 at 7:11 am to jso0003
I thought when the market went down gold goes up? frick I don't know.
Posted on 1/9/14 at 7:17 am to Volvagia
quote:
If it was an already standing investment I would just DCA right through it, but the fact that it is new, and would represent a good size of my portfolio gives me pause.
If you're going to open and make steady contributions, what difference does it make? Time in the market and DCA will work, regardless.
Now, doing a full rollover or large buy in (perhaps capital gains, a windfall, insurance, etc.), that might be smart to not go all-in.
However, you can put it in a cash or money market account and break it into monthly chunks and do DCA that way. Remember time in the market is what counts, not specific yield targets - the only time that yields really apply are the 5 (up to 10) year window prior to retirement - at that point, you should be locking in gains by moving tenths, quintiles, quadriles, whatever, into less volatile assets to avoid taking the big hit of a market drop just prior to retirement.
The goal is to accumulate shares over time - if you don't expect any downturn to reverse, eventually, why are you investing in stocks in the first place?
Just my $0.02.
Posted on 1/9/14 at 7:18 am to Volvagia
quote:Certainly depends on the fund. Also depends on your anticipated holding timeframe, the longer the term, the less important exact purchase timing. Short term timing is a crap shoot in my experience.
But is there merit in holding off opening a new mutual fund with a probable correct imminent?
As an aside, we target mutual fund purchases keeping consideration of December cap gains tax ramifications in mind. So most of our buys do tend to be Jan-Aug timeframe. JFWIW. Taking a look at high quality funds which underperformed competitors last year might be a way to sidestep timing a bit too.
Posted on 1/9/14 at 8:26 am to Volvagia
What are you using the funds for? If your answer is retirement, the best time is now. If it is potential investment / short-term, wait til July or August. By that time, quantitative easing could be done and a slight pullback should happen in the market. Plus historically, the summer does far worse than (school) semesters. Ultimately, timing the market is near impossible but making a wise decision is possible. With that said, the market could hit a high in July. But I wouldn't bet on it.
Oh, and don't buy gold.
Oh, and don't buy gold.
This post was edited on 1/9/14 at 8:28 am
Posted on 1/9/14 at 8:46 am to LSUTigers00884
QE won't be done by July or August. We would have to see GDP over 5% for them to even think about accelerating it that fast and that's not happening.
Posted on 1/9/14 at 9:54 am to I Love Bama
quote:
I thought when the market went down gold goes up? frick I don't know.
No.
Posted on 1/9/14 at 9:57 am to Volvagia
quote:
I know market timing is typically frowned upon....
But is there merit in holding off opening a new mutual fund with a probable correct imminent?
If it was an already standing investment I would just DCA right through it, but the fact that it is new, and would represent a good size of my portfolio gives me pause.
You should not buy something if you think its price is going to go down and you can buy it cheaper later.
Posted on 1/9/14 at 11:22 am to LSUTigers00884
That's the reason it's giving me pause. It is assets not in a retirement account. In general there is a long view with in, but it is taxable in case there is a need for withdrawals in the intermediate time frame.
Posted on 1/9/14 at 11:29 am to SpidermanTUba
quote:
You should not buy something if you think its price is going to go down and you can buy it cheaper later.
Remember when I said in the other thread that you don't understand economics?
The stock market WILL go down, then it WILL go back up. In your world, you can never buy, because you never know if it is at the absolute bottom.
Dollar cost averaging (DCA) means that if you buy in regular intervals - not timed to market fluctuations - and put in a consistent amount, you will buy relatively fewer shares (and mainly we're talking about index funds, here) when the market is up and more shares when the market is down. Over time you will build up a package of shares that is steadily increasing in value. You will get advantages of market lows and hedge at market highs - automatically - with this process and will not need to either predict or know when these highs and lows hit - OR even realize it has happened until you look at a graph retrospectively.
This post was edited on 1/9/14 at 11:30 am
Posted on 1/9/14 at 1:22 pm to Volvagia
quote:Volvagia, I'm sure you know this, but there are something like 4500 mutual funds available. Provides a little something for everyone. There are market neutral long/short funds, hedged funds with a short or long bias, bond funds, REITs, mixed asset funds, foreign focused funds. Timing depends on the fund and your confidence.
It is assets not in a retirement account. In general there is a long view with in, but it is taxable in case there is a need for withdrawals in the intermediate time frame.
Posted on 1/9/14 at 2:18 pm to NC_Tigah
Well yes.
But the fund in question is VEIPX
I didn't want to buy into a hedge fund to exchange over if that was your point.
But the fund in question is VEIPX
I didn't want to buy into a hedge fund to exchange over if that was your point.
Posted on 1/9/14 at 3:33 pm to Volvagia
I will sell you $240k of VEIRX if the price is right...
Posted on 1/9/14 at 3:44 pm to roguetiger15
quote:
Just dollar cost average for 6 months or so
Posted on 1/9/14 at 4:06 pm to Volvagia
Why is that the "one", what differentiates it in your decision making process? How does it fit with the rest of your holdings? If I were really concerned about a market decline I would sit in much less volatile assets or possibly a minimum volatility equity fund if one is willing to experience some fluctuation which should be expected to be less than the broad market. VEIPX/VEIRX is a good fund and I have been in the admiral version a long time, but don't know that VYM or similar may not perform better with lower ER. VEIRX is up to almost 10% foreign now, it used to be 2-3%, maybe VEUSX will outperform it the next few years.
The biggest point is that if your overall portfolio is still relatively small, no matter if the potential new investment is sizable relative to the entire account, it likely won't matter much in the long run.
The biggest point is that if your overall portfolio is still relatively small, no matter if the potential new investment is sizable relative to the entire account, it likely won't matter much in the long run.
Posted on 1/9/14 at 4:16 pm to tirebiter
Its was less a concern of a market decline, than it was the opportunity for getting assets cheaper.
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