Wednesday, February 17, 2010
Why I time the markets part 2. How I did over 10 years.
How well have I done? I often said I wish I would have been sent an email to tell me when to sell and buy. It never comes. Even if it did would you believe it? On May 6, 2001 I was listening to the Bob Brinker radio show. A caller came on with a heavy Middle East accent and stated you stock market is going to crash on September 11. Mr. Brinker the host stated that he had not made that call and that to make such a call would be purely speculative. The caller responded no you not make call I make call you call it 911! The caller hung up. I along with approximately one million listeners had just been given a stock tip which turned out to be very valid. I dismissed the man as being some kind of fool and no one could predict the stock market crashing on September 11. It turns out the man was correct. Unless you are living in a vacuum are well aware of the events of September 11 which changed our lives forever.
The truth is all one has to do is turn on CNBC or FOX Business and you will get a host of predictions where the market is going. Like the terrorist they are hard to believe. With so many opinions one of them has to be correct.
Over the last 10 years how have I done? I wish I would have done better but according to my calculations I am up 60 percent over buy and hold not including interest earned!
My major actions have been.
February 2000. I took 100 percent of my money out of the market and went to cash. (Good call) at that time the NASDAQ traded in the 4000 to 4500 range.
May 30, and 31 2000. I put about 10% of my assets in each day (20% total). NASDAQ was in the 3425 area.
June 21, 2000 I sold out. NASDAQ closed at 4064 that day.
July 26 through 28, 2000 I put the money back in that I had taken out in June. NASDAQ was about 3800.
August 23-28, 2000 I took the money out again. This time the NASDAQ was about 4050.
October 18 through 31, 2000 I put 100% back in the market (big mistake). The NASDAQ averaged 3250 on the days I added money. This is still much lower than when it was taken out of the market in February.
November 4 through November 12, 2004 I took out 50 percent of all my holdings from the NASDAQ which averages 2050 during this time.
April 20, 2005 I put the money taken out the pervious November back in. The NASDQ closed just below 1914.
April 27 to July 19, 2007 I sold off 40 percent of my stock portfolio and bought it back from July 26 to August 10, 2007. This was a long sell off and a long buy back. The average sell on the NASDAQ was 2650 the average buy back was 2575. Not a significant gains but a gain none the less.
Does market timing work? Yes but do not expect to sell at the top and buy the bottom no matter how good you are.