What's the point of riding it out?

[sugarandspice]

Why would someone choose to ride it out? It became apparent that things were going South a few weeks ago and some chose to ride it out. I don't understand the strategy. Is it greed? Because you know it will turn? But it doesn't so you stay waiting...waiting....waiting to recover the losses. Why not park and wait? Keep what you have and wait. It still feels like a bottom hasn't hit yet. I think once the International markets realize that they are in the drivers seat, U.S. markets will have less influence and the I fund will take off. Euro approaching 1.30 soon. Then where?

[Griffin]

Good questions, relatively coherent, can I assume I’m talking to Spice? :D

Spice,

The purpose of “riding it out” is that the person assumes there is more risk in moving then in holding, this depends on the person’s perspective. That is very much a function of what time frame your looking at and what the risk is. The longer the timeframe, the bigger the loses you can absorb without being off track. I will assume you have started to look at charts and saw the developing potential plunge back in mid May right? Question: Why didn’t the big drop come on 8 January, 13 February, 8 March, 28 March or 12 April? Answer: It could have.

The point is, people get antsy around the bottoms and tops, if you continuously miss gains and/or lose at every little top and dip, then in the long run, your cumulative small screw-ups can out weigh a single big one. The channel of the last three years is still intact and it’s still moving up, why sweat the small stuff? Some people only worry about years like 2000. This is why Sugar wants to stick when you want to move. :)

Personally, I only will “ride it out” for a few days because I am more confident the market will rebound, then break some threshold point. I am never willing to commit to more then a 2-3% lose.

[sugarandspice]

There really is no risk if you park it in the G and observe though. I just can't understand the mindset. There will be other opportunities to get back in. I think the MTV generation of fast results, quick action, and 24 hr everything is leading to the impatience factor.

[The_Technician]

There really is no risk if you park it in the G and observe though. I just can't understand the mindset. There will be other opportunities to get back in. I think the MTV generation of fast results, quick action, and 24 hr everything is leading to the impatience factor.

Its rather distrubing how much you can miss out on if you can't play the markets accurately.....its which bus that gets you there faster how I look at it....you can take which ever bus that goes to the next town first or you can sit and wait until the one you're riding finishes backing up and then takes off again .......

[Griffin]

There really is no risk if you park it in the G and observe though. I just can't understand the mindset. There will be other opportunities to get back in. I think the MTV generation of fast results, quick action, and 24 hr everything is leading to the impatience factor.

The risk of being in the G, is in missed opportunity. I agree with you about the patience issue, but it is not confined to any generation. I've seen baby boomers taking out variable rate mortgages within the past two years. Be satisfied that there are people who will forever chase the market, thank them silently, for beefing up your retirement account. :D

[TiCKed]

Why would someone choose to ride it out? It became apparent that things were going South a few weeks ago and some chose to ride it out.

For the same reason some were in G for most of the first 5 months of the year!

In that case, they didn't want to buy in at the new "high" level, and get smacked by a drop.

Those who rode it down, (i.e. ME), don't want to sell at a new "low" level, and miss out on a rise.

What is "apparent" to one may not be to another. More power to those who can read both the ups and the downs....whoever you are. :)

[tsptalk]

The only way to beat the market is to be out of it when it goes down. Of course the only way to lag the market is to be out when it is going up - which is what I was guilty of this year.

[sugarandspice]

The term apparent was used in the wrong way. You are correct about being able to "see" things. So much info and so many interpretations of it leads to opposite strategies coming from the exact same data. It really depends on what each of us uses as our main indicator.

For example, todays slow drift down I would not view as a buying point. However that is because I want a better price. It could very well go down more and then power up past the closing price today and become an excellent buying opportunity for who got in today. The underlying "greed" factor is driving it all. And I believe greed to have many definitions.

[nnuut]

Why would someone choose to ride it out? It became apparent that things were going South a few weeks ago and some chose to ride it out. I don't understand the strategy. Is it greed? Because you know it will turn? But it doesn't so you stay waiting...waiting....waiting to recover the losses. Why not park and wait? Keep what you have and wait. It still feels like a bottom hasn't hit yet. I think once the International markets realize that they are in the drivers seat, U.S. markets will have less influence and the I fund will take off. Euro approaching 1.30 soon. Then where?

You two are right on, Sugar and Spice!;) Like I Say, let's not be stupid!!:nuts:

[Griffin]

It could very well go down more and then power up past the closing price today and become an excellent buying opportunity for who got in today. The underlying "greed" factor is driving it all. And I believe greed to have many definitions.

You hit the nail on the head :) . That is exactly why trying to play the day to day strategy is doomed with TSP. The key is to be looking at trends over the periods of years, months and weeks (in that order), start with a big picture and work your way down to a strategy that you can actually react to. Set points where you can buy and sell and allow yourself enough flexibility to do so, without sweating the small stuff. What you described yesterday is almost exactly what happened last Wednesday and what may very well happen tomorrow, so you have a good grasp on the fundamentals, which is an absolute must.

Here is my interpretation: open a good chart of the DWCP (i.e. don't use Yahoo and not the DWCPF - the pattern is the same but the numbers are slightly different) I like Bigcharts.com's interactive charting, but it does not carry data for the DWCPF. Bring up a 10 day chart, a 6 month chart and a three year chart.

I had a big picture goal based on the three year chart. Mid may, We were at the top of the three year channel, but we were simultaneously approaching the bottome of the 3 month channel. My big picture plan was to maintain in that three month channel until it brokedown, which it did (very subtle) on the 16th. So at that point I transferred to the G and started looking where I expected the fall to stop, over the course of the next week or two. I had 555 as my magic number where I expected the bottom to establish (look at the three chart and draw a line across the two lowest lows and a parallel line along the other lows). It was my belief that it would hit that level and hold, if it goes below it, the market is toast for another 10%. Anyway, it wasn't happening Wednesday morning, so I allowed myself the flexibility to take the bottom at 560 because it was holding going into the noon decision and it was close enough (I bought in at 100%). It immediately dropped to 555 after the mid-day cutoff and subsequently rebounded. If that had happened prior to noon, I would have waited for the 555 to be retested to buy in which will probably happen tomorrow. Buying last Wednesday or tomorrow doesn't really matter in the big picture, the action of the intervening week is incidental. I was in my "buy in" ball park -good enough for government work, I bought. Now if I had not bought in on Wednesday and it drops below 555 tomorrow, I would not have bought in (actually my sell number s 553, jsut to be sure). Since, I was already in, I'm not going to second guess the strategy, If 555 holds great, if not I will probably pop to the G for a day or two then roll over to the F until it hits the next major support level.

It has taken me sometime to start thinking in terms of weeks and months, rather then days. Once you do, days like today become irrelevant - making the whole process less stressful.

[Griffin]

Here's a graphic to see what the heck I'm talking about. It's not real clear, hopefully you'll get the point.

[Fivetears]

Nice illustration Griffin! It looks like a great place to put your boat in the water and hope for some nice rapids, perhaps even risk another serious waterfall; hopefully not the Niagra. Many have said it's just down stream. Keep a good grip on the ol' paddle.Here's a graphic to see what the heck I'm talking about. It's not real clear, hopefully you'll get the point.

[Griffin]

Nice illustration Griffin! It looks like a great place to put your boat in the water and hope for some nice rapids, perhaps even risk another serious waterfall; hopefully not the Niagra. Many have said it's just down stream. Keep a good grip on the ol' paddle.

5T's - I didn't expect you of all people, to buy into all this doom and gloom garbage. What's really changed from three weeks ago when the economy was supposedly in such great shape? You were my hero, when you were full throttle into the I-fund. I'd thought you would be choppin' at the bit to get back in, what's happened?

Anyway, I reread what I wrote, and I’ll be the first to admit it wasn’t well written. I was trying to illustrate the difference between when it’s worthwhile to ride it out and when it’s time to suck up the losses and bail. Do you really think I’m going to ride out a big drop? I didn’t do it before and I won’t do it this time if it happens, but you have to assume risk at some point – so stack the odds in your favor.

Keep in mind, chart patterns work because people believe in them, and people believe in them because they work.

Read what Ticked said earlier, the “it’s only a lose, if I sell” mentality is the easiest trap to fall into. Ticked, don’t take that personally, it is the most common and costliest mistake people make – it is the first major point Jim Cramer makes in his most recent book. A lot of people on this site will dump on JC, but I recommend the book.

[sugarandspice]

A lot of people on this site will dump on JC, but I recommend the book.


Let's take a vote on the JC issue(Jim Cramer). I vote thumbs up.

[TiCKed]

Read what Ticked said earlier, the “it’s only a lose, if I sell” mentality is the easiest trap to fall into. Ticked, don’t take that personally, it is the most common and costliest mistake people make – it is the first major point Jim Cramer makes in his most recent book. A lot of people on this site will dump on JC, but I recommend the book.

Won't take it personal at all. But I do believe it to a point. It's more of a mental sedative than a real investment strategy. :)

- It does apply when thinking LONG term. I'm not "selling" for 13-15 years, so a drop of a few percent doesn't really mean anything. The people who fret about every drop are going to drive themselves nuts, and probably into investments that are too conservative. (I know people at work who REFUSE to have anything except the G-fund). Or worse yet, into blind daily trades that will lose them more than just riding it out.

- That being said, I would LOVE to be able to avoid the drops. I just lack the knowledge and experience to make it happen every (or even a majority of) time. (I nearly did it this time...but that's for another campfire story). :)

Still working on my predictive ability. Until then, go with the flow. When I'm "riding it down", it's probably more due to trading restraint and perpetual optimism, than real strategy. :sick:

[nnuut]

And who are you callin' nnuuts? :D

[TiCKed]

And who are you callin' nnuuts? :D

Nothing will ever drive you nuts....You've been nnuuts for a long time now. :D

[nnuut]

:D Hee, hee thanks TiCKed! Just a little levity, good for the soul.;)

[Griffin]

- That being said, I would LOVE to be able to avoid the drops. I just lack the knowledge and experience to make it happen every (or even a majority of) time. (I nearly did it this time...but that's for another campfire story). :)



Your a good sport and you are not nnuuutttts:D

Thank you for illustrating why someone with a long range strategy would ride out a big drop

[nnuut]

Yep! Thanks!;)

[Griffin]

Ticked ,

I apologize, I quoted the wrong paragraph, this is what I meant to quote:


- It does apply when thinking LONG term. I'm not "selling" for 13-15 years, so a drop of a few percent doesn't really mean anything. The people who fret about every drop are going to drive themselves nuts, and probably into investments that are too conservative. (I know people at work who REFUSE to have anything except the G-fund). Or worse yet, into blind daily trades that will lose them more than just riding it out.


The other response suggested something I did not intend. Sorry. :D

[Spaf]

The point of riding it out->does not protect funds from big losses, and significant damage to a savings plan designed into a retirement program.

Riding it out ignores the time horizon position, and capital preservation principal. Major items in age and trading.

There are two choises: Manage your plan, or not. If you chose "not" then you should be in the L-funds. If you chose to manage your funds then you should be knowlegable about trading strategies. This is a hard answer, but then again so is reality!

Rgds, and be careful!..................:blink: ................Spaf

[TiCKed]

::::: Deleted in the interest of Peace and Harmony::::::


Except to note that all investors are different, have different philosophies, and have different levels of trading expertise. The proof of success is in your returns, and your own objectives.

[Rod]

There really is no risk if you park it in the G and observe though. I just can't understand the mindset. There will be other opportunities to get back in. I think the MTV generation of fast results, quick action, and 24 hr everything is leading to the impatience factor.

It's all about risk.

Some riskier than others.

I love the adrenaline rush of RISK. I still have 34 years of trading left... so, what the hey???:cool:

Imagine staying long in (I) for the next 34 years... BUT that would be TOO boring. Then again, it could make one VERY rich. ;)

There IS a method to my madness, and that's the target price I set for myself in considering when to bail. It's essentially the price I bought in at. As long as I'm above it, I'm a content camper.

[Brett]

"The first ones now will later be last, for the times they are a changing." Rod, don't count on the I-Fund, or any other for that matter to always giving the best return. A couple of years ago the F-Fund was giving me great returns, but is now a dog. One of the great rules of investing is to NEVER fall in love with a stock, or a fund for that matter.

[FundSurfer]

Let's take a vote on the JC issue(Jim Cramer). I vote thumbs up.

Ditto. Thumbs up. He's entertaining. I actually like his radio show better than the TV show. He's a little too over the top on TV.

[Spaf]

I love the adrenaline rush of RISK. I still have 34 years of trading left... so, what the hey???:cool:

Imagine staying long in (I) for the next 34 years... BUT that would be TOO boring. Then again, it could make one VERY rich. ;)...

Gee Rod,
You got my sympathy, as a Civil war vet I have infinity to trade!..:nuts:
Need I say more...:cheesy: ....Spaf

[Rod]

Gee Rod,
You got my sympathy, as a Civil war vet I have infinity to trade!..:nuts:
Need I say more...:cheesy: ....Spaf

:D

One further note, if you do not have a target price set in stone in which you will consider exiting the market, then you are simply setting yourself up to becoming a "panic seller". The market drops and you morph into "chicken little". Then the market takes off and you fastly become a "panic buyer". If you would've simply stayed put you would have the shares to show for it. Been there, done that. Of course, there's always that legit time to pull out. Nowadays, it's just really hard to tell when that is. That's why it's important to gauge it with a target price. Because once you drop below it, then you KNOW you are losing $$$. It's a live-n-learn experience.

[nnuut]

Pluck, pluck, Chic, chic, chic!:D

[Machinist Mate]

Different strokes for different folks Sugar and Spice.I made money the past three weeks,and it was not in G.I guess that is the point.

[robo]

Only one person on this board that really rides it out! I'm willing to bet a coke he has more money saved than most TSP folks that make frequent trades. NEVER NEVER NEVER use long term investments portfolios for trading.
That said, I trade my account! I'm also behind some L Funds in gains.

Good Trading / Investing

Just something to think about.


GO GO Birchtree!!!!

Investors and traders fall into three major categories:

Those with long term investment accounts only. This type of investor is not concerned with what the market is doing today or even tomorrow. Their eyes are on a long term investment objective without regard for short term market fluctuations. In other words, investors are concerned primarily with time.

Those with trading accounts only. This type of investor is keenly concerned with paying attention to what the market is doing right now in order to capitalize on opportunities to latch onto trends and ride them for as much profit as they can capture as long as that trend exists. In other words, traders are concerned primarily with price trend.

Those who maintain both investment accounts for the long term and trading accounts to capture short term price movements. These investors need to make a clear distinction between the ways they treat each account to avoid making tactical mistakes, such as treating a long term investment as a trading investment, or vice versa.


Since Bob Brinkers last buy signal in 2003 the S&P is up over 70%. If you stayed long you have some very nice gains. Just ask Birchtree? I get Bob's newsletter and Money Talk on Demand. For longer term investors, with cash to invest. When the S&P is around 1250 or lower it's a good time to add shares! His opinion not mine. However, when BOB TALKS I LISTEN. He has made me lots of money. Last year he said add shares or new money when the S&P was at around 1180. That's when we all thought the the world was ending, he was recommending buying and Birchtree was adding shares. GO GO BIRCHTREE!!

Turned out to be a good buy. Again, just some thoughts for you to think about as you watch your account get big losses!

Oh, his newsletter is called Market Timer!!!!

http://www.bobbrinker.com/