Thread: What's the point of riding it out?

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

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.

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.

Originally Posted by 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.

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 .......

Originally Posted by 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 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.

Originally Posted by 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.

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.

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.

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.

Originally Posted by 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?

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

Originally Posted by sugarandspice

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.

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

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.

Originally Posted by 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.