MrJohnRoss' Account Talk

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MrJohnRoss said:
RMI,

You're looking at the RELATIVE performance of the S Fund vs. the I Fund. When the line heads higher, the S Fund is performing better than the I Fund, and vice versa.

The S Fund has clearly outperformed the I fund since Oct 1.

There have been brief periods during this time when the I Fund has rallied to outperform the S Fund. See the downtrendiing red line from 27 Dec to 3 Jan, and 13 Jan to today.

The S Fund has still outperformed I since Oct 1, but we need to keep an eye on this to see if there is a change of leadership.

Hope that helps!
Click to expand...

Interesting. I could see if you were trying to maximize profits, still had the IFTs, and wanted to switch S->I or I->S when we are in a continuing bull market... I just don't think we have been in a continuing bull market since, say the beginning of May 2011... Very volatile since then (more so from August on) and I would rather just use the S vice fighting/timing the FV of the I fund. Just a quick thought.

Thanks for the clarification. Good luck.
 
Here's the latest chart from my Timing System vs. Buy & Hold. Birch, this is an eye test for ya. Pick either the blue or the red... which account would you rather have invested in, the blue (Buy & Hold) or red (Timing System).

Timing Chart.jpg
 
My wife has her defined contribution plan 100% in the S&P 500 index and she is staying there. The objective is to accumulate as many shares over time using the dollar cost averaging approach. It's the number of shares you own that will provide the growth in gains as time rolls on. Great percentages need to be backed up with shares or there is no growth. Now, if one had 40,000 shares at retirement then the first graph would be our choice - that may come later. For now we'll sacrifice some growth to gain more cheaper shares - it all depends on the discipline and objectives.
 
Birchtree said:
My wife has her defined contribution plan 100% in the S&P 500 index and she is staying there. The objective is to accumulate as many shares over time using the dollar cost averaging approach. It's the number of shares you own that will provide the growth in gains as time rolls on. Great percentages need to be backed up with shares or there is no growth. Now, if one had 40,000 shares at retirement then the first graph would be our choice - that may come later. For now we'll sacrifice some growth to gain more cheaper shares - it all depends on the discipline and objectives.
Click to expand...

Thanks Birch, I didn't mean to pick on you. (Ok, well maybe a little bit... :toung: )

We both agree that we need to accumulate as many shares in our accounts as possible. However, I'm trying to utilize my timing system to take advantage of the buy low, sell high theory. If the market begins to tank, and my timing system says sell, I prefer to flatline our accounts by going into cash and waiting for a bottom. Then I buy even more shares at a cheaper price when I get a buy signal. Rinse and repeat. Viola! In theory, I should have many more shares than if I just used buy and hold.

It's worked pretty well over the last five years.

Like I've said before, there is no right or wrong. Everyone has their own ideas and comfort level with their trading strategies. I've explained my system to many of my family members, co-workers and friends, and found that only a very small percentage of them "get it". For the life of me, I can't understand why they don't want to do things the way I do! (Hahaha).

Thanks for your input Birch, I appreciate it.

JR
 
The market is a global open arena and gains can be made as long as there is discipline. Not every one has the available time to input their accounts like we do. Retirement will present that opportunity but knowledge is critical when you swing trade. Someone with a 30% gain on no money is still no money. There is more risk in being out of this market than being in. Once we break 1320 all hell is going to break out as everyone tries to get on the train.
 
Birchtree said:
The market is a global open arena and gains can be made as long as there is discipline. Not every one has the available time to input their accounts like we do. Retirement will present that opportunity but knowledge is critical when you swing trade. Someone with a 30% gain on no money is still no money. There is more risk in being out of this market than being in. Once we break 1320 all hell is going to break out as everyone tries to get on the train.
Click to expand...

I would absolutely love a screaming up market. I would also absolutely love for it to be followed by a screaming market crash.

Cha-ching!

Cha-ching!

Rinse and repeat.
 
MrJohnRoss said:
I would absolutely love a screaming up market. I would also absolutely love for it to be followed by a screaming market crash.

Cha-ching!

Cha-ching!

Rinse and repeat.
Click to expand...

"MrJohnRoss", your chart looks like you made roughly 8% for the two years 2007-08 and maybe 2%? last year. Could you explain why you would like to see a big bear market? Thanks.
 
SkyPilot said:
???
Click to expand...

SkyPilot, I'm guessing you're not getting it. Let me provide a theoretical example:

Mr. BuyN-Hold buys 1,000 shares of the market at $100 a share.
His account value is $100 X 1,000 shares = $100,000.

The market goes up 20%.
His account value is $120 X 1,000 shares = $120,000.
So far so good...

Now the market goes down 20%.
His shares are only worth $96.
Account value is $96 X 1,000 shares = $96,000

Now the market goes back up 20%.
His shares are now worth $115.20.
Account value is $115.20 X 1,000 shares = 115,200

Now the market goes back down 20%.
His shares are now worth $92.16.
Account value is $92.16 X 1,000 shares = $92,160.

Does the above make sense to you?

Now let's look at the exact same theoretical market conditions, except with someone who sells high and buys low:

Mr. ExpertTimer buys 1,000 shares of the market at $100 a share.
His account value is $100 X 1,000 shares = $100,000.

The market goes up 20%.
His account value is $120 X 1,000 shares = $120,000.
So far he's got the same results as MrBuyN-Hold...
But now he sells at this theoretical high!

He puts the $120,000 into the bank, under the matress, in a coffee can, whatever, and earns zero percent interest.

While he's sitting in cash, the market goes down 20%.
Now the same shares can be purchased at $96.
He pulls the $120,000 out of the bank, and buys low!
He buys 1,250 shares of the market at $96.
Account value is $96 X 1,250 shares = $120,000.

Now the market goes back up 20%.
His shares are now worth $115.20.
Account value is $115.20 X 1,250 shares = $144,000.

Since he's timing the market, he gets out at the top again.
$144,000 goes into the bank or under the matress...
... until the market bottoms once again!

So the market goes back down 20% while he's sitting in cash.
Now it's time to buy low!
He can now purchase shares at $92.16.
He purchases 1562.5 shares at $92.16
Account value is $92.16 X 1,562.5 shares = $144,000.

I could go on and on with this, but this should provide a good illustration. The market performed the same, it was the timing that made the difference.

Mr. BuyN-Hold account value = $92,160
Mr. ExpertTimer account value = $144,000

That's 56% more money over buy & hold.

Hope that helps!
JR
 
Last edited:
MrJohnRoss said:
SkyPilot, I'm guessing you're not getting it. Let me provide a theoretical example:

Mr. BuyN-Hold buys 1,000 shares of the market at $100 a share.
His account value is $100 X 1,000 shares = $100,000.

The market goes up 20%.
His account value is $120 X 1,000 shares = $120,000.
So far so good...

Now the market goes down 20%.
His shares are only worth $96.
Account value is $96 X 1,000 shares = $96,000

Now the market goes back up 20%.
His shares are now worth $115.20.
Account value is $115.20 X 1,000 shares = 115,200

Now the market goes back down 20%.
His shares are now worth $92.16.
Account value is $92.16 X 1,000 shares = $92,160.

Does the above make sense to you?

Now let's look at the exact same theoretical market conditions, except with someone who sells high and buys low:

Mr. ExpertTimer buys 1,000 shares of the market at $100 a share.
His account value is $100 X 1,000 shares = $100,000.

The market goes up 20%.
His account value is $120 X 1,000 shares = $120,000.
So far he's got the same results as MrBuyN-Hold...
But now he sells at this theoretical high!

He puts the $120,000 into the bank, under the matress, in a coffee can, whatever, and earns zero percent interest.

While he's sitting in cash, the market goes down 20%.
Now the same shares can be purchased at $96.
He pulls the $120,000 out of the bank, and buys low!
He buys 1,250 shares of the market at $96.
Account value is $96 X 1,250 shares = $120,000.

Now the market goes back up 20%.
His shares are now worth $115.20.
Account value is $115.20 X 1,250 shares = $144,000.

Since he's timing the market, he gets out at the top again.
$144,000 goes into the bank or under the matress...
... until the market bottoms once again!

So the market goes back down 20% while he's sitting in cash.
Now it's time to buy low!
He can now purchase shares at $92.16.
He purchases 1562.5 shares at $92.16
Account value is $92.16 X 1,562.5 shares = $144,000.

I could go on and on with this, but this should provide a good illustration. The market performed the same, it was the timing that made the difference.

Mr. BuyN-Hold account value = $92,160
Mr. ExpertTimer account value = $144,000

That's 56% more money over buy & hold.

Hope that helps!
JR
Click to expand...


Thanks for explaining this in detail, because the buy and hold method for me last year was a disaster. My Uncle Len who was in the funeral business made all his money years ago in the stock market and would try explaining this to me 30 years ago, but the stock market was the last thing on my radar. Now I am in my fifties and a few years out from retirement and know very little.........I REALLY appreciate all the comments and still have alot to learn, wish I had started sooner.................bj
 
barbarajean said:
Thanks for explaining this in detail, because the buy and hold method for me last year was a disaster. My Uncle Len who was in the funeral business made all his money years ago in the stock market and would try explaining this to me 30 years ago, but the stock market was the last thing on my radar. Now I am in my fifties and a few years out from retirement and know very little.........I REALLY appreciate all the comments and still have alot to learn, wish I had started sooner.................bj
Click to expand...

Awww, thanks BarbaraJean. I'm glad I was able to help you. Last year was a rough one for almost everyone, including me.

Wishing you much more success to you this year in your TSP.

JR
 
I am the wet rag here but in theory that works great, buy high/sell low. Unless you have a crystal ball or inside information you may catch the high and low wave once in awhile but over the long run the timing is never right. Good luck to all, because we can all use a little luck. :cheesy:
 
NASA, you are absolutely correct. No one can time the market perfectly. My example was purely theoretical.

In real life, I'm just trying to use technical analysis to get a high percentage of my signals correct. I'm correct about 80% of the time, and usually my mistakes are small.

Tom, good catch spotting your business name! LOL!
 
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