| HN Mirror

[0] https://www.stayingrich.net/wp-content/uploads/2016/05/Towne...

If your plan is "throw my money into a pit" that is not a good strategy, even if you stick to it. So no, we would not agree.

You ignore Nejat Seyhun's 1994 paper "Stock Market Extremes and Portfolio Performance" [0] which says:

> For the 1963-1993 time frame, the findings were similar. The index gained at an average annual rate of 11.83%, for a cumulative return on $1.00 of $23.30 over 31 years. If the best 90 trading days, or 1.2% of the 7,802 trading days, are set aside, the annual return tumbles to 3.28% and the cumulative gain falls to $1.10.

And from ARWDWS [1]:

> The past history of stock prices cannot be used to predict the future in any meaningful way. Technical strategies are usually amusing, often comforting, but of no real value.

Further:

> Using technical analysis for market timing is especially dangerous. Because there is a long-term uptrend in the stock market, it can be very risky to be in cash. An investor who frequently caries a large cash position to avoid periods of market decline is very likely to be out of the market during some periods where it rallies smartly.

[1] https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/03933...

A lot of people would be better off it they just took a $100 a month and put it under their mattress, i.e. throwing money into a pit. There are obviously many better ideas than that.

Thank for for that paper, I'll give it a read.

The next line in Seyhun's paper is more interesting to me and the focus of my research and strategy:

> If the 10 worst days are eliminated, the annual return jumps to 14.06%, and the cumulative return increases to $44.80. With the 90 worst days out, the annual return rises to 21.72% and the cumulative gain to $325.40.

I believe this paper describes a strategy that accomplishes that goal relatively well: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4346906

The point is you cannot know which days are the worst days ahead of time.

Also uncited and unpublished papers aren’t worth the ink they’re printed on.

If you're open-minded, give the paper a read. They suggest a method, that you can verify yourself, for figuring out which months are likely to be worse.

The paper you shared defines "in the market" as long equities and "out of the market" as long T-bills. The paper I linked looks at other assets you could rotate into besides T-bills. How could that one change (they offer several other ideas) impact the results of your paper?

If that's not interesting to you, skip the paper I linked.

Personally, I believe that type of research is still valuable. I don't structure my life just based on things in published and cited articles.

As with literally everything else of this nature, it's overfit for the past, and in future applications inevitably fails.

This isn't about interest, it's about value. What you're proposing is flat out wrong, and has been shown to be so in hundreds of different ways.

https://allocatesmartly.com/diving-deeper-does-the-day-of-th...

You may just ignore this (dear thread-reader may not!) since it's on a blog but how do you fit this into your mental model of market phenomena?

If you can't smell the salesmanship taking place on this link, there is a whole lot more wrong with your filtering abilities than I had initially thought.

So based on this, I think you have a filter problem; you seem to be unable to accurately evaluate sources for their credibility, and take in any/all arguments without understanding how easy it is to be manipulated by un-credible sources into believing hard-to-disprove ideas that are nonetheless actively harmful to you and your ability to grow your investments.

This leaves you susceptible to charlatans and snake-oil salespeople, which fully explains your desire to believe proven-wrong ideas on investing. When you lose out on these market timing attempts, you apparently do so in a way that allows others to profit directly off of you, and you further advocate for others to follow suit.

You're a great mark, I'll give you that.

We certainly have different types of filters. Your filter apparently catches blogs and that's fine. I feel I've been exposed to many interesting things on blogs. I'm sure others would agree.

Your model/filter may be better because you don't have to think about as many things. There's certainly more information out there than one has the ability to ingest. In my experience many things I thought were settled turned out not to be upon further inspection. A simple filter might be good enough for your purposes!

I think your ideas about investing can be correct (in that they produce favorable outcomes) and other ideas can be correct too.

Not a perfect analogy, but Newton's ideas about gravity are correct to explain a lot of things. Einstein's ideas expand and explain more. They are both correct, depending on the level of detail you need. Sometimes "correct" roughly equals "useful".