Confession: I’m Trying To Time The Market

I am usually very skeptical when people try to time the market. But I must confess, I have been trying to do it this week. As part of my new portfolio, I need to buy $11,000 of IVV (an S&P 500 ETF). That’s a big order for me. On Monday I saw the market going south, with IVV going below 128.5, and made a limit order for 128. I figured, if I could just catch the market on a 1% dip, I’d save over $100!

Fast forward to market close on Thursday, and IVV is at 131.30 (a 2% increase) after the Federal Reserved hinted at an end to interest rate hikes. Oops. Oh well, the trade is good-til-cancelled, so maybe tomorrow I’ll still catch it. Or not. See, this is why I need to just stick with mutual funds! =)

Comments

  1. pennypacker04 says:

    Why not dollar cost average? With the FED raising rates and the S&P near it highs, that is not a very good risk vs. reward scenario for going all-in.

    I personally don’t buy & hold US index funds… that is so 1990′s.

  2. Transactional costs… I have some free trades but I’m not treating them as such.

    Sometimes I like thinking about the market, sometimes it just feels like a waste of time. Today’s 52-week high could easily be next years 52-week low.

  3. I have a feeling you’ll get your chance, either tomorrow or next week. Inflation numbers were not all that great, oil keeps going up.

    When buying mutual funds I like to watch where the market is going and enter my market order around 3:30-3:45. This is mainly in our 401Ks though as I don’t trade mutual funds much in taxable accounts yet.

  4. Sounds like you’re headed in the right direction. Good perspective on the free trades. You’re using Scottrade now right?

  5. Jon, I know for sure that you’ll get in at your desired level soon. The S&P is sitting at basically a 52-week high right now and as MPFB said so elequently there’s nothing particularly pushing stocks higher outside of generally good earnings reports thus far. The broad market dip of a few percent is inevitable… at least I think so. :)

    ps. If you buy now at 128 and next year 128 is a 52 week low you should be a happy camper.

  6. IMHO…Since your time horizon is very long waiting a few days isn’t a big deal. At the same time, buying “today” regardless of the price also isn’t a big deal, since your time horizon is long.

    I wouldn’t worry too much about it. I used trade all the time and worry about day-to-day movements until I switched to lazy index portfolios. It took some time getting used to not worrying about day-to-day movements but it was rather liberating. I do feel left out of conversations sometimes when friends say “did you see what the market did today?!” and I could care less.

    I have peace of mind and am exceeding my investment return goals.

    Wes

  7. Jonathan,

    I have to laugh – today I’m purchasing my very first shares ever through a discount brokerage (Scottrade), and I’m doing the exact same thing you described!

    Oh where oh where did all those lessons from reading Bernstein/Swedroe/Ferri/Bogle/diehards/mymoneyblog go?!?!?! Put the power to try to time a purchase on a down-tick in front of me, and I wanna pretend I’m Warren Buffet or something!

  8. Quote from invest-faq.com regarding the fallacy of market timing:

    “In the 1980s if you were out of the market on the ten best trading days of the decade you missed one-third of the total return.”

  9. Thanks for Socttrade referral. I had to send paper based form due to my visa status. But your blog post was helpful to open the account. We both should see free trades as soon as they cache my first check!!!.
    I want to invest $2500/- on IVV from Scottrade, do i need to pay any extra fee for this ETF or i just pay for the stock value

  10. Arun,

    I bought an ETF on Scottrade with one of my 3 free trades, and it appears there was no fee whatsoever, just the stock value as you said.

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