Official Shiny Things thread—Part III

[hkchew03]

Alamak you also another one, relatively new and just sold off your entire StashAway/Syfe portfolio after 9 months? Sigh...

Funny how new/old in the forum determine to how good you are.

I am glad i sold off my SS/Syfe, at least if i were to re-enter again now or even 2 weeks from now, my loss will be far lesser. And I not advising anyone to pull out from their existing holding, but to think twice before doing DCA.

 

[Asphodeli]

Funny how new/old in the forum determine to how good you are.

I am glad i sold off my SS/Syfe, at least if i were to re-enter again now or even 2 weeks from now, my loss will be far lesser. And I not advising anyone to pull out from their existing holding, but to think twice before doing DCA.

I believe the mantra here is "time in market beats timing the market"...there's a relatively recent study by Merril Lynch to support this school of thought.

For your second para...well its to each person's individual judgement whether to endure the pain and come out a better, more experienced investor or take the loss and exit. As they say, "no pain, no gain"

 

[culepico]

Okay so you claim:



Assuming we're talking about buying the index ETFs, which is the topic of discussion here. My question is, how then do you know whether the market goes up or down? Can you predict the future?

See the discussion very carefully. You are better off no matter you time it correctly or failed, compared to those who DCA down the market. You could get your buy wrong 99% of the time, but you are still better off 100% of the time as long as you don't buy the dips. In this case timing or not doesn't matter, you always win as long as you don't buy down.

Give you a better example for you to analyse.

Take the S&P 500, IWDA, or whatever ETF historical chart for the past 10, 20, 30 years up to you. Assume the timeline and total money invested in this timeline are the same. Assume DCA is monthly.

Scenario 1: You DCA blindly no matter the market movements.

Scenario 2: You DCA as long as the the current month is higher than the previous month, and pause (hold the cash) as long as the current month is lower than the previous month, and then buy again (plus deploy that cash that you hold) as long as the current month is higher than the previous month. Do this for the whole timeline.

Do your calculations and you will see that scenario 2 is better off than scenario 1.

Then you will say, this is historical data, how do you know how future markets will move?

Fine. In that case you can arbitrarily set any trend that you like and do the same calculation. You will find that no matter what the market trend is, as long as you don't buy dips, you are always better off.

 

[Asphodeli]

See the discussion very carefully. You are better off no matter you time it correctly or failed, compared to those who DCA down the market. You could get your buy wrong 99% of the time, but you are still better off 100% of the time as long as you don't buy the dips. In this case timing or not doesn't matter, you always win as long as you don't buy down.

Give you a better example for you to analyse.

Take the S&P 500, IWDA, or whatever ETF historical chart for the past 10, 20, 30 years up to you. Assume the timeline and total money invested in this timeline are the same. Assume DCA is monthly.

Scenario 1: You DCA blindly no matter the market movements.

Scenario 2: You DCA as long as the the current month is higher than the previous month, and pause (hold the cash) as long as the current month is lower than the previous month, and then buy again (plus deploy that cash that you hold) as long as the current month is higher than the previous month. Do this for the whole timeline.

Do your calculations and you will see that scenario 2 is better off than scenario 1.

Then you will say, this is historical data, how do you know how future markets will move?

Fine. In that case you can arbitrarily set any trend that you like and do the same calculation. You will find that no matter what the market trend is, as long as you don't buy dips, you are always better off.

Ah, yes. The "stocks only go up, and infinite money cheat". Well your logic isn't wrong here, but are you okay with the risk of loss and volatility? If say its a 50% drop from the amount you threw in only when the market went up?

 

[culepico]

Ah, yes. The "stocks only go up, and infinite money cheat". Well your logic isn't wrong here, but are you okay with the risk of loss and volatility? If say its a 50% drop from the amount you threw in only when the market went up?

Lol, just lol. You don't seem to get it do you? OK so the market only goes down forever. If you don't buy, you are better off than those who kept buying during this time. Problem?

And for the 2nd part, I did say buy when the current month is higher the previous, and hold when it is lower? It doesn't matter if it's 1%, 50% or 70%.

My point is, don't buy the dips, buy anytime else.

 

[Asphodeli]

Lol, just lol. You don't seem to get it do you? OK so the market only goes down forever. If you don't buy, you are better off than those who kept buying during this time. Problem?

And for the 2nd part, I did say buy when the current month is higher the previous, and hold when it is lower? It doesn't matter if it's 1%, 50% or 70%.

My point is, don't buy the dips, buy anytime else.

OK so you are not concerned with drawdown risk but portfolio value of investments + cash then? That sounds...really strange honestly. But it is an interesting idea. I would simulate this if I could but I don't think it will turn out well in terms of XIRR...

 

[culepico]

OK so you are not concerned with drawdown risk but portfolio value of investments + cash then? That sounds...really strange honestly. But it is an interesting idea. I would simulate this if I could but I don't think it will turn out well in terms of XIRR...

No concern at all. Just like strict DCA. Just that you remove the component of buying at the dip, and pump the cash back in when it doesn't dip. And yes, please simulate and share the results if you could.

 

[celtosaxon]

I felt otherwise because i sold all my stocks & ETFs about a month ago by ignoring such advice & i saved myself from losing >35% of my portfolio.
I am fully cash & ready to take advantage of this stock market crash.
I am lucky but also because i am willing to act swiftly and contrary to popular opinions here.

If you did this last month, then you would have probably done (or in the future, will do) similar things wheneve the market goes up and is at all time highs. Between early 2009 up until last month, doing this kind of would have put a real drag on your returns.

Then there is also the question of when to get back in, most people think it will keep going lower... until it doesn’t, and even after it goes up they think it will go back down... until it doesn’t.

 

[flowerpalms]

The problem with buying the dip

Nobody can beat dca. Why?

Buying the dip only works when you know that a severe decline is coming and you can time it perfectly.

So if you attempt to build up cash and buy at the next bottom, you will likely be worse off than if you had bought every month. Why?

Because while you wait for the next dip, the market is likely to keep rising and leave you behind.

Missing the bottom by just 2 months leads to underperforming dca almost all the time

You have to realise that your beloved dip may never come and while you wait, you can miss out on months (or more) of continued compound growth

 

[moolala]

The problem with buying the dip

Nobody can beat dca. Why?

Buying the dip only works when you know that a severe decline is coming and you can time it perfectly.

So if you attempt to build up cash and buy at the next bottom, you will likely be worse off than if you had bought every month. Why?

Because while you wait for the next dip, the market is likely to keep rising and leave you behind.

Missing the bottom by just 2 months leads to underperforming dca almost all the time

You have to realise that your beloved dip may never come and while you wait, you can miss out on months (or more) of continued compound growth

Just to check, how much is ur portfolio down?

Need for reference on who is right

Even ST agree dca not always the right approach

 

[apriliasiao]

Most never read the little book John Bogle wrote.

Sent from Apollo 13 using GAGT

 

[flowerpalms]

What i can do is to make a 2nd adjustment to monthly dca amount . 1000 -> 1160 (current)-> 1700+ while not tapping into warchest and emergency fund a single cent

But the time to buy will not change. For me will remain at end of the month, irregardless of price

 

[culepico]

The problem with buying the dip

Nobody can beat dca. Why?

Buying the dip only works when you know that a severe decline is coming and you can time it perfectly.

So if you attempt to build up cash and buy at the next bottom, you will likely be worse off than if you had bought every month. Why?

Because while you wait for the next dip, the market is likely to keep rising and leave you behind.

Missing the bottom by just 2 months leads to underperforming dca almost all the time

You have to realise that your beloved dip may never come and while you wait, you can miss out on months (or more) of continued compound growth

Don't buy dips! Correct! That was my point in my arguments really. Read them properly again. Do you understand now? I advocate not buying dips! And I also advocate against blind DCA!

My method doesn't require timing the market at all. It is essentially just removing the component of buying down the market as compared to a regular DCA.

I think many people have a misconception of my method. It is not advocating timing the market at all. I am merely stating that by removing "DCA down the market", you will perform better than those who did it!

You can do the simulations/calculations yourself for convincing sake.

 

[flowerpalms]

Pls read my subsequent post

Don't buy dips! Correct! That was my point in my arguments really. Read them properly again. Do you understand now? I advocate not buying dips! And I also advocate against blind DCA!

My method doesn't require timing the market at all. It is essentially just removing the component of buying down the market as compared to a regular DCA.

I think many people have a misconception of my method. It is not advocating timing the market at all. I am merely stating that by removing "DCA down the market", you will perform better than those who did it!

You can do the simulations/calculations yourself for convincing sake.

 

[Bun & Bear]

Accumulating and Distributing ETFs

We were all noobs once; no need to apologise!

It doesn't make a difference. You won't be leaving the dividends from VWRD in cash; you'll be reinvesting them into more shares of VWRD. The end result will be the same - even if the price of VWRD round-trips back to where it started, you'll have more money than you did before, because of the reinvested dividends.

Hi Shiny,

Thanks for the words of encouragement and advice!

Sorry, still slightly confused. Could you explain how I will have more money than I did before? Apologies as I am still unsure how accumulating ETFs work as my portfolio currently only consists of Singapore blue chips and ES3. For example, I have 5000 shares of ES3 which I bought at $2.60 back in 2016. For the dividend that ES3 pays, I may choose to buy more ES3, buy other blue chips, keep as cash, etc. In other words, this cash flow affords some degree of flexibility.

On the other hand, from what I understand, an accumulating ETF pays no dividend, but uses the income generated by its underlying shares to buy more of said shares. This will result in the ETF's share price/NAV increasing over time. So if ES3 was an accumulating ETF, perhaps I would now have 5000 shares of ES3 worth $5.

So sticking to this example, had ES3 been an accumulating ETF, gone up to $5, and round trips back to $2.60, won't I be back to square one? And thus, wouldn't a dividend paying ETF be better? For example, theoretically, I could have increased my shares of ES3 from 5000 to 7000, bought other shares, etc.

Unless I am mistaken and an accumulating ETF works like REITs and their scrip dividend scheme where the amount of ETF shares increases over time (in lieu of dividends). But I doubt this is the case based on what I have read online.

Grateful much and huge thanks in advance, again!

 

[culepico]

Pls read my subsequent post

Yes I have read and I fully understood that you will buy at the end of every month no matter the price. If it is still dipping, means you are buying the dips right?

 

[moolala]

What i can do is to make a 2nd adjustment to monthly dca amount . 1000 -> 1160 (current)-> 1700+ while not tapping into warchest and emergency fund a single cent

But the time to buy will not change. For me will remain at end of the month, irregardless of price

haha, i guess ur portfolio must be down so much
so buying the dips is the correct strategy

 

[flowerpalms]

The problem is lets say this month you hold because the price is so much lower then previous month and buy only when price is higher.

What if the price nv even come close to higher price? Are you going to hold and not buy forever? That is where DCA comes in.

You increase ur DCA amount a do the same regular investing every single month, irregardless of the price and especially not buying the dip in that sense

Forget the word dip and you know what i mean. Increase ur invesment amount, buy at whatever market price few cents above following the strategy

Yes I have read and I fully understood that you will buy at the end of every month no matter the price. If it is still dipping, means you are buying the dips right?

 

[culepico]

The problem is lets say this month you hold because the price is so much lower then previous month and buy only when price is higher.

What if the price nv even come close to higher price? Are you going to hold and not buy forever? That is where DCA comes in.

You increase ur DCA amount a do the same regular investing every single month, irregardless of the price and especially not buying the dip in that sense

Forget the word dip and you know what i mean. Increase ur invesment amount, buy at whatever market price few cents above following the strategy

Correct, if the price goes down forever, I am going to hold forever. The instance it is up, I buy. Down again, I hold. The percentages of up or down doesn't matter. If you DCA during the downtrends you are losing money.

Anyways, I have a limited capacity to explain. Those who REALLY understand what my method is will know its value. Those who don't or assume you know what I meant, you can continue to use your method, no problem as it will still earn in the long term.

To each his own, peace out

 

[hkchew03]

For me, I don't care whether dip or rise. But as long as I konw for sure it will dip further, I hold for the moment. In the case of COVID, most countries still shows no sign of recovery, a very big telltale that the stock will remain or dip even lower until we start to see some recovery. Can't say if it will work in other recession case like GFC or not. But at least we have seen that fastest sign of recovery is at least 2-3 weeks after effective lockdown (South Korea). Holding DCA will also means more ammo to unload once it dips lower.

But of course nothing is 100%, if one day a drug/vaccine is announce, we will be chasing after the boat. Or if there is a burst of transmission even after the infection in stable, there will be more dips.