How's your buy and sell timing?

[fenders53]

This is a thread about nothing if you are truly long-term investing, which I am on 80%+ of my stocks.  I swear 65% of the time I move a stock it moves 1/2% or more in the wrong direction within 48HRs.  

One of my investing rules is always try to avoid doing what you wish you had done yesterday, or last week.  That seems to help avoid the problem somewhat.

[crimsonghost747]

My experience from timing comes from two different perspectives.

First there is the timing of my buys. I put money on my brokerage account monthly and try to deploy it to the best of my ability. Timing is kinda sketchy, just like you I often end up buying and it declines a percentage or so in the coming days. Or alternatively I go "hmm I'll wait" and it goes up a percentage. I have to say that I've been getting better at this recently, though I can't say if that is skill or luck. In the end, this does not matter at all as these stocks are going to be in my portfolio (hopefully) for 40 years or so.

Second is with my options trading. Mainly covered calls but also some puts. I've done surprisingly well with these.

[fenders53]

My buy timing is poor at times, and the only thing to describe it is impatience. It starts off well when I wait 3 or 6 months for a stock on my radar to dip. Something happens to drop it 10% and I jump in with a half position. It starts bleeding down and I chase it will small buys. After a few weeks I figure out I should have just let it settle down before I jumped in with more purchases. Doesn't matter at all for a longterm play. If I intend to hold a cyclical for only a few years the entry point matters. This recent correction went longer than I thought and I was scared not to be long from now until end of year.

Like you, my cover options sales seem to work out fine. Selling covered puts to enter long positions is the smartest strategy I've ever employed. It's a can't lose proposition if you are going to buy the stock anyway. I have a set of rules I seem to be better at adhering too and it works out very well about 85% of the time. I am killing about 5 stocks without ever owning them, even though I intend to own them longterm.

[crimsonghost747]

(11-26-2018, 11:22 PM)fenders53 Wrote:  Selling covered puts to enter long positions is the smartest strategy I've ever employed.  It's a can't lose proposition if you are going to buy the stock anyway.

That is not exactly true. You could be forced to buy in too early, for example with a short term put during a large correction you'd be going in on the stock at the beginning of the correction and if you were holding onto long term puts you're entry price could be tens of percentages higher than the current market price.

There is also the other thing where you keep selling puts but the stock simply goes up and up and up. You will keep collecting the premium but end up one day with an entry price significantly higher than you would have gotten by just buying it in the first place.

I do like puts too but you have to remember that there is no such thing as a free lunch.

[fenders53]

(11-27-2018, 02:51 AM)crimsonghost747 Wrote:

(11-26-2018, 11:22 PM)fenders53 Wrote:  Selling covered puts to enter long positions is the smartest strategy I've ever employed.  It's a can't lose proposition if you are going to buy the stock anyway.

That is not exactly true. You could be forced to buy in too early, for example with a short term put during a large correction you'd be going in on the stock at the beginning of the correction and if you were holding onto long term puts you're entry price could be tens of percentages higher than the current market price.

There is also the other thing where you keep selling puts but the stock simply goes up and up and up. You will keep collecting the premium but end up one day with an entry price significantly higher than you would have gotten by just buying it in the first place.

I do like puts too but you have to remember that there is no such thing as a free lunch.

They definitely work best in a sideways to slightly up market.  That is when they are just about a free lunch.  Generally works well in a slightly falling market if you are nimble because it is easy to roll a contract forward in those times and drop your entry basis further.  Still end up with a better entry than just going long a few months ago.  Obviously doesn't work as well if the market is falling fast, but you are dropping some equity  whether you go long or enter with a put.  Selling a put is going short, but not in a meaningful way the way it is used in my strategy.  I'm not selling a high volume of puts 20% out of the money.  If a stock is going straight up and living in overbought RSI, I won't chase it selling puts.  Once or twice and I move on as it wasn't meant to be. (going long).  My personal put selling rules are simple, but that is definitely one of them.  MCD is a good recent example.  Owned my initial position at a low price.  Attempted to increase it with puts and collected premiums.  Sure I would have been better off just going long, but MCD is a rare example in this market.   Certainly among the stocks I wish to own at this time.    

Back to the point, it beats my record of timing entries when just going long.  Dollar cost averaging over ten years is better, but I am getting older now and this is the most conservative entry method I have found.

[Kerim]

I'm pretty happy with my buy timing, though often I end up wishing I hadn't been so timid and bought more! (And selling is rare enough for me that I don't have a sense of whether I'm any good at timing it!)

[fenders53]

(11-27-2018, 03:06 PM)Kerim Wrote: I'm pretty happy with my buy timing, though often I end up wishing I hadn't been so timid and bought more! (And selling is rare enough for me that I don't have a sense of whether I'm any good at timing it!)

Good point.  If you hold long enough, as most of us do here with quality DGI stocks, then any sell point will look good enough a decade or three from now.  When I started this thread I was just trying to make forum conversation, and had experienced a a week where everything I touched moved a buck or so in the wrong direction every time I touched my port.  I said within 48 hrs but in a few cases it was more like 48 minutes lol.  Trading near the open is a double edged sword.  There are a lot of flash sales, but if the media piles on a few hours later sometimes the sale gets even better lol.  I shouldn't dwell on it, but I want to kick myself when I could have had a couple free shares a few days later.  Buying even smaller positions would cure that since commissions are about free.

[rayray]

Terrible, always has been. Some of my worst investments were on the sell side of investing. So, I try not to sell.

[fenders53]

(01-01-2019, 03:05 PM)rayray Wrote: Terrible, always has been. Some of my worst investments were on the sell side of investing. So, I try not to sell.

As long as you buy above average companies, not selling is a winning strategy.  Personally, my biggest sell errors are when a stock gets crushed.  I patiently hold 5-10 years and when it finally recovers and gives me a decent gain, I become thankful to get out.  Often those are the stocks that double again in just a few years because I bailed after they righted the ship.  MSFT comes to mind.

[rayray]

(01-01-2019, 03:19 PM)fenders53 Wrote:

(01-01-2019, 03:05 PM)rayray Wrote: Terrible, always has been. Some of my worst investments were on the sell side of investing. So, I try not to sell.

As long as you buy above average companies, not selling is a winning strategy.  Personally, my biggest sell errors are when a stock gets crushed.  I patiently hold 5-10 years and when it finally recovers and gives me a decent gain, I become thankful to get out.  Often those are the stocks that double again in just a few years because I bailed after they righted the ship.  MSFT comes to mind.

fenders, a buddy of mine lost money on Google, Amazon and Microsoft!! He told me he feels like the only guy in the world that lost money on those 3 lol...at least he has a sense of humor about it.

I think about Redhat....if I never sold my shares I'd be getting a 400k check from IBM

[fenders53]

(01-02-2019, 09:46 PM)rayray Wrote:

(01-01-2019, 03:19 PM)fenders53 Wrote:

(01-01-2019, 03:05 PM)rayray Wrote: Terrible, always has been. Some of my worst investments were on the sell side of investing. So, I try not to sell.

As long as you buy above average companies, not selling is a winning strategy.  Personally, my biggest sell errors are when a stock gets crushed.  I patiently hold 5-10 years and when it finally recovers and gives me a decent gain, I become thankful to get out.  Often those are the stocks that double again in just a few years because I bailed after they righted the ship.  MSFT comes to mind.

fenders, a buddy of mine lost money on Google, Amazon and Microsoft!! He told me he feels like the only guy in the world that lost money on those 3 lol...at least he has a sense of humor about it.



I think about Redhat....if I never sold my shares I'd be getting a 400k check from IBM

I bought MSFT shortly before the 2001 tech crash.  Held that pig for 15 years for a double, then missed another quick double because apparently 15 years isn't quite patient enough lol.   INTC wasn't a quick win either but I bought it much earlier. Now I am down on AMZN and AAPL.  These won't take 15 years to recover as they are nothing like the 2001 overvaluation. Timing is everything though lol.

[fenders53]

Sold a CSCO put today. I'm probably early which is normal lately lol. I made a lot of money on CSCO in the 90s and rolled it into JNJ for 20 years and dumped that before the recent talc debacle. I get it right sometimes. CSCO is a completely different company now. I like the div and they will make it through any recession. I'm comfortable holding it until I am old. I'd like to think it will outgrow an oatmeal or ketchup company. We shall see.