Buffett@market timing describes two meanings AA) acquisition price, or BB) price forecast.

Hi,

I spoke to a few fund managers and fund house salesmen (who seem to know something about the fund strategies) from some top 30 fund houses.

(None of them mentioned automated trading. They may very well use an execution algorithm like VWAP to automate slice and dice a block order and smart-route it to multiple liquidity venues. They could get trading signals from a software but I didn’t ask if they let a machine automatically send orders based on the signals.)

Their sales pitch is very heavily macro-economic.

One fund house said as a guideline they don’t encourage market timing [BB] by retail investors, though I believe the fund managers have to operate by different guidelines. However, another fund house rep shared with me that poor timing [AA] is a valid explanation for a 10 year drawdown.

These are opposing/conflicting guidelines for a retail investor, to whom I belong. Since my investment skills and experience is mediocre, so I do not regard myself as a sophisticated investment pro. Anyway, the way I reconcile these guidelines is,

• ideally the investment strategy should be largely timing-proof [BB] and fool proof so we don’t need to time the market. Perhaps DCA in some balanced fund?
• I haven’t identified such a strategy yet so I feel timing [AA] is important, extremely.
• It pays for a retail investor to spare some time following the market, to help decide where and when to invest.
• .. Some don’t have the time. I once wrote that a passive investor may spend half a day a year. I doubt such a person can accumulate any insight or investment experience. But I won’t say these individuals should avoid investment.
• most retail investors except the retirees probably don’t have a few hours a week to spare. We have to make timing decisions based on what little we gather. Buffett makes the same timing decisions in the AA sense.
• even those with hours to spend may not gain any real insight to improve their timing. All the experts could fail to time the market in the BB sense.
• Back to Square One — I still hope to find some timing-proof way to increase my equity exposure.

Just to share. Here’s my eq investment strategy so far. This strategy is light on BB timing. To increase my equity exposure, I would need to increase the 2 top-up decisions, which require timing!
– start with small positions like $100.
– If profitable, I time the market to exit. Relatively unstressful timing — even if I exit too early or too late, I still make some small profit
– If profitable, I may also top up, but carefully, since the price is higher now.
– if it remains at a loss, I usually wait for it to recover. In special cases, I top up on an unprofitable position, but slightly. Don’t want to invest on a downward slope.