Nice recent podcast on active vs. passive. Don’t worry, they’re really respectful towards active guys 
https://www.bogleheads.org/blog/2021/05/02/episode-033-bogleheads-on-investing-guest-jeff-ptak-host-rick-ferri/
Oh and btw, active CAN be cured, you just need to address your bias: overconfidence, recency, survivorship etc. No shame in it.
Great reply!
That’s exactly why I think you’ll also need some chart interpretation in addition to determine whether it’s just a just a flash crash/pump with a quick bounce back or a real trend change. Strictly sticking to a mathematical model results in too many (or too little) false buy/sell signal.
The moving averages give an indication only. And as you mentioned it clearly works less good with “slow” assets like broad index funds and better with ones further out the risk curve with strong up/down trends like single tech stocks and cryptos. In latter you are currently seeing a lot of people hurt, hodling all the way down.
I find being fully invested during times like these now too stressful and rather be in cash waiting for a clear trend reversal for reentry than watching my net worth shrink day by day by day over months and months and maybe even years! 
But yeah, it’s a personality thing, I’m honestly just not cool enough for passive investing. 
I theory yes, if you can buy the bottom perfectly you’d miss out on a potentially big gain.
With the moving average strategy you’d have substantially reduced your losses during the big crashes like 2000 (-8% instead of -40% over 900 days from ATH, max drop -50%) and 2008 (-8% instead of -38% over 500 days from ATH, max drop - 58%). We are currently at -23% from ATH, sell indicator was at -9%. (example S+P 500 EMA 50)
Very rough assumption: Let’s say this bear market is going to be 2 years and goes down 40% and you invest 5k per month at an average discount of 40% that’s potential 50k gain.
At the same time you portfolio of 500k drops to 300k (-40%) instead of 450k (-10%), that’s a 150k delta or with you potential low buying opportunity gain included around 100k or -20%. Guess it strongly depends in which phase of wealth building you are.
If you retired with a withdrawal rate of 4% or above and P/E indicators were high - what makes sense for you is quite different vs someone in the accumulation phase
I can see how support/resistance levels or flag patterns could be linked with investors psychology/sentiment and give a signal on whether the times are rather bullish or bearish but I have high doubts about other patterns (it seems a bit like astrology to me, something unrelated with the actual underlying psychology that we have refined to make it fit as best we can).
The problem I have with patterns related technical analysis is that it works until it doesn’t. Support/resistance bands can be breached every time they’re tested, it is very important to make sure we can’t loose more by a change of sentiment (support/resistance line breached) than using the whole system makes us win, which makes it very hard to use to me.
I’d rather test my own sentiment vs an attempt at understanding what is really going on in the market: who is invested with how much money, who is investing, who sits on the sidelines with how much dry powder that could get in, what are their objectives, what may make them change their stance and so on.
It is a very time consuming endeavour. I’d be willing to think, if we factor in the time we spend following it, only professional funds managers manage to make it a profitable venture. That’s the strength of passive: spend a weekend reading a selection of articles, starting with Bill Bernstein’s If you can, take a week to think about your personal situation, your goals and the risks you are willing to take, select your asset allocation, a broker and a few ETFs that fit you and you’re done. Enjoy spending time with your family on the weekends, being focused on enjoying your work and getting the most value out of it and just live life.
Indeed, investing in retirement/with significant assets invested is very different than being a (all but late) accumulator. It would probably deserve its own thread. I’d personally not envision going into retirement with anything else than a risk parity portfolio including many asset classes. A risk mitigation strategy requirering active actions from my part would be vulnerable to me having to spend a prolonged period of time in dire shape in a hospital (or wherever else where I can’t trade), for example after a road accident.
Sure. Going broke would have a more detrimental impact on my life than getting a shot at becoming a billionaire would compensate for, though (have you computed the real chances of that? Multimillionaire, sure, billionnaire+, I’d be amazed if the chances to reach it with a 100% VT investment starting at a relatively relatable FIRE value of, let’s say, 5 millions are significant).
The concept of “enough” is what I’d be taking into consideration here (I know it tends to feel alien in our current society, which is why talking about it is so important).
To answer the question of this thread: when the SP500 hits ~2700.
I saw an interesting comment that now at the turn of a month/quarter a rebalancing of institutional investors into stocks might kick in. So we can have a rally next week or so.
how does that work? Institutional investors publish when they are investing? It should be easy to make a quick buck if you know how they balance.
Like rebalancing a typical 60:40 (for example) stocks-bond portfolio?
While stocks have dropped around 20% in 2022, unfortunately the Bloomberg Global Aggregate Bond Index has also dropped 15% this year, so there may not be much to rebalance.
They are typically rebalancing around a turn of a month/quarter/half year. Now we have all of them.
It is just one factor out of many, so good luck with trying to catch upward movement due to the institutional investors rebalancing.
Yes.
True but even small rebalancing by institutional investors can easily create huge orders.
Nevertheless I agree with both of you, nothing to really get excited about. Just wanted to share a thought.
There’s quite a few institution that think we could (or should, if we want to avoid hyperinflation) be headed for proper recession, most recently the BIS. So what’s the argument that the pain is short term vs. multi year?
I think the argument isn’t that the pain is short term but that it is mostly already priced in, which should limit further declines in stock prices. I’m not sure I agree with that. While pain is expected this winter, there’s been a habit of being overly optimistic so far and I don’t feel that the optimistic spirits have really been crushed yet.
That’s just the crapshot that my magic eight ball tells me. None should act on it, and I won’t.
Isn’t that almost 50% from the top? Can’t it be considered an hard crash?
Given how some parts of the US are “addressing inflation”, I wouldn’t be surprised if the self-fulfilling prophecy on recession comes about. 
I guess the Californian Governor never attended Economics 101…
What is currently getting my attention: Germany seems to be seriously running low on gas. They’re even turning their old coal power plants back on.
Yes, we in Switzerland are less dependent on Russian gas than Germany, but they’re our most important economic partner. If they get in trouble, so will we.
What will happen when winter comes?
There are political imponderabilities that seem harder to price (in) than most previous ones.
E.g. Putin shutting off the gas to Germany and the EU.
In order to pump up stocks on bad economic news, one needs to have available money and not be struggling to maintain their family and reduce the margin they’ve accumulated in good times. Stock prices go really down when people are either unable or unwilling to buy them at real bargain prices, recessions go a long way toward the first.
It’s still early, we’re already having warnings for a need for prioritizing energy this winter, yet few are the people in Switzerland who fathom that they, themselves, may have to make do with less heating or other hardships. We take a lot of things for granted but there is a lot of potential for a lot of things to go awry. There are warnings for a potential food crisis in many countries, Covid could make a comeback and there’s no telling how other countries would react, putting potential pressure on supply chains once again and several states policies have become quite crazy.
Nothing is for sure but in order to profit from potential stocks bargain, one first needs to survive. Not everybody is putting a focus on that. The less people do, the more likely it becomes for stocks to go real low.
Can you believe it? With environmentalists in power?
