Do not time the market - how to master the investment game?

March 6, 2020

Introduction

It is tough for me to discipline myself as an investor. I have to work on my TFSA account and stay on the course. I did rebalance my portfolio, and sold some bond and purchased some equity ETF.

Do not time the market

I learn to discipline myself. I am thinking that bear market is coming, and SPX will drop at least 50%. But I like to learn how to discipline myself. Do not time the market, since SPX was going down around 2900, and it was time for me to learn how to rebalance.

Behavior economics

It is hard to learn behavior finance, and specially when the market swung like 4% a day on SPX index. I like to recognize my emotions, and then make decision based on rules to keep balance of my portfolio. Keep it simple. Do not think about coming bear market, Corona virus, just treat it as a normal day go out shopping. 

Here are highlights:

1. June 10, 2019 Purchase VFV.TO at price 67.34, 140 share;
2. January 21, 2020 Sell VFV.TO at price of $77.23, 18 share
3. Feb. 6, 2020 Purchase VFV.TO at price of $78.99, 83 share
4. March 6, 2020 Purchase VFV.TO at price of $70.00, 20 share

My market position of VFV.TO on March 6, 2020, cost/ share 71.8761, market price 70.89, Market value is $15,950.25, P & L (221.88), %rtn is (1.37)

I did sell VFV.To since my portfolio went up unrealized gain more than $3000 dollars, so I sold $2000 dollars to rebalance in January 21, 2020. 

I purchased equity ETF on Feb. 6, 2020 with $6,500 VFV.TO. I like to keep 50% in equity, I like to see another year 30% growth on S & P 500 index.

I purchase equity ETF on March 6, 2020 with $1400 VGV.TO.

Lesson I learned from 2009 to 2019

I do not know how to start my story as an investor. I just could not believe that I got so stubborn and did not learn anything like reading an investment book from 2009 to 2019.

First time  I learned is back in May 2019. I learned that I timed the market since I sold everything in my 401 K, and IRA and moved to money market fund. It is called time the market in 2009. I thought that I was so depressed since I failed my Canada immigration application in Jan. 2009. But actually it was my emotion, I reacted the market change and timed the market. Only thing I remembered was that I walked near FAU stadium, I heard radio saying the market was 15 years lowest point. Did I spend 5 - 10 hours to work on study and research? No!

I like to repeat my story, 43 year old and my finance ignorance.

I timed the market, and sold my par 401 K in 15 years low, and then I never spent any time from 2009 to 2019 December to look into my portfolio, and I did not do any research how to invest on stock market.

I learn the inflation for 10 years with 4% a year, it is 40% of loss counting inflation risk alone. Why did I so pissed off when the portfolio lost over 25% back in 2009? I was naive and did not choose to be a self-learner, I was 43 years old in 2009.

Actionable Items

There are so many emotions and it is hard for me to make decision in terms of investment on stock market. It is better to stay on the course, and keep the original plan.

I should not speculate, even though I spend time to watch videos about Corona virus, but I do not think that I can time the market.

Best result is to take my unrealized gain over $3000 dollars in January 2020; and then I got back in when the market was in 2900 SPX, and then sold them when it was in 3100 SPX. But it is impossible, no one can time the market.