Investors Fleeing Market A Concern?

In terms of using flows as a contrarian indicator — the thought being that when everyone leans one way, lean the opposite direction — Bespoke said outflows worked in the early parts of the bull market, but not anymore.

“Early on in the bull market, each of these occurrences came right near a short term market low,” the note said. “More recently, though, the timing of occurrences hasn’t been nearly as good. As shown, in both July and November of 2015 we saw weekly outflows of more than $10 billion, both of which were followed by pretty sizable short-term corrections.”

People never flee at the top.

Aaah, but isn’t that how people lose their shirts, by being too greedy? You can always buy back in right? I thought a general strategy to stocks was to set a sell price and once you hit it, you sell. Pocket the profit and move on to the next one.

Don’t smart real estate investors sell out when the market is near or at the peak and they wait to buy back in when the market has come down? Yes, timing the market perfectly is difficult but I think people (some here) do it fairly well in both the stock and real estate markets.

We aren’t near a peak when people are fearful. The peak is when everyone’s optimistic which is why they don’t sell.

For investment property, I would acquire and rarely/never sell. No one is likely to time it right consistently. Besides, if they keep producing cash flow and rents are paying down principal, why would you sell? The odds of selling right now then buying back cheaper in the next 5-10 years are very slim. Even if you could, there’s the transaction costs, lost cash flow, and lost principal pay down. So would you really come out ahead? I would add properties whenever people are fearful and keep leverage reasonable (50% LTV). I know that’s too conservative for some, but it’ll protect you during downturns. Max leverage seems like a great idea when prices are going up, but they don’t always go up.

Stocks are a different animal and far more liquid and volatile. Just look at Amazon vs. Alphabet post earnings. In my experience, a 25% run is a lot. You usually hit some resistance and pull back. If you’re a long-term holder, then you don’t care about it. If you want to be more active, you can sell some then buy more on a pullback. I use 10-50-200 day moving averages. There’s a lot of slop right now with no clear direction. I don’t like that uncertainty. It’ll eventually breakout and fast given the length of consolidation. I’d personally rather wait for the breakout to happen, because there’ll still be time left to make money. I’d only allocate 10-20% of capital to that short-term of trading though. Most should just go in SPY index fund or long-term stock picks.

Perhaps not there yet but when everyone and their mother is watching house flipping shows and apparently divorcing just to buy houses individually (granted China) maybe there is something there to it. It doesn’t hurt to ever step back and evaluate one’s position right?

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Here is someone who has some actual experience who is not exactly bullish…

http://www.chicagobusiness.com/realestate/20161026/CRED03/161029871/zell-not-bullish-on-economy-real-estate-market

So conservative :slight_smile:

How many experts were bearish before the 2008 crash? How many people have been optimistic since the 2009 bottom?

Bearish since 2007… took two years… last leg of bull before the bear is usually the most lucrative and treacherous… don’t run too early or too late. Running too early won’t get rich but run too late could bankrupt you. So there is a saying, don’t lose money taking profit :slight_smile: . Btw, have less than 5% in short-term trading :blush: