Series: Timing buys and sells ~ Stock market investing

Some Basics: Introduction to tools for protecting and growing your Net Worth.
 

Stock trading is not my primary investment vehicle of choice. But since clients add this into their mix, here’s some input.


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The new analysis re: the returns of exchange-traded fund SPY or SPDR S&P 500 E.T.F., which started trading on Jan. 29, 1993 – which mirrors the Standard & Poor’s 500-stock index – shows SPY’s overall price gain from its inception through 1/2018 ( time of article & data) has been 541 percent cumulatively, not counting dividends.

But look closely and a remarkable fact emerges.

  • Separate the daytime from after-hour returns and all of that price gain since 1993 has come outside regular trading hours.
  • eg: If you had bought SPY at the last second of trading on each business day since 1993 and sold at the market open the next day — you’d get all of the net after-hour gains — your cumulative price gain would be 571 percent.
  • But, if you had done the opposite, buy at open, 9:30 a.m., and sell at close, you have lost 4.4 % !

Caveat: Orders tend to build up overnight, hence:

  • in a rising market, that will produce an upward price surge at open, but
  • during declining markets, overnight sell orders may tank at open.

  • and in a rising market, that will produce an upward price surge when the market opens. But during extended declines, overnight sell orders may cause prices to plummet when the market opens.
  •  

What now? I have many stock investing spreadsheet templates you may like. I edit these in realtime with the client ~ via virtual or in person meetings ~ to help you know where you’ve been, where you are, and estimate where you are headed.

Contact me for assistance.feedback_todo_checklist

Our approach will be looking at the bigger picture. You can also begin by sharing you’re thoughts, dreams, needs, goals, and comfort parameters.


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Year-end tip(s):  Update your Assets spreadsheet. Keep a draft of your Trust/ Will documents on a google drive format for easy sharing with your insurance/ legal/ and tax counselors.


 

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