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What is considered a win for trading in/out S&P500


chrispy
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If a person only has access to basic index funds in an employer retirement account, what would be considered a successful trade? The primary goal of buying individual companies is to outperform the S&P each year. So would selling and buying in after a 1 percent drop be considered a success? This would represent beating the S&P by 1 percent this year.

 

Should the person simply be content with this mild outperformance even if they expected the market to drop further?

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Guest cherzeca

if you want a rule of thumb the best one I have seen is dollar cost averaging on a periodic basis.  simple to follow and has a built-in money management system

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If a person only has access to basic index funds in an employer retirement account, what would be considered a successful trade? The primary goal of buying individual companies is to outperform the S&P each year. So would selling and buying in after a 1 percent drop be considered a success? This would represent beating the S&P by 1 percent this year.

 

Should the person simply be content with this mild outperformance even if they expected the market to drop further?

 

Your comparative is not the S&P, it is the YTD performance of the various index funds your employer offers.

A swing-trade win: You sold the index fund at a high price, bought it back at a lower price, and gained additional units.

A index win: You sold a bond index fund, bought an equity index fund at a low price, and made no further changes. Your win is the year-end value of your equity index units, less the year-end value of what your bond index units would have been.

 

For the more astute employee, it's not uncommon to add a annual 5% to your portfolio value via fund rotation. If it were just you, you wouldn't do it as transaction costs would exceed the benefits. If the employer is paying, you're typically allowed a maximum 2 asset mix changes/year. If you're trading bonds, this is the place to do it  ;D

 

SD

 

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If a person only has access to basic index funds in an employer retirement account, what would be considered a successful trade? The primary goal of buying individual companies is to outperform the S&P each year. So would selling and buying in after a 1 percent drop be considered a success? This would represent beating the S&P by 1 percent this year.

 

Should the person simply be content with this mild outperformance even if they expected the market to drop further?

 

Your comparative is not the S&P, it is the YTD performance of the various index funds your employer offers.

A swing-trade win: You sold the index fund at a high price, bought it back at a lower price, and gained additional units.

A index win: You sold a bond index fund, bought an equity index fund at a low price, and made no further changes. Your win is the year-end value of your equity index units, less the year-end value of what your bond index units would have been.

 

For the more astute employee, it's not uncommon to add a annual 5% to your portfolio value via fund rotation. If it were just you, you wouldn't do it as transaction costs would exceed the benefits. If the employer is paying, you're typically allowed a maximum 2 asset mix changes/year. If you're trading bonds, this is the place to do it  ;D

 

SD

 

5% a year with fund rotation? Do you have any evidence to support that?

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