Stock market correction or bear market/crash? Either way I bailed.

Discussion in 'Investments' started by landlord, Sep 21, 2015.

  1. joe sod

    joe sod Frequent Poster

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    What a year 2016 has been, 2015 ended badly with an awful lot of negativity then 2016 started with markets in panic and freefall. Alot of the extreme negativity was a result of anticipation of Fed hiking interest rates which they had to abandon due to the panic. Commodities and oil were also in freefall . Yet 2016 ends with fed hiking interest rates to barely a whimper, the stock markets and oil have had an incredible run and the dollar at a decade high. So 2016 would have been a horrible year to be uninvested even though nobody could have predicted that back in january
     
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Lest we forget, early in 2016 RBS were telling people that the end is nigh and exit doors would be thin on the ground.

    Not being invested is the road to penury.
     
  3. MrEarl

    MrEarl Frequent Poster

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    Whereas investing badly, can get you to penury much quicker via helicopter ;)



    ... I do agree with the principal that a certain amount of carefully invested funds in the stock market is a good thing over long periods, btw.
     
  4. PMU

    PMU Frequent Poster

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    Few if any persons can consistently call market tops or bottoms. And what's overvalued to you may not be overvalued to someone else. The original post was made on Sept 15 2015 by landlord who had bailed out of the stock market. Was that a wise decision? The answer is NO. Here are the returns of major indices in that period to date.
    Iseq today 6,471.52; 21/09/15 6,182.62, i.e. you missed out on an 5 % gain. Eurostoxx50 today 3,259.24; 21/09/2015 3,076.05, i.e. you missed out on a gain of 6%. FTSE100 today 7,1001.64; 21/09/15 6,108.70; i.e. you missed out on a 16% gain. S&P 500 today (i.e. at time of writing) 2,202.50; 21/09/15 1,966.97 i.e. you missed out on a 12% gain. Commodities (i.e. CRNL.L) about a 12% increase. (Above prices from Yahoo and may not be in EUR.)

    It's time in the market that counts; not market timing. If you have a certain investment horizon you need an asset allocation to match that; rebalance when appropriate; and accept the associated risk.
     
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  5. irish_investr

    irish_investr Registered User

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    I think the gains listed above are not including dividends, in which case add on another 3-4%.
     
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  6. joe sod

    joe sod Frequent Poster

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    If you are starting out and maybe have a small sum to invest maybe 10000 you can afford to be more focussed and take more risk. If for example your 10000 falls to 5000 it is actually tolerable and you can sit it out. However if you have built up a fund of 200000 from successful investments or other endeavours then you are much more risk averse. While it was tolerable to watch 10000 investment fall to 5000 it is intolerable for most people to watch 200000 of investments fall to 100000.
     
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  7. settlement

    settlement Frequent Poster

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    And 20 months later the bull market continues to rage on. Shows the dangers of market timing or waiting for a crash/correction
     
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  8. galway_blow_in

    galway_blow_in Frequent Poster

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    anyone think the FTSE is a good bet right now , sterling 15% below where it was twelve months ago and the FTSE only about 15% above where it was in the year 2000 , only the u.s markets have had a raging bull market since 2009 , europe is still not much above where it was a good few year ago , germany being the exception
     
  9. MrEarl

    MrEarl Frequent Poster

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    With regards to the FTSE much depends on your proposed investment period....

    If you said 2-years for example, then I would personally be very reluctant to invest in the UK given the issues around BREXIT, but if you said 20-years then that is an entirely different story and you need to take a view on whether you think the British economy will do well in the long run after it leaves the EU.

    When it comes to the US, I personally am still upbeat about the S&P500 because it would appear that the US Government will be progressing with their stated policies to create economic activity within the US so should benefit US companies. Furthermore US Government strategies surrounding protectionism, trying to encourage US companies to relocate their operations back to the US from other locations and their interest rate policies need to be considered (there are a few more interest rate hikes expected in the next 12-months so there should not be any surprises, with corporates having factored these increases into their projections etc.).

    The Eurozone is the one I am struggling with most, when I look into my crystal ball... at one level, corporate results are relatively good, interest rates are particularly low and the Quantitative Easing (though buying bonds) has put a lot more cash in the EU economies. However, that said, the German's obsession with inflation and concerns about Spanish and Italian debt levels cannot be ignored - both remain significant geographical and economic areas within the EU. Then you throw the likely exit of the UK from the EU into the mix and it's a toss of a coin almost with the most likely outcome being little change one way or the other over the next couple of years.

    All of the above is just my own view, definitely not financial advice and sometimes sourced from a person who might be related to Mystic Megg ;)
     
  10. Gordon Gekko

    Gordon Gekko Frequent Poster

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    With a two year time horizon, I wouldn't invest at all!
     
  11. PMU

    PMU Frequent Poster

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    (a) Do you have an investment plan? (b) Does you investment plan have an asset allocation strategy designed to meet your investment objectives? (c) Does your asset allocation strategy include the asset class 'foreign developed market equities'? (d) Are you under or overweight in this asset class? Now you can answer your question.
     
  12. galway_blow_in

    galway_blow_in Frequent Poster

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    the ftse 100 is not all that reliant on the domestic uk economy
     
  13. PMU

    PMU Frequent Poster

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