# "My shares have fallen 30% what should I do?" "Is this a good time to invest in the stock market?"



## Brendan Burgess

To save people reading through lots of posts in different threads, I am going to summarise my views and the contrary view in this thread.

There are two camps

*Camp 1* believes that you cannot time the market.  In other words, it's not possible to identify whether the market is overvalued or undervalued.

However,  history has shown that the stock market has outperformed other markets including bonds and cash and there is no reason to believe that this will change.

If you cash out now, there is a real risk that you will miss out on the market recovery when it does happen.

I belong firmly to Camp 1 as do most professional investment managers and investment advisors.

So you should not sell out now.  If you have cash and you can handle stock market volatility, you should buy a diversified portfolio of shares either directly or through a fund.

*Camp 2   *is comprised of individuals who believe that they can predict the future and that the market will drop further and the recent falls are only the start of the problem.  They also believe that they will be able to identify when it's right to buy back in to the stock market.

The problem with this is that study after study shows that there is no evidence that anyone can do this consistently.  Individual posters will tell you that they saw this coming and sold all their shares 6 months ago and they will buy in again "when the time is right".   Personally, I would put no weight on those claims.

*Camp 3 - The Duke's Camp *

Camp 3 is similar to Camp 1 in that it does not claim to know what will happen in the future.  However,  the past is no longer a useful guide as we are in uncharted territory.  The Coronavirus is a new phenomenon as is the extent of Quantitative Easing. 

History might not repeat itself under these circumstances.

So while Camp 3 does  not attempt to forecast the market, the level of risk outweighs the potential gain.


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## Brendan Burgess

*Applying this to your personal financial situation.*

If you have a pension fund, your investment horizon is long-term and you should not switch it to cash or bonds. 

If you have cash, but you also have a mortgage or other borrowing, you should pay off these borrowings before investing in the stock market. 

If you are invested in the stock market and you will need the money in the near future, then it's a very difficult question.

For example, if you are in the market to buy a property and the deposit is invested in the stock market, then you will probably need to sell enough shares to make sure that you can go ahead.  Of course, if you are about to buy a house, you should not be invested in the stock market in the first place. 

If you are saving up to buy a house in 5 years, then that should be a long enough time frame to remain invested in the stock market.


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## Brendan Burgess

To be completed


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## jim

Brendan,

In relation to Camp 2, i think those individuals do not claim to predict the future as you say. What they are doing is applying probability. So if they anticipare the market will fall further based on real world events this isnt predicting the future. This is applying logic based on current events that are unfolding.

Genuinely curious in posing the question - is it not possible to take action to protect ones fund ie move to cash if mkt has fallen and you belive it was fall further.

Then buy bk in when you believe it will rise.

Obviously this is timing but why is this strategy so derided if the investor themselves is confident, in as far as one can, be that the mkt is either rising or falling at a given point in time? Of course they may get timing wrong and loose out but they may also protect their fund


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## Duke of Marmalade

Can I suggest a Camp 3.  Clearly the market sentiment is currently almost entirely driven by the Corona Virus thing.  So nearly all conventional evaluation processes are out the window.  The only question that matters is how will CV play out both in medical terms but also in terms of how governments and the populace behave in the face of the threat.  The signs are that globally we will try to err on the safe side and the economic implications seem to be taking a back seat. 

Even the medics cannot predict this.  So everyone is almost equally well (or badly) placed to get a sense of the possibilities.  From what I read the range of possible outcomes is very wide indeed.  It is not off the radar that we will see a complete meltdown in stockmarkets.  After all, if global economic activity is set back 50 years won't the markets follow? 

The most one can say on the plus side is that it would seem that it will be some time yet before we can say we have got over this thing and it is hard to see the stockmarket upside to be any more than clawing back recent losses.

So in my Camp 3 I see staying with or entering the current market as a hugely risky prospect in "utility" terms.


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## Gordon Gekko

Recent events simply illustrate the importance of having a well thought out investment plan and sticking to it.

If I have a decent time horizon, then I should take that money and invest it in a diversified portfolio of shares.

Yes, Covid 19 might appear or the US might attack North Korea, but my crutch is my time horizon.

Stock markets do very well over time but they are volatile; I fully expect my investments to do well over time, and by well I mean 6-8% on average over the next 50 years. But what I can guarantee is that the ride won’t be linear; it’ll be +30%, +6%, -25%, +4% and so on and so forth. If it was easy, everyone would do it and those good returns just wouldn’t be there.

But the salient point is that in times like this you do not sell and turn a temporary loss into a permanent one; if your time-horizon is still decent (i.e. 5+ years) and you’re diversified, stay the course. Wealth is created and preserved by time in the market, not timing the market.


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## cremeegg

Brendan, the above post 1 is a very biased summary of those who dont agree with you.



Brendan Burgess said:


> *Camp 2   *is comprised of individuals who believe that they can predict the future



So basically anyone who disagrees with you is claiming supernatural powers. That's not discussion Brendan thats just slagging people off.





Duke of Marmalade said:


> Clearly the market sentiment is currently almost entirely driven by the Corona Virus thing.  So nearly all conventional evaluation processes are out the window.



Exactly, so the usual pricing mechanism is not working as well as usual.

Markets price shares efficiently when lots of informed, willing buyers and sellers are present.

Right now no one is an informed buyer or seller.

The S&P 500 turned on 15th February exactly one month ago. The corona virus has a long time to run.


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## Brendan Burgess

cremeegg said:


> Brendan, the above post 1 is a very biased summary of those who dont agree with you.



What? 

I introduce the thread as a summary of my views and the alternative views. 

There are plenty of people here who believe that they can predict the future.

Duke has suggested a 3rd Camp. When I get my head around it I will include that in the summary.

Brendan


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## jim

Staying the course is ok but surely taking action at times, esp if you hold strong views and have some knowledge, makes sense for at lease some investors.

If one anticipates further drops they should sell. How can anyone argue with this?


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## Fidgety

jim said:


> If one anticipates further drops they should sell. How can anyone argue with this?



If one anticipates further increases they should buy. How can anyone argue against this?

It's illogical and yet both perspectives are valid. It's likely this extreme volatility, with wild swings in both directions, will continue for a while. 
There is no wrong or right so do whatever you wish that makes you sleep better.


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## jim

Fidgety said:


> If one anticipates further increases they should buy. How can anyone argue against this?



Well, yes. This is my point. There may be ups and downs from day to day but over the next few weeks i think the mkt will be down, based on strong evidence we see every day ign news. So how can one say "stay the course", do nothing, let your funds drop. This seems lazy and stupid. What am i missing? The strong concensus seems to be contrary to my thinking.

Of course then when the mkt is anticipated to rise, based on what we will see in the news for example virus being controlled then buy bsck in.

So rather that stay the course proactively manage your funds.


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## Itchy

If you were happy riding the wave of the bull market but these big drops are causing you to reevaluate then you should really reevaluate two things: 1) your asset allocation strategy and 2) your risk tolerance - you've likely exceeded it


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## Gordon Gekko

galway_blow_in said:


> Only if they've exclusively invested in the U. S market
> 
> European markets are below 2007 levels



I’m talking about someone who’s globally invested, where the US represents the bulk (50-60%).


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## Gordon Gekko

Itchy said:


> If you were happy riding the wave of the bull market but these big drops are causing you to reevaluate then you should really reevaluate two things: 1) your asset allocation strategy and 2) your risk tolerance - you've likely exceeded it



The salient point is that if the current volatility is causing you to think about abandoning your investment plan, the investment plan wasn’t appropriate in the first place.


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## Duke of Marmalade

It is now clear that the greatest bull run in history was as a result of being pumped full of steroids.  It left the markets' immune system in shreds.  And all the doctors can do is to pump in more steroids - but is this just delaying the melt down?


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## cremeegg

JSnowWinterfell said:


> my gut feeling is that until we see the cases in the US stop increasing the markets will not calm.



Agreed.

The market reaction so far is just emotional, and will continue to be until the spread is under control in the US.

Rational analysis of the medium term economic impact will not reach the markets for some time.

Markets are not down now because investors have made careful calculations about future economic prospects, they are down because trades are scared.

Are traders as scared now as they are going to be in a week, in a month, in two months.


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## NoRegretsCoyote

Itchy said:


> Is this the case? I'm not so sure. Ample credit, liquidity, factors of production etc. There will be causalities but a supply side problem?



Large sectors of the economy are forcibly shut. Most of them will re-open when this passes, but some won't.

Also, workers that would have been hired won't be hired, and not all laid-off workers will be taken back on again.

This will have a supply-side impact.


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## Sarenco

Looking back at this thread it strikes me that a lot of posters are taking rather extreme positions.

It's either -

Go to 100% cash, now!  We're doomed.  Doomed!

Or -

Go to 100% equities, now!  Stocks are on sale - fill your boots!

There is obviously plenty of ground in between these polar opposites.

In my opinion, most people that are within a couple of years of retirement should have a portfolio that is broadly balanced between equities and cash/bonds. 

And then just accept whatever the market returns.


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## Gordon Gekko

And they wouldn’t go far wrong. You’d probably be equally okay replacing the bond portion with cash and State Savings given the volatility of bonds in recent years.


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## elacsaplau

I was on a webinar last night regarding the impact on the market of the coronavirus. Quelle surprise, the recommendation was to "stay the course"!

Indeed, I am unaware of any respected financial commentator who has publicly recommended "not staying the course". [I am not saying there are none - just that I haven't seen any such commentaries.]

I can understand why they would say this because it's hard to time the market and in the past, this was the right thing to do. To do otherwise puts such commentators at odds with their peers and history - it also requires them to say that "this time it's different." The thing is to become a respected financially commentator, you've probably spent a lot of time ridiculing the "this time it's different" brigade.

When the markets were down about 15% and the extent of this issue was becoming clear, I seriously question whether "staying the course" was the right advice at that stage. 

Is it reasonable to believe that the market is wrong at certain points?


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## Daddy Ireland

D'ont know why I bother but  anyone who is interested please refer to my posts in recent threads Longest Bull Market in History and Time To Buy In.   I will post one final post now on stock markets.  On those threads  I posted  Nourini's prediction which has for the most part already come through.  Heads up to you all now.  I am advising to come out of the market/pensions tomorrow (despite losses aleeady incurred) especially those people within 5 years of retirement and get into cash for the foreseeable future.  Unless a vaccine is found for this virus in the next several weeks the stock markets are going down way further.  USA especially and UK are going to go the same way I'm sorry to say as Italy has done and when that pending reality dawn's on the markets there's only one way it's going and an economic crash/recession is coming and the market crash of 2008/2009 will look like a picnic in comparison to what has already happened the markets.  Now some of you will say stay the distance and that's grand for folk in their 40's and younger with time on their side. Good luck to all of you who decide to ride it out.


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## Fidgety

Well Daddy, I think much of your post has merit. Markets are in free fall, every asset class in under attack and the dash for cash has hastened. You suggest the Coronavirus is going to cripple America with devastating consequences. And I think you’re right. 

All of that said, and having ridden through 87, 9/11, 2008 and 2918, staying invested proved very good for long-term investors. The pace of acceleration exceeded the rate of decline and in several cases, the markets reached all time highs. 

This is different and that requires additional pause for thought. A recession is imminent, job losses immediate and deep and structural changes may not see some companies survive. 

With the recent market retreat, long term investors are down 30% give it take, with further volatility almost certain. But the 30% loss in value is offset by the considerable gains achieved during the long bull run. 

Personally speaking, I like all of the companies in my portfolio bar one. So it’s now a question of sticking to my guns because of strong performance and my knowledge of these companies. That could change in which case I will adjust. 

I think you are right to sound the warning. We’ve never experienced such a catastrophe envelop our world so learnings from the past may not prove fruitful in this market. 

I will stick to the knitting and I might even keep the dog, until and unless this market heads for meltdown.


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## Gordon Gekko

Daddy Ireland said:


> D'ont know why I bother but  anyone who is interested please refer to my posts in recent threads Longest Bull Market in History and Time To Buy In.   I will post one final post now on stock markets.  On those threads  I posted  Nourini's prediction which has for the most part already come through.  Heads up to you all now.  I am advising to come out of the market/pensions tomorrow (despite losses aleeady incurred) especially those people within 5 years of retirement and get into cash for the foreseeable future.  Unless a vaccine is found for this virus in the next several weeks the stock markets are going down way further.  USA especially and UK are going to go the same way I'm sorry to say as Italy has done and when that pending reality dawn's on the markets there's only one way it's going and an economic crash/recession is coming and the market crash of 2008/2009 will look like a picnic in comparison to what has already happened the markets.  Now some of you will say stay the distance and that's grand for folk in their 40's and younger with time on their side. Good luck to all of you who decide to ride it out.



This post is a disgrace. Possibly the worst contribution and most reckless advice that I’ve ever seen on AAM. A combination of ‘Monday Morning Quarterbacking’ at its very worst and complete ignorance of how investment markets and investors behave. Please ignore it.


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## elacsaplau

I should take this opportunity to acknowledge Gordon's penultimate post - short priced favourite for creative post of the year.


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## Gordon Gekko

If people “knew”, then equity-type returns wouldn’t be available because they’d be guaranteed and everyone would invest in equities! One can only look at previous shocks and events and lean on the crutch that is one’s time-horizon.

Where will markets be next week? I haven’t a clue.

Where will markets be next month? I haven’t a clue.

Where will markets be in 10 years’ time? I would bet my house that they’ll be higher than they are now.


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## cremeegg

This time it's different.

And I am not trying to sell you anything.

I do think that the world will recover and widespread prosperity will return, however the current pandemic will reshape industries, the looming recession will set the world back, and it will not recover to the pre covid economy, but to an economy that will look very different.

There will also be huge political implications of this pandemic, which will in turn have economic effects. If China comes out of this as the country who was most effective in combatting Covid-19, which may well happen, that will have huge economic implications and even bigger political implications.

It may well be that half the companies in a well diversified portfolio go bust. That means that when "markets" regain their highs in x years time, todays investors will not be at the party.


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## Fella

Gordon Gekko said:


> If people “knew”, then equity-type returns wouldn’t be available because they’d be guaranteed and everyone would invest in equities! One can only look at previous shocks and events and lean on the crutch that is one’s time-horizon.
> 
> Where will markets be next week? I haven’t a clue.
> 
> Where will markets be next month? I haven’t a clue.
> 
> Where will markets be in 10 years’ time? I would bet my house that they’ll be higher than they are now.



I agree with you 100% except for the last bit , I wouldn't be betting my house on it been higher in 10 years. It's interesting to look at how long some recoveries took , can't link the graph I was looking at but recovery times.

1905 19 years to recover 
1929 25 years 
1973 16 years 
2000 6 years 
2007 6 years 

 I will still be investing every few months , but from reading posts online I think a lot of people are hoping that they can invest now wait a year and expect a big return . I think the damage from this virus to the world economy could be lasting , I would not be suprised if we are lower in 10 years than we are now . It seems to be there is little more intervention the governments can do to prop up the market , it's certainly going to be interesting times ahead .


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## Gordon Gekko

To recover from now, not from the highs!

You seem to be citing the time periods to get from the previous peak back to those levels.


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## Fella

Gordon Gekko said:


> To recover from now, not from the highs!
> 
> You seem to be citing the time periods to get from the previous peak back to those levels.



From the graph i was looking at to recover from the price it dropped from , so yeah to reach the high it was at a month ago .
Sure as you know yourself its all speculation , it could be back there in a week or it could take 20 years. But thats why we have stock market returns , the returns are from the unknown. 
My opinion doesn't mean much , but i wouldn't be suprised if we are waiting a considerable while to see new stockmarket all time highs.


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## Sarenco

When the Spanish flu pandemic hit in 1917, the DOW fell by 33% over a couple of months. It fully recovered within a year.

It is estimated that the Spanish flu infected 500 million people worldwide, or about 27% of the world’s population and killed between 30 million and 50 million people.

I'm not suggesting that the markets will necessarily follow that pattern on this occasion but I think it's interesting nevertheless.


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## joe sod

Fella said:


> I agree with you 100% except for the last bit , I wouldn't be betting my house on it been higher in 10 years. It's interesting to look at how long some recoveries took , can't link the graph I was looking at but recovery times.
> 
> 1905 19 years to recover
> 1929 25 years
> 1973 16 years
> 2000 6 years
> 2007 6 years



so from 1905 to 2013 which is just over a century , 72 years out of that century was the stock markets just recovering from previous highs if you add up all the periods of recovery you have posted, and that is not including the quicker sell offs. Therefore the only periods free from long recoveries from previous highs were the 1950s and 60s along with the 1990s. So an interesting observation from the above post is that you are going to be spending alot of your investment horizon as an investor just recovering previous  valuations of your portfolio.


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## WhiteCoat

Personally, the money I have on the sidelines, awaiting investment, is going to remain on the sidelines for the time being. There are three reasons for this. 

Firstly, I think markets are more likely to fall further than to rise in the short term. Admittedly, I am less sure of this than I was a few weeks ago. 

Secondly, if I am wrong about the markets, it means that the virus has taken a relatively benign trajectory which will please me greatly.

Thirdly, if things go really bad, I would have put at risk money that I might need to make money that, in normal times, I really don't need.


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## joe sod

After this sell off the msci world index ETF is now back where it was in january 2016 and 2013, but even worse the Vanguard ex US ETF (world markets excluding US) is now trading where it was in 2012 and 2010. So we have had a 35% sell off and this has wiped out a decade of gains (if you were to sell now). Therefore it might have been the *longest bull market* in history but it definitely didn't take much of a sell off to wipe out those gains, the 1990s it was not.


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## Sarenco

joe sod said:


> Therefore it might have been the *longest bull market* in history


There is no _might _about it!

The 11 years to 12 March 2020 represented the longest bull market in the history of the S&P500.

That's a fact - not an opinion.

The 1990s bull market lasted around 9.5 years.

Why you are continuing to query a simple fact is beyond me.  It's really irritating at this stage.


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## cremeegg

DK123 said:


> Based on previous experiences of financial falls over the last 50 years, I think that to sell funds or shares now would  simply be to turn a temporary loss into a permanent loss plus we could miss the rebound sometime in the future.Either sit tight or maybe add a little.Dont analyse too much.[I am an amatuer invester in the market].P.S.I think there is something called the paralysis of analysis or "overthinking"



I don't doubt that at some point in the future the market will be significantly higher than it is now. Higher than its high point earlier this year.

However I do doubt that much of that rebound will be available to todays investors.

Lots of well known businesses will never recover. They will be replaced by new businesses, but the investors in todays businesses will lose in the process.

The index of 2030 will not be the index of 2020.

No doubt The Gordon Gekkos of 2050 will be able to look back and say "it took x years for markets to recover". However that doesn't mean that the investors of 2020 ever recovered.

The market will be higher in 2030 is like saying someone will win the championship in 2030, but the Coronavirus will lay low lots of todays companies, lots of companies  unknown possible unfounded today will lead the indices of 2030, being fully invested today does not get you exposure to their rise.


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## Sarenco

cremeegg said:


> The index of 2030 will not be the index of 2020.


The securities that make up any index are constantly changing.

You could equally say the MSCI World index of 2020 is not the MSCI World index of 2010.

It would be equally meaningless to any index investor.


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## cremeegg

Sarenco said:


> The securities that make up any index are constantly changing.
> 
> You could equally say the MSCI World index of 2020 is not the MSCI World index of 2010.
> 
> It would be equally meaningless to any index investor.



You are correct in detail and but absolutely wrong in the important aspect.

The constituent shares of an index are constantly changing, shares are demoted and promoted, if I can put it like that.

The cost to the investor is the trading cost and the price difference between the share going down and the share coming up. 

When that is a small number of shares with little difference between them the cost is not huge.

That is not what we are looking at now.

In my opinion large numbers of business will become worthless, and investors will lose out. Of course they will be replaced by new better companies but their shares will not be free.

Simplified example

What used to happen. Share XYZ falls out of the index, the share is sold for €100. Share ABC replaces it in the index, the €100 is used to buy ABC shares. Cost to investor just the trading cost.

What happens now. Airline UAD was worth €100 in Jan, is worth €50 now, falls out of the index. Amazon was worth €100 in Jan is worth €105 today. (depending on exact date Amazon has risen 5% since Jan). Investor buys €50 worth of Amazon shares. Loss locked in.


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## Gordon Gekko

This is in no way me calling the bottom; markets could fall from here. However, yesterday was classic in the context of markets. Volatility ramps up, markets fall and some people panic. They exit and turn temporary losses into permanent ones. But the market’s best days often come straight after their worst days; the problem is that the scaredy cats miss out on them. Yesterday was the Dow’s best day since 1933 and the S&P’s 10th best day since 1927. But where are all the sensationalist headline about “billions being wiped back onto markets”?


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## Steven Barrett

Gordon Gekko said:


> This is in no way me calling the bottom; markets could fall from here. However, yesterday was classic in the context of markets. Volatility ramps up, markets fall and some people panic. They exit and turn temporary losses into permanent ones. But the market’s best days often come straight after their worst days; the problem is that the scaredy cats miss out on them. Yesterday was the Dow’s best day since 1933 and the S&P’s 10th best day since 1927. But where are all the sensationalist headline about “billions being wiped back onto markets”?



I saw that yesterday alright, markets getting excited over the $2 trillion package being agreed by the Senate. Trump wants everything open again by Easter. Our schools are staying closed until the end of April!! While I firmly believe the US will come out of this quicker, there is a massive gamble going on by the US government with people's health over the economy. 

The US are still a few weeks behind Europe regarding this outbreak and NYC is being hit very hard. There is a very good chance that there's bounce and back down again. Then when the unemployment figures come out and Q2 earnings figures are announced, markets will probably tumble again. Impossible to predict. Stay in quality and rid it out. Make sure you have enough cash too. 


Steven
www.bluewaterfp.ie


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## Duke of Marmalade

SBarrett said:


> I saw that yesterday alright, markets getting excited over the $2 trillion package being agreed by the Senate. Trump wants everything open again by Easter. Our schools are staying closed until the end of April!! While I firmly believe the US will come out of this quicker, there is a massive gamble going on by the US government with people's health over the economy.
> 
> The US are still a few weeks behind Europe regarding this outbreak and NYC is being hit very hard. There is a very good chance that there's bounce and back down again. Then when the unemployment figures come out and Q2 earnings figures are announced, markets will probably tumble again. Impossible to predict. Stay in quality and rid it out. Make sure you have enough cash too.
> 
> 
> Steven
> www.bluewaterfp.ie


Steven, one would have to read it that way.  This is not like 2007/2008 which was essentially a malaise in the financial system and therefore amenable to financial panaceas'
The Fed are going all in here, in the parlance of Texas Hold'em.  Is the river card the Ace of Hearts allowing The Donald to open his hotels and golf courses for Easter or are we in for the mother and father of busted flushes?
Throwing 5,000 dollars per man woman and child at the economy is fine if they are able to spend it, but it is useless if economic activity has come to a standstill.
Someone earlier recommended that if you were approaching retirement you should cash in.  I don't think he was making predictions,  he was simply asking should they run the current risks which I think everyone posting here admits are probably unprecedented.


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## Fella

Gordon Gekko said:


> So that’ll be fear then...you’re afraid that markets will fall further



Hmmmm it's a strange one , initially I was thinking wow this is going to be a big drop at end of February , so this is what a big crash feels like !

Then I start thinking this could actually be my chance to make a lot of money I'm still in my 30's I've time on my hand and I believe in equities long term. 

So the little fear I may of had turned to excitement of potentially making significant investment at a reduced price .

Now my excitement has turned to disappointmemt as I watch my portfolio recover in what I'm viewing as an irrational market.  

I never thought I would be disappointed with a recovering portfolio but would love to get this big chunk in at where I thought we were heading . 

I'm not going to rush in now as there may be opportunities in the future .

I've become accustomed to losing money that it rarely causes me fear , once I paid my mortgage and my income is gauranteed I look at all my money invested and in banks credit unions etc as at risk and potential to go to zero and I can live with that .


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## joe sod

I googled data on how much of the global stock markets were traded every year surprisingly it was not that widely available but here is a chart from the world bank upto 2016, Id say this year will be equally dramatic when total data collected for the year






						Stocks traded, turnover ratio of domestic shares (%) | Data
					

Stocks traded, turnover ratio of domestic shares (%) from The World Bank: Data




					data.worldbank.org
				




What it shows is that in normal times with no big sell offs the proportion of the total stock market that has changed hands in a year is between 80 and 100% and this has been steadily rising, in the mid 1990s less than 50% of the stock market changed hands. However in years like 2008 250% of the total stock market changed hands so that in that year the average stock changed ownership 2.5 times in that year.
It is obvious that computers have caused alot of this over trading but I doubt they have added any real value .
Buffet said that the stock market is a* mechanism to transfer wealth from the impatient to the patient.*


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## jim

In relation to the title of the thread: My shares have now dropped 50%. Is now a good time to invest in the stock markets or should I wait until it drops further? I know that this is crystal ball territory but here are my 2 assumptions.

1. If the US unfortunately continues to see deaths and infections rising over the next number of weeks -assumption 1.
2. Then stock markets will fall further - assumption 2.

Then do not invest for a few weeks?


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## Brendan Burgess

The stockmarket is a leading indicator. 

In other words, it does not wait for the latest GDP figures to be published and for the recovery to be well under way before it starts rising. 

If investors think that the end is in sight, although it's expected to get worse in the meantime, the stockmarket will recover.

Brendan


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## jim

Its about 50% now versus about 3 weeks ago when i started monitoring it. Prob a bit less than 50% but its ballpark there. Yes, a big drop indeed.
A lot of advice out there to invest and snap up a bargain but is that wise given whats happening in the US and the probable further impact that will have on markets?
People say ya cant predict the mkts but what is happening is happening and its right before our eyes. The logic would be that itll further impact markets negatively. Be wonderful to here more views on this.


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## Duke of Marmalade

I think we can agree that there is huge uncertainty.  There is a not negligible possibility that by year end markets will have substantially rebounded.  In a sense that is almost bad news for it means there must be a compensating chance that they will sink much further - that's what makes a stock price.
Look at it this way.  In normal times the markets might be taking a view that there is a 50% chance that they will be up 10% by year end and a 50% chance they will go sideways.  In the current situation that is more like 50% chance they will be up 30% and a 50% chance they will be down another 20%.  I presume this uncertainty is reflected in the price of options.
For someone who has lost 30% that poses a nasty dilemma - to get out now and see markets recover might be even more painful than staying in and tanking a further 20%.
For someone who missed the plunge it looks to me that jumping in now is taking a punt.


----------



## cremeegg

Brendan Burgess said:


> The stockmarket is a leading indicator.
> 
> In other words, it does not wait for the latest GDP figures to be published and for the recovery to be well under way before it starts rising.
> 
> If investors think that the end is in sight, although it's expected to get worse in the meantime, the stockmarket will recover.
> 
> Brendan



I agree with all the above, but the market will not have bottomed while there are people who think the dip is a buying opportunity.

The market is driven by fear and greed. Usually fear of loss and greed for profit, today fear of disease and greed for opportunity. The US is not anywhere near as afraid now as it will be in a few weeks.


----------



## Sarenco

Believe it or not, the shortest bear market in the Dow's history technically came to an end last Thursday!

Thursday's close was 20% higher than Monday's close.

Anybody predict that?


----------



## Fella

Nobody knows what way the markets will move , they trend upwards long term so if your not in your likely to miss out on the gains. I turned on cnbc the other day it was painful listening to some people saying its time to buy and others saying we haven't bottomed yet . There are death crosses or candles and stuff , whatever that means.

Anyway only you can decide when to invest and what to invest in , your guess is as good as the next persons. You don't have to be all in or all out . You could always invest 50% of your money now and invest 10% a week/month/quarter or whenever there's another drop. You can do what you want , you can drive yourself crazy , the gains aren't linear so if your hopping in and out of the market your going to risk missing the good days as well as bad days. I think the best advice for everyone is just buy and forget , likely when you look back over a few decades this will be a winning strategy compared to the timers of the market . 

At the end of the day everyone's allowed have an opinion , I believe the markets are efficient and what we have is a market in equilibrium based on all available information. My instinct sometimes disagrees with this , but as someone told me "there's enough people trying to get rich quick , be happy to get rich slowly" , I also have to remember how bad humans are at making decisions . We carry way to much bias. I look at negative news like millions unemployed and economies coming to a standstill and stock markets rising and realise that this is not a game I can play because I don't know the rules!
So I jog on into the sunset happy to take my few percent a year with zero knowledge.


----------



## joe sod

jim said:


> In relation to the title of the thread: My shares have now dropped 50%. Is now a good time to invest in the stock markets or should I wait until it drops further? I know that this is crystal ball territory



It just shows you how hard it is to stay the course in investing and not panic sell. The crescendo of negativity from all quarters over the last few weeks was unbelievable, it was much more than in the 2008 financial crash. Yet surprisingly the stock markets have risen again over the last 2 days, nobody predicted that, I was surprised myself


----------



## Brendan Burgess

joe sod said:


> Yet surprisingly the stock markets have risen again over the last 2 days, nobody predicted that, I was surprised myself



But that is the point. 

Most of us realise that none of us can predict short term movements. 

Some have asserted "as the death toll rises in America, the markets will fall steeply".   The confidence of their predictions is inversely related to their expertise. 

Brendan


----------



## joe sod

Peter Brown had some interesting insights on news talk this morning, he is saying invest in Europe and even emerging markets, they were cheap before the sell off but are really cheap now, stay out of the US markets and even the dollar, he is saying that the dollar is going to fall back now that interest rates have equalised (that will be good for emerging markets). He is even recommending precious metals especially silver, maybe it's like 2001 all over again.


----------



## Gordon Gekko

I would be more inclined to listen to Peter Rabbit


----------



## joe sod

Daddy Ireland said:


> On those threads I posted Nourini's prediction which has for the most part already come through. Heads up to you all now. I am advising to come out of the market/pensions tomorrow (despite losses aleeady incurred) especially those people within 5 years of retirement and get into cash for the foreseeable future.



this was posted on 19 march, the market looks like it bottomed the very next day, the msci world index has climbed 25% from then to now, That looks like being the worst day to sell investments. Of course things could get bad again as the coronavirus drags on. But at that time in march almost all the predictions were for bigger falls in stock markets, nobody including Nourini predicted that the market would turn tails and rise 25% *(nobody ever predicts stuff like that anyway because that gets remembered but predictions of falls are forgotten about until they actually happen) *in a few weeks and that when Boris Johnson is in hospital and large numbers of people are dying in the US.


----------



## Brendan Burgess

joe sod said:


> this was posted on 19 march, the market looks like it bottomed the very next day, the msci world index has climbed 25% from then to now,



Hi Joe

Well spotted.  It's funny reading it.  I remember the frustration at the time.  A few people reported that post saying it should be deleted as they guy clearly had no idea what he was talking about.  But we would be deleting a lot of posts if that was the criterion.

The other objection was that it was dangerous and might well cause people to panic.  It was asserted with such confidence.  That people might be more influenced by the 100% confidence than by the "bland nothings" of the rest of who know we don't know. 

Again, supports the point that no one can forecast the short term outlook for the stock market.

Brendan


----------



## Zebedee

I think it was Charlie Munger who said that “stock market forecasters make fortune tellers look professional “


----------



## cremeegg

So the S&P at about 2,800 is back to levels of about a year ago.

The MSC world index at 470 is back to levels of Jan 2019, (although its July 2017 since that level was an all time high).

So a set back of about 18/24 months to the world economy. No biggie then.

At the risk of being called an expert, (which seems to be a term of abuse around here), I am suggesting that the impact of the coronavirus is not fully priced into markets just yet.


----------



## galway_blow_in

cremeegg said:


> So the S&P at about 2,800 is back to levels of about a year ago.
> 
> The MSC world index at 470 is back to levels of Jan 2019, (although its July 2017 since that level was an all time high).
> 
> So a set back of about 18/24 months to the world economy. No biggie then.
> 
> At the risk of being called an expert, (which seems to be a term of abuse around here), I am suggesting that the impact of the coronavirus is not fully priced into markets just yet.



It's been said that the stock market does not always reflect the broader economy and vice versa 

The broader economy saw no recession in 1987 despite "Black Monday" occurring. 

Perhaps the support provided by the Fed is seen as so comprehensive, stocks may have seen the bottom in March? 

Obviously there could be much sharper falls yet but it's interesting how the disastrous job report last week had no effect on stocks, in fact the market rose sharply, the Powell put appears to be blocking the dam


----------



## cremeegg

Brendan Burgess said:


> And my opinion, your opinion, and Daddy Ireland's opinion are worthless.



You are entitled to your opinion as to the value of my opinion. I hope you will understand if I disagree.

Between bland nothings and passionate certainties, I think it is possible to have an intelligent ( if not expert no one is an exert in the future value of the market ) view as to the how well the market has priced in the available information. 

I have put forward the view that the market has failed to reflect the enormity of the impact of the coronavirus. 

I am basing this opinion on clearly outlined reasoned argument, which the reader is free to examine and accept, reject or ignore as they wish. 

I am delighted if someone says I  am wrong and explains why, the virus is not that bad, the markets have fully priced it in whatever the reasoning maybe. 

But to say my opinion is worthless, is hardly within the spirit of AAM.


----------



## Gordon Gekko

cremegg, I think it’s naive in the extreme to say that markets have failed to reflect the enormity of Covid 19.

There’s field hospital in Central Park, the world is in lockdown, and thousands of people are dying every day.

Do you think that someday the authorities will announce that everything is okay and then markets will recover?


----------



## Brendan Burgess

cremeegg said:


> But to say my opinion is worthless, is hardly within the spirit of AAM.



Hi cremeegg



Brendan Burgess said:


> And my opinion, your opinion, and Daddy Ireland's opinion are worthless.



I am simply pointing out that your opinion as well as mine is worthless.  We can't predict the market.  

Read the stockbrokers' comments and the analysis from the journalists.  They all clearly outline sound reasons, but they can't predict the future. 

My opinion and your opinion on many other issues are very valuable. But on this issue, they are worthless.

Brendan


----------



## cremeegg

Gordon Gekko said:


> cremegg, I think it’s naive in the extreme to say that markets have failed to reflect the enormity of Covid 19.
> 
> There’s field hospital in Central Park, the world is in lockdown, and thousands of people are dying every day.
> 
> Do you think that someday the authorities will announce that everything is okay and then markets will recover?



There is a field hospital in Central Park, unemployment is through the roof

and

the markets are In general term back two years. That’s ONLY two years.

The markets, so far, are reacting as if Coronavirus was only a moderately big deal.

I completely accept the point that we can’t tell the future, but we can have an opinion on the present.

The markets are not reflecting panic about the Coronavirus. Yet.


----------



## Brendan Burgess

cremeegg said:


> The markets are not reflecting panic about the Coronavirus. Yet.



The markets did panic and they fell dramatically.

Then they did analysis and came up with a balanced assessment to reach the current level.

In doing this assessment, they knew that morgues were being built in Central Park. They knew that the death toll was going to get a lot worse. They expected that the restrictions would be extended. 

They did their analysis and arrived at their conclusions. 

The market is made up bears and bulls.  The current price reflects the balance between them.  One of them is right, but I don't know, and you don't know which one is. 

The bulls would probably say that the sell-off is overdone and that the economies will recover quickly. They will say that the bears have simply not underestimated the spike which will occur when there is good news e.g. the development of a vaccine or an effective antibody test which shows that there is herd immunity. 

And the bears will say that the share prices should fall to the same extent as they did in 1929 as this recession is going to be worse. 

There is huge uncertainty. That is all we can agree on.

Brendan


----------



## Brendan Burgess

The record of economists forecasting what is going to happen is very poor.

It does feel like the end of the World is nigh.  But my guess is that it isn't nigh. And that is as good a guess as the economists' guess.

These things are very complex and it's impossible to forecast accurately.

I have reviewed the first post in this thread. I think it still stands today as it did a month ago, with the Duke's amendment. 

Brendan


----------



## cremeegg

Brendan Burgess said:


> It does feel like the end of the World is nigh.  But my guess is that it isn't nigh.



Of course this is not the end of the world, but the markets are behaving as if it is little more than a minor blip. 

The S&P 500 at 2,800 is back where it was just this time last year.


----------



## Gordon Gekko

cremeegg said:


> Of course this is not the end of the world, but the markets are behaving as if it is little more than a minor blip.
> 
> The S&P 500 at 2,800 is back where it was just this time last year.



And was the world ending then?

If the global market was a blue chip investment property somewhere, this crisis has all the hallmarks of its solvent and successful tenant just not paying the rent for a quarter or two.

Ultimately, it has very little impact on its long-term value.

Purveyors of doom both here and in the media love to paint the worst possible picture. For the latter, that drives clicks and revenue because headlines like “ARMAGEDDON!” and “MARKETS CRASH!” create more of a reaction than “Keep Calm & Remember Your Time Horizon”. In reality, markets fall by 10% or more at least once a year on average. What are markets down now Year-to-Date, around 15%? Not pleasant, but hardly a disaster either.


----------



## Fella

I'm a firm believer in efficient markets and you'll never see me try time the market or pick winning stocks or losers for that matter.

But even the most adamant of efficient market theorists (if that's a word!) Has to look at the S&P now and the S&P a year ago and wonder how they can be the same price.
So either it was undervalued before or overvalued now because the economic conditions are not the same. The market at the moment seems totally disconnected with the actual economy. 
There have been alot of commentators on here saying in the last year or so they felt stocks are at historic highs and seem expensive before this pandemic.

I don't know what the future holds like the next person but I don't agree with the influence of the FED , I've been thinking on a micro level what would happen if I throw loads of money at a market and what I am guessing at is much more volatility in future. I don't think it's a good thing for investors long term, I think future returns could potentially be lower. I think corrections are needed for a healthy market , we don't want a gauranteed return otherwise we will all have to accept a much lower return.


----------



## Gordon Gekko

Markets are up 25-30% so talk of the slump being over and whether it’s time to “get back in or not” seems almost academic.


----------



## Brendan Burgess

What I would like to know is - all these clever people who anticipated the fall in stock prices and sold out - where did they put the proceeds? 

I would not like to have money in cash.

If the World order collapses as many think it will, then banks and governments will collapse as well.

Even if the banks and governments survive, the inflation risk must be greatly increased now. 

I think my share portfolio is uncertain and risky. But it seems to me to be the least risky option.

Brendan


----------



## EmmDee

Brendan Burgess said:


> What I would like to know is - all these clever people who anticipated the fall in stock prices and sold out - where did they put the proceeds?
> 
> I would not like to have money in cash.
> 
> If the World order collapses as many think it will, then banks and governments will collapse as well.
> 
> Even if the banks and governments survive, the inflation risk must be greatly increased now.
> 
> I think my share portfolio is uncertain and risky. But it seems to me to be the least risky option.
> 
> Brendan



If I may - taking the worst possible outcome you mention  where banks and government fail, do you think if that happened that equities (and stock markets generally) would survive? If someone was planning for such an eventuality would the best strategy not be physical assets.

Inflation risk hits many (not all) equities. Again I think there is correlation


----------



## cremeegg

Brendan Burgess said:


> What I would like to know is - all these clever people who anticipated the fall in stock prices and sold out - where did they put the proceeds?
> 
> I would not like to have money in cash.
> 
> *If the World order collapses* as many think it will, then banks and governments will collapse as well.
> 
> Even if the banks and governments survive, the inflation risk must be greatly increased now.
> 
> I think my share portfolio is uncertain and risky. But it seems to me to be the least risky option.
> 
> Brendan



Is this camp 3 emerging, those who believe in the world order collapsing.

Why can't we have a camp which thinks Coronavirus is something serious not adequately reflected by a 12 month pullback in the markets, without going full dolally and a collapsing world order.


----------



## Brendan Burgess

cremeegg

There are two main camps here. Those of who can't predict the future, and those like you who can. 

Let's assume for the moment that you are right and the stockmarket is going to fall dramatically and permanently.  What practical implications does that have for you?  

Brendan


----------



## Daithi7

cremeegg said:


> Why can't we have a camp which thinks Coronavirus is something serious not adequately reflected by a 12 month pullback in the markets, without going full dolally and a collapsing world order.



Exactly this.  It's quite clear to me that markets with valuation levels of ~12-18 months ago, seem not to be fully pricing in the probable full negative effects of C19 on companies' earnings. Especially,  when you consider that these valuation levels were themselves inflated e.g  shiller PE at ~28-30 which is way above long term average of ~16. I think that the IMF economists may have put the cat back among the pigeons this week when they reeled off some fairly stark projections for the world's economies.....

Of course you have to ask if the market is already taking account of all of this bad news, but also factoring in the counter cyclical central bank stimulus and government fiscal responses, and on balance came to this considered view of the s&p at these prices, based on likely future company earnings!?!

Or, alternatively,  one can take the view that this recent rally is merely a fairly typical bear market rally,  and that stock markets will likely make significant further moves downwards, as the true effects of covid crystallize into reality in London,  New York & everywhere else, to end up at valuation levels that reflect significantly lower earnings for a year or 2 of recession,  & readjustment to covid measures.

I'm more inclined to the latter opinion, more so after the IMF were so bleak,  but I'm a bit of a bear anyway. Nonetheless as Brendan rightly says,  my opinion & others are totally unimportant.  It's only the opinion and valuation of the market that really matters.... hey!?


----------



## cremeegg

Brendan Burgess said:


> cremeegg
> 
> There are two main camps here. Those of who can't predict the future, and those like you who can.



I don't claim to be able to predict the future, you are only hearing what you expect to hear, not what I am saying.

I am saying that the markets have not adequately reflected the economic impact of the Coronavirus, that is an opinion about the present not a prediction for the future.

I do not rely on any claim to expertise to support this opinion (there are no experts on the economic implications of the lockdown), rather reasoned argument.

It would be nice if people would respond to these arguments exposing the flaws of understanding or reason they may contain rather than just repeating "you can't predict the future"



Brendan Burgess said:


> Let's assume for the moment that you are right and the stockmarket is going to fall dramatically and permanently.  What practical implications does that have for you?
> 
> Brendan



Again you are hearing what you expect to hear. If I am right and the market does not adequately reflect the implications of the coronavirus it is a further step to say that it will, remember Keynes 'the market can stay irrational longer than you can stay solvent'.

There is not even a hint in anything I have posted that any fall would be permanent. In fact I have said that inefficient firms may die off as a result of the lockdown and fitter ones emerge.

The practical implications for me include a serious fall in my income, not permanent I hope but a concern at the moment. Although a lot of economic comment suggests that while the sector may recover it will not recover to pre-covid levels. But hey I am an optimist, I dont think they can predict the future.


----------



## Sarenco

cremeegg said:


> I am saying that the markets have not adequately reflected the economic impact of the Coronavirus, that is an opinion about the present not a prediction for the future.


So your argument is that the market consensus is wrong but you are making no predication about whether it will ever correct itself. 

Is that right?


----------



## Fella

Brendan Burgess said:


> Hi cremeegg
> 
> As requested, let me expose the flaw in your reasoning.
> 
> If you are saying that the markets have not adequately reflected the economic impact, you are implying that the market is overpriced.
> 
> If you are saying that the market is overpriced, you are implying that it will fall.
> 
> If you are implying that it will fall, you are making a prediction.
> 
> You could say "The market is overpriced. It should fall. But it might remain overpriced forever."  But that is also a prediction that the market will remain overpriced. So either way, you are making a prediction.
> 
> Brendan



I'm been totally impartial here and I think @cremeegg is making reasoned arguments, the economy is not the same as last year yet the markets seem to have priced them reasonably the same. I am with @cremeegg that either the markets where undervalued last year or overvalued now. I am not predicting what they should be I am taking 2 positions in time where the markets are of similar value but the economies are in a vastly different state. 

@cremeegg is not alone in making predictions , I do remember over the years of my investing reading many posts by regular contributors here saying they felt the markets where high.

This is a quote from yourself @Brendan Burgess only on Feb this year "where should I invest aged 65 thread" I don't think @cremeegg is saying much different to what you are saying ?



Brendan Burgess said:


> I was asked this again recently and thought it worthwhile revisiting this thread.
> 
> Has anything changed in the meantime to alter the advice?
> 
> Returns on deposits are even lower than they were.
> 
> I know one can't time the stockmarket, but it just does seem to be a bit high at the moment.
> 
> Brendan


----------



## Brendan Burgess

> I know one can't time the stockmarket, but it just does seem to be a bit high at the moment.



I think that quote shows my inability to time the stock market.  And my worry that even so, it seemed a bit high.

I would not claim that I predicted the subsequent crash. Because it crashed for different reasons.

Brendan


----------



## Fella

Brendan Burgess said:


> Hi Fella
> 
> That is not the point.   Cremeegg is saying that the markets have not allowed for Covid. Therefore he is making a prediction.
> 
> I am saying that I don't know the future.  I don't know if the markets are too high or too low.  I can't predict the future.
> 
> You are making a finer point. The market was wrong then or now. But you don't know which.   I think that you are saying that it was possible that the market  was undervalued a year ago, and fairly valued now?
> 
> Brendan



Well my point is if you look at the S&P 500 its the same price now as roughly June last year. I don't know if that price was wrong last year I don't try to predict the market. But last year people seemed to be saying the markets are high , but now the same people seem to be saying everything is priced in and the markets are correct now. 

I don't get involved in the markets are high debate because I believe in efficient markets. I don't know why the markets are where they are today but there is something fundamentally wrong in my mind as the economic outlook has changed significantly from June last year to now , so for me there is a total disconnect between the economic outlook and the markets. 

I was watching the news the other day and Boeing had announced cancellation of orders and no work coming in and at the same time they pull up a graph and it shows Boeing stock up 5% or something for the day. This is not unique to Boeing you could argue they are oversold or whatever , the markets where also rising while another 6 million signed on in America , I don't expect a direct correlation between news and share prices but if the markets are rising solely on the back of intervention by the Federal Reserve I think it's probably not a great thing for all investors long term.


----------



## Duke of Marmalade

The Bank of England Governor today said:
			
		

> Economy may be heading for its worst three months since comparable records began, with a  35% plunge in GDP "not implausible" in this quarter.


I have to admit that I too am surprised, not at the initial correction, but by the relative recovery, which is even more pronounced across the pond.  We are of course seeing the Fed PUT in operation with injections of liquidity also at historic levels. All the same I wouldn't be investing in these circumstances, and no that is not a prediction. On the other hand I will not be reducing my already relatively low exposure to equities.


----------



## joe sod

Fella said:


> Well my point is if you look at the S&P 500 its the same price now as roughly June last year.



Everyone is preoccupied with the Fed and S&P however the european markets even after the recovery are only back where they were in 2011 and 2013  yet the euro area money supply has more than doubled in that decade from just under 4 trillion euros to 9 trillion euros now. The question is where did all those euros go, they definitely did not go into the european stock markets. There was never a bull market in Europe.




__





						Euro Area Money Supply M1 - September 2022 Data - 1980-2021 Historical
					

Money Supply M1 In the Euro Area decreased to 11704878 EUR Million in September from 11725681 EUR Million in August of 2022. Money Supply M1 in the Euro Area averaged 3330690.33 EUR Million from 1980 until 2022, reaching an all time high of 11725681 EUR Million in August of 2022 and a record low...




					tradingeconomics.com


----------



## cremeegg

Gordon Gekko said:


> We are through the worst of it and things will slowly return to normal. It’s estimated that it will cost the Exchequer €15-20bn. A lot of money but backstopped by Europe and stuck on the never-never at 0%, is it really that big a deal?
> 
> Yes we might have 25% unemployment but people quote that like it’s a surprise; we’ve chosen to do that to save lives. Those jobs will return in the main.
> 
> I believe that the global economy and the Irish economy will thrive in the aftermath of this; the errors in 2009-11 around austerity etc won’t be repeated.



An opinion backed up by some detailed reasoning. Be careful the next thing you know people will be accusing you of making predictions or claiming to be an expert.

The is a very satisfying post Gordon, I can see what you think and why you think it. Any reader can improve their own ideas by considering your points.  

I hope that you are correct in saying that the jobs will return. My concern would be that they will not return in the short term and that they will be different jobs requiring different skills when the do return.

It is not that I dont think that the world will recover, it is that the markets dont reflect how bumpy the ride will be. Negative oil prices  ??


----------



## joe sod

This thread got alot of posts during the market panic of march/april 2020, the fastest sell off and recovery in history. The recovery has been very narrow dominated by the US tech giants with much of the global markets still down significantly from january 2020, however the predictions that the rapid recovery of march were a short term bounce have not been borne out, bear market rallies dont last so long. The bond markets were not the safe haven of previous bear markets with government bonds also selling off heavily by mid march in the rush for cash, this was actually the real reason why the central banks intervened so rapidly.


----------



## Brendan Burgess

Hi Joe

The future is uncertain. 

I don't think that we can say that we were right not to sell off  and really won't know for some years to come.

Brendan


----------



## Sarenco

joe sod said:


> The recovery has been very narrow dominated by the US tech giants with much of the global markets still down significantly from january 2020,


Global stocks have gained about 30% over the past two months, from their low on 23 March, as measured by the MSCI World Index. That's hardly a "narrow recovery".


joe sod said:


> The bond markets were not the safe haven of previous bear markets with government bonds also selling off heavily by mid march in the rush for cash, this was actually the real reason why the central banks intervened so rapidly.


Euro Government Bonds delivered a positive return when stock prices were plummeting back in Feb/March.  So, bonds did indeed prove to be a safe haven during this period.

In any event, this tells us nothing about the future.


----------



## joe sod

Brendan Burgess said:


> The future is uncertain.
> 
> I don't think that we can say that we were right not to sell off and really won't know for some years to come.


Yes but I think all precedents have been broken in the last decade therefore trying to predict the future based on precedents from past crashes or booms no longer works. Therefore you will just have to cope with more volatility falls and rises of 30% or more in rapid succession, these things no longer roll along in easily predictable timelines.


----------



## Brendan Burgess

joe sod said:


> these things no longer roll along in easily predictable timelines.



Hi Joe

I don't think that they ever did? 

When the market was at big highs in the past, I often "felt" it was too high, but never so confident that I sold out.

And when it had fallen, I often felt that the fall was justified but while I expected it to recover, I did not know when it would recover.

Brendan


----------



## joe sod

Its been a great week for european investors , finally the european markets are starting to outperform and also the euro is rising against the dollar a very good sign. There have been many false dawns since the financial crash in 2008 but it looks like  some money is moving out of the over priced US stock markets and US dollar. The theme music has changed Europe has handled the corona virus pandemic much more sure footed than the US, its very likely that a european company will get to the corona virus vaccine first and of course the race riots in the US are not a good backdrop. Suddenly Europe looks like a safe haven.


----------



## Brendan Burgess

joe sod said:


> Suddenly Europe looks like a safe haven.



I arrived at the opposite conclusion.

Now it's looking very risky.

I know that I can't time the stock markets but I am now reevaluating the points made by  Creme egg and others earlier in the thread.  How can these companies be worth more or less the same as they were 6 months ago?   They were a bit frothy then, they must be even more frothy now.

Brendan


----------



## Brendan Burgess

Sarenco said:


> Looking back at this thread it strikes me that a lot of posters are taking rather extreme positions.
> 
> It's either -
> 
> Go to 100% cash, now! We're doomed. Doomed!
> 
> Or -
> 
> Go to 100% equities, now! Stocks are on sale - fill your boots!
> 
> There is obviously plenty of ground in between these polar opposites.



I think that this is a very good point.

Fundamentally, I don't believe in timing the stock markets.  But with the huge recent recovery, the risk must be much higher now than it was 3 months ago.  (Unless you think that the impact of Covid will be a lot less than we thought three months ago.)

I am seriously thinking of converting about 25% of my equity portfolio to cash.

If the market continues to increase, as I hope it will, I will be still making plenty of money.
If the market drops, I will be able to buy back in at a lower price.

But I still face three big barriers in doing this.

1) When will it be right to buy back in?  My general philosophy is to be 100% invested in equities.
2) I will have a big CGT liability.
3) Where do I put the cash?  I guess it will just have to sit in a current account.

Brendan


----------



## Brendan Burgess

By the way, as this is a very interesting thread, I have gone back and edited it substantially. 

There was a lot of repetition. 
There were quite a few meanderings off topic. 

I have it down from 13 pages to 5. I might go back in again and see if I can reduce it further.

Brendan


----------



## joe sod

Brendan Burgess said:


> I have it down from 13 pages to 5. I might go back in again and see if I can reduce it further.



but surely by editing out comments you remove the thought process during a sell off, thats one of the big strengths of a blog like this that it is a record of what people are actually thinking when their stocks are falling by thousands a day, in other words its real. I think it is not good to edit out stuff especially in a rare thread like this where people were genuinely in fear of their investments and pensions.


----------



## Brendan Burgess

Hi Joe
Did you read what I have edited out?  
Duplication  and off topic stuff. 

The thought process is still there and very clear.

Brendan


----------



## Sarenco

Daddy Ireland said:


> I am advising to come out of the market/pensions tomorrow (despite losses aleeady incurred) especially those people within 5 years of retirement and get into cash for the foreseeable future. Unless a vaccine is found for this virus in the next several weeks the stock markets are going down way further.


I hope nobody followed this terrible advice.

The S&P500 is up nearly 40% from its 23 March low.


----------



## Brendan Burgess

As Gordon said at the time in response to Daddy's post:



Gordon Gekko said:


> This post is a disgrace. Possibly the worst contribution and most reckless advice that I’ve ever seen on AAM. A combination of ‘Monday Morning Quarterbacking’ at its very worst and complete ignorance of how investment markets and investors behave. Please ignore it.



The problem with Daddy's comment was the confidence with which it was delivered.  He stated it as a matter of fact. I did consider deleting it at the time, but I thought that Gordon's response made its deletion unnecessary.

And, of course, Daddy could still be proven correct.

Brendan


----------



## cremeegg

At this stage markets (The S&P 500) have recovered to the point they were at before the Corona virus began to dominate the news.

So it would appear that the virus was, economically at least, no big deal.

I hope that is true, but I don't believe it. I think that the markets have failed to adequately reflect the impact of corona on the economy. 

In a sense the markets cannot be wrong, if the S&P is trading at 3,200 then it is trading at 3,200. However if the profits in the economy over the next few years are much less than would support that valuation, we may be in for a very bumpy ride.


----------



## Gordon Gekko

You’re ignoring the massive and unprecedented fiscal stimulus. Yes, the economies have taken a hit but the government and central banks have intervened.


----------



## Brendan Burgess

Gordon Gekko said:


> You’re ignoring the massive and unprecedented fiscal stimulus.



Hi Gordon

That is true. But surely that has to be unwound at some stage? 

For a long term investor, the unwinding of this stimulus could be catastrophic. 

Brendan


----------



## Gordon Gekko

Brendan Burgess said:


> Hi Gordon
> 
> That is true. But surely that has to be unwound at some stage?
> 
> For a long term investor, the unwinding of this stimulus could be catastrophic.
> 
> Brendan



Perhaps, but I don’t think so. Yes, it will all have to be unwound but only when things normalise.

Europe made a pigs ear of things post the financial crisis with austerity and interest rate increases(!). The US on the other hand got it right. Importantly, lessons were learned.

I believe that any unwind will coincide with the normalising of the economy.


----------



## joe sod

From reading the posts on this thread back in March, some people had sold out and gone to cash, more were sitting tight and hoping the sell off would not be too bad, alot of people were not invested at all but saying they were waiting for another big fall before they would buy anything. However virtually nobody was buying the market back in March yet the markets have risen by 40% from the lows. Even Warren Buffett got it wrong he sold out of the airlines at their lows, some are up 100% since he sold out. If everyone is so pessimistic and bearish who is buying this market ??


----------



## Cricketer

I invested €45,000 in equities in March and April. It has done very well so far but I have no idea if I was brave, foolish or a bit of both. It's a long term investment so I'm prepared to watch the ebbs and flows with some amusement (or bemusement). Only when I sell will I know for sure. Not that I'm responsible for movements in global markets!


----------



## yosim00

Cricketer said:


> I invested €45,000 in equities in March and April. It has done very well so far but I have no idea if I was brave, foolish or a bit of both. It's a long term investment so I'm prepared to watch the ebbs and flows with some amusement (or bemusement). Only when I sell will I know for sure. Not that I'm responsible for movements in global markets!


wow well done, had money on the sidelines but got caught up in the "this is only the beginning!!!!1" hysteria, easy to say in hindsight however 

I think this Fed pump has to be unwound at some stage but, as ever, the question is when
I'm hoping for a pullback somewhere here and for sentiment to go more negative again but could just as easily keep pumping


----------



## ClubMan

This thread ...

Lots of subjective sentiment, gut feeling (and remember what Carl Sagan said about that), a smattering of confusing/meaningless jargon and some people who seem to think that they can read the runes and predict the future. But not too much in the way of hard data or recognition that timing the market and predicting the future is a mug's game.

If you think that capitalism is collapsing (and maybe it is) then we're all screwed. If you don't and, even with all the unknowns about COVID-19, the current situation is another dip to be ridden out on the roller coaster that is the markets then (depending on specific personal circumstances and according to your portfolio needs) you should invest.

Everything else seems like pointless idle chatter.


----------



## joe sod

ClubMan said:


> Everything else seems like pointless idle chatter.


is this not a bit arrogant afterall you have 43,000 posts yourself on this site, are they all worthy contributions I doubt it, I bet some are pointless idle chatter aswell ? By the way I agree with the general thrust of what you said but I dont agree with arrogant smack downs of other contributions.


----------



## Brendan Burgess

ClubMan said:


> Lots of subjective sentiment, gut feeling (and remember what Carl Sagan said about that), a smattering of confusing/meaningless jargon and some people who seem to think that they can read the runes and predict the future.



You should have seen it before I edited it. I think I reduced it from 13 pages to 6. 

Brendan


----------



## cremeegg

Gordon Gekko said:


> You’re ignoring the massive and unprecedented fiscal stimulus. Yes, the economies have taken a hit but the government and central banks have intervened.



This is probably the best explanation for what we have witnessed. 

What does it mean in economic terms. If a quarter of the workforce wasn't working for two months, that must represent a large reduction in wealth created. Some of it may be just missed haircuts, but some of it must be significant missed wealth.

So the governments of the world borrowed money to plug the gap, they disbursed this money in several ways, from wage subsidies, to lump sum donations to big companies (Lufthansa), to supported borrowing for SMEs.

Even apart from the idea that this must be unwound at some stage, (must it?), I suppose the governments will have to carry the liabilities, I don't expect that the wage subsidies will have to be repaid. 

However this is just reshuffling of existing wealth, and investors who can borrow cheaply seem to be supporting the share price of those companies which benefit. There is still a reduction in real wealth which must become an issue t some point. Maybe


----------



## joe sod

Another false dawn for a big market crash, yet again it's turned tails and gone back up. With the massive central banks intervention and money printing sitting out the markets in cash and waiting for a 50 percent correction looks like the wrong strategy. You actually need to take a position now, whether it's bonds, precious metals , commodities, European stocks, bit coin or tech stocks you have to place your bet. That's the real effect of money printing you can't sit in cash for very long


----------



## Brendan Burgess

joe sod said:


> You actually need to take a position now,



My mistake was thinking it was all or nothing.   "I can't time the market so I must be 100% in stocks."

The discussion on this thread helped me clarified my thoughts.  I still can't time the market, but 

It must be riskier now that it has been for some time 
It must have been wrong before Covid or else it's wrong now because it's about the same 
I sold down 25% of my shares last week. 

My reasoning was 

If there is a crash - I will be hedged a bit 
If the stock market continues rising, my 75% will continue rising 

I would be better off today had I not sold off last week.  But I would be even more jittery today after yesterday's rises. 

I am comfortable now with 75% equity and 25% cash. 

Brendan


----------



## Sarenco

I think it's interesting to compare the performance over the last 40 years of an all-equity portfolio (S&P500) with a traditional portfolio made up of 60% equities (S&P500) and 40% bonds (10-Year Treasuries) -

100% equities - annualised return 11.33%; worst year -37.45%; maximum drawdown -50.97%
60/40 portfolio - annualised return 10.46%; worst year -14.00%; maximum drawdown -26.46%.
So the all-equity portfolio only modestly outperformed the 60/40 portfolio over the full 40-year period but was far more volatile.


----------



## cremeegg

'We are, you might say, in a time when the smart money lacks all conviction, while the dumb money is filled with a passionate intensity."

Paul Krugman with a different explanation as to why the market is in a bubble. Note, that the market is in a bubble is so obvious that he doesn't even discuss it. Why is the question that interests him.









						Opinion | Market Madness in the Pandemic (Published 2020)
					

Why are investors rushing to buy junk?




					www.nytimes.com


----------



## cremeegg

Or as Keynes put it 

In abnormal times in particular, when the hypothesis of an indefinite continuance of the existing state of affairs is less plausible than usual even though there are no express grounds to anticipate a definite change, *the market will be subject to waves of optimistic and pessimistic sentiment*, which are unreasoning and yet in a sense legitimate where no solid basis exists for a reasonable calculation.


----------



## Cricketer

@Brendan Burgess This is a genuine question, I'm not being smart, just genuinely interested: are you not trying to time the market? I keep reading advice that it's a mug's game...


----------



## Brendan Burgess

Hi Cricketer 

As I have explained in an earlier post, I used to think it was "all in the market or all  out of the market." 

I don't believe I can time the market, but it just seems mad at the moment.  I won't back the conviction by taking it all out. But I have taken 25% out.

Brendan


----------



## Sunny

Brendan Burgess said:


> Hi Cricketer
> 
> As I have explained in an earlier post, I used to think it was "all in the market or all  out of the market."
> 
> I don't believe I can time the market, but it just seems mad at the moment.  I won't back the conviction by taking it all out. But I have taken 25% out.
> 
> Brendan



This came up before Brendan as it is something I have done in the past with a PRB that I own and have re-balanced from 100% equities to 70/80% equities and up again albeit not very often. I was pretty strongly told that I was trying to time the market.


----------



## Tickle

Sarenco said:


> I think it's interesting to compare the performance over the last 40 years of an all-equity portfolio (S&P500) with a traditional portfolio made up of 60% equities (S&P500) and 40% bonds (10-Year Treasuries) -
> 
> 100% equities - annualised return 11.33%; worst year -37.45%; maximum drawdown -50.97%
> 60/40 portfolio - annualised return 10.46%; worst year -14.00%; maximum drawdown -26.46%.
> So the all-equity portfolio only modestly outperformed the 60/40 portfolio over the full 40-year period but was far more volatile.


What would the difference in total return be? I'd say that would be a fair whack if you are comparing the two over a 40 year timeline.


----------



## Brendan Burgess

Sunny said:


> re-balanced from 100% equities to 70/80% equities and up again albeit not very often.



I think that this is the key.

This is the first time I have ever done it. 

And it has three big problems , so it's not a clear decision 

1) When do I go back in? 
2) What do I do with the cash in the meantime? 
3) I have to pay CGT on the realised gains which would have run on if I had not sold. 

Brendan


----------



## Sarenco

Tickle said:


> What would the difference in total return be? I'd say that would be a fair whack if you are comparing the two over a 40 year timeline.


$10,000 invested in the all-equity portfolio at the start of the 40 year period would be worth $765,523 today.

$10,000 invested in the 60/40 portfolio at the start of the same period (with annual rebalancing) would be worth $557,257 today.


----------



## Brendan Burgess

Sarenco said:


> So the all-equity portfolio only modestly outperformed the 60/40 portfolio over the full 40-year period but was far more volatile.






Sarenco said:


> $10,000 invested in the all-equity portfolio at the start of the 40 year period would be worth $765,523 today.
> 
> $10,000 invested in the 60/40 portfolio at the start of the same period (with annual rebalancing) would be worth $557,257 today.



Am I reading this correctly?  One is earning 37% more. That is not modest in my opnion.

Brendan


----------



## Sarenco

Brendan Burgess said:


> Am I reading this correctly? One is earning 37% more. That is not modest in my opnion.


Poor wording on my part.

What I meant was the reduction in return was modest relative to the reduction in volatility.


----------



## Sunny

Also, those figures are for annual re-balancing Brendan over 40 years which is not what you are suggesting.


----------



## jpd

If you go for a split portfolio at the start, you really need to re-balance regularly otherwise it's just a gamble as to whether you timing was right at the time you invested.

Either you are using a 60/40 or whatever split or you are not


----------



## jim

What does annual rebalancing mean?


----------



## Oisin19

Say you have a 60/40 equity strategy. At the end of the year equities have done well and now your portfolio has drifted to 70% equity due to the increase in value. A rebalance would involve selling down the required amount of equities to bring you back to 60/40.


----------



## jim

Thanks fergal, makes sense.


----------



## joe sod

cremeegg said:


> 'We are, you might say, in a time when the smart money lacks all conviction, while the dumb money is filled with a passionate intensity."



its a good quote but everywhere I look there are articles and youtube videos all with the same theme, "Dont get caught by this rally", "The market is about to crash", "Its a suckers rally" and not just since the coronavirus crash long before it aswell. Nobody is ebullient with the exception of bitcoin and Tesla investors. Everyone hates this rally but yet the stock market keeps rising but who is doing all the buying?


----------



## llgon

cremeegg said:


> Paul Krugman with a different explanation as to why the market is in a bubble. Note, that the market is in a bubble is so obvious that he doesn't even discuss it.



Presumably he is referring to the US market.  The thread title also refers to 'the stock market'.  I think it's worth bearing in mind that there are many different stock markets and comments that are applicable for some do not apply to all.

Cremeegg, the only reason I'm quoting your particular post is that while I agree that the US markets are in a bubble I don't think it would apply to Europe.


----------



## cremeegg

Brendan Burgess said:


> I don't believe I can time the market, but it just seems mad at the moment.



Priceless


----------



## cremeegg

joe sod said:


> Everyone hates this rally but yet the stock market keeps rising but who is doing all the buying?



Well people whose alternative is getting negative returns on cash is one suggestion

Here are some others

The run-up in stock prices that took place between mid-May and Thursday’s sudden plummet was driven, to an important extent, by investors rushing into very dubious companies — what one observer called a “flight to crap.” That sudden plummet has since been largely reversed.

Although there is some dispute about how important they were, most of the evidence suggests that a major role in this apparent bubble was played by small investors — “retail bros” — pursuing get-rich-quick dreams. Some of these exuberant investors were people who normally bet on sports and were looking for an alternative source of excitement. And as the Hertz example shows, they didn’t care much about quality.

Its the sports guys. Love it !


----------



## joe sod

cremeegg said:


> The run-up in stock prices that took place between mid-May and Thursday’s sudden plummet was driven, to an important extent, by investors rushing into very dubious companies — what one observer called a “flight to crap.” That sudden plummet has since been largely reversed



most of the rally was driven by tech , the FAANGS, they are a bigger proportion of the market than they were before Covid, therefore if you buy the S&P index now you are buying more FAANGS and less of everything else than you were beforehand. Even if you are buying a global index the FAANGS are now a larger proportion even of that.
You are referring to the robinhood trading app where small guys made or lost money betting on the carnage after the corona virus sell off. Surely that is small compared to the FAANGS and their valuations now.


----------



## Thargor

Is it just going to keep rising and rising? New ATHs all day every day? Dont time the market blah blah but does anyone think its getting dangerous now?


----------



## confused12

joe sod said:


> Everyone hates this rally but yet the stock market keeps rising but who is doing all the buying?


Algorithms


----------



## jim

Algoritms hardly answers the question. What entities are using the algos to buy.


----------



## joe sod

Brendan Burgess said:


> I would be better off today had I not sold off last week. But I would be even more jittery today after yesterday's rises.
> 
> I am comfortable now with 75% equity and 25% cash.


From reading your posts I know you have investments in Ryanair, CRH and Berkshire _(I think you mentioned that at some stage),_ I dont know what else you own but Ryanair and Berkshire are still down substantially since before Covid . Im just wondering did you sell 25% of everything despite their performance or did you discriminate and only sell some stocks. In any case why did you not just add to stocks like Berkshire ? My point is that the stock market recovery has been extremely narrow, focussed on the US technology stocks, if you dont own any of these you have not really recovered that much. Even in the case of Berkshire the performance would be much worse except for his holding in Apple which has compensated for everything else. Im not being critical by the way Im just trying to find out more your thinking


----------



## Brendan Burgess

Hi Joe

I don't try to pick winners or losers.

I have a portfolio of about 10 stocks.

Some had become overweight , so I sold off 4 of my heavier stocks to achieve the 25% reduction while rebalancing my portfolio. 

Brendan


----------



## Gordon Gekko

Brendan Burgess said:


> Hi Joe
> 
> I don't try to pick winners or losers.
> 
> I have a portfolio of about 10 stocks.
> 
> Some had become overweight , so I sold off 4 of my heavier stocks to achieve the 25% reduction while rebalancing my portfolio.
> 
> Brendan



It’s very concentrated though as has been previously discussed. Not for the faint-hearted!


----------



## Brendan Burgess

Terry Smith has a good article on the issue in the current FT 

Google: There are only two types of investors 

_
 When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it. It’s safer and more profitable to be in the latter camp.

...

 Imagine that over this 50-year period there were two competing investment strategies. One is to invest an equal amount every trading day throughout the period irrespective of market conditions — so-called pound (or dollar) cost averaging which many investors actually apply by making regular contributions into a pension, Isa or regular savings plan. 

The other strategy requires enough foresight for the investor to invest the same amount daily, but to stop investing when the market turns down and save the cash. This money is only invested when the Dow makes a new bottom, hitting its low point in any period of decline (hence why it’s known as an “absolute bottom buying strategy”). 

... Over the 50-year period, the second strategy would have produced returns 22 per cent higher than the first. It sounds impressive — perhaps a little less so when you break it down to an 0.4 per cent outperformance per year. But think of the time and effort you would have to spend monitoring markets to get those calls just right. 

...


_


----------



## cremeegg

You are all overthinking this. The market, specifically the S&P 500 is at 3,200 approx the same level it started the year. So the Coronavirus epidemic has had no impact other than a short lived dip. Maybe thats reasonable, maybe it's not.

I am reminded of the story about the barber who gave JP Morgan a stock tip. When JP returned to the bank after his haircut he asked his analysts to review the tip he had been given. The analysts agreed with the barber, JP decided that if the idea that shares were always a buy had reached the barbers, there was no greater fool left and sold down all his equity holdings. 

To make a return on shares requires either future profits to justify the purchase price, or a greater fool to take them off your hands.

I can't see either.


----------



## Brendan Burgess

cremeegg said:


> I am reminded of the story about the barber who gave JP Morgan a stock tip.



I hadn't heard of the barber before.

Was it not the shoe shine boy?

Brendan


----------



## confused12

Brendan Burgess said:


> Terry Smith has a good article on the issue in the current FT
> 
> Google: There are only two types of investors
> 
> 
> _When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it. It’s safer and more profitable to be in the latter camp.
> 
> ...
> 
> Imagine that over this 50-year period there were two competing investment strategies. One is to invest an equal amount every trading day throughout the period irrespective of market conditions — so-called pound (or dollar) cost averaging which many investors actually apply by making regular contributions into a pension, Isa or regular savings plan.
> 
> The other strategy requires enough foresight for the investor to invest the same amount daily, but to stop investing when the market turns down and save the cash. This money is only invested when the Dow makes a new bottom, hitting its low point in any period of decline (hence why it’s known as an “absolute bottom buying strategy”).
> 
> ... Over the 50-year period, the second strategy would have produced returns 22 per cent higher than the first. It sounds impressive — perhaps a little less so when you break it down to an 0.4 per cent outperformance per year. But think of the time and effort you would have to spend monitoring markets to get those calls just right.
> 
> ..._


This implies that anyone can perfectly time the bottom, which is impossible


----------



## cremeegg

Brendan Burgess said:


> I hadn't heard of the barber before.
> 
> Was it not the shoe shine boy?
> 
> Brendan



Now that you mention it I think it was.


----------



## Sarenco

It was Joe Kennedy (JFK's father) that allegedly had the shoe shine moment in 1929.

J.P. Morgan died in 1913!


----------



## Brendan Burgess

confused12 said:


> This implies that anyone can perfectly time the bottom, which is impossible



I think you are confused? 

It implies the very opposite.

Brendan


----------



## Bluefin

Brendan Burgess said:


> I think you are confused?
> 
> It implies the very opposite.
> 
> Brendan


I have a simple question to ask.. 

At what point does one sell their holdings and realise there gains?


----------



## Brendan Burgess

That is anything but a simple question.

The best time to realise one's gains is after you have died, as the liability to CGT evaporates.

Other than that, it's probably when you need the money. 

I have sold in the past, to rebalance my portfolio after a very good run by one stock makes it too high a weighting in my portfolio.

We are in very strange times at the moment.  I was fully invested in equities and while I can't time the market, I think that the risk is very high at the moment, so I took some of my money off the table.  

Brendan


----------



## cremeegg

confused12 said:


> This implies that anyone can perfectly time the bottom, which is impossible



It was also my understanding that this involved buying at the bottom, which of course is impossible.

I think the point was that EVEN if you had foreknowledge and could buy at the bottom the advantage over the regular buying strategy would be minimal.


----------



## Sarenco

cremeegg said:


> It was also my understanding that this involved buying at the bottom


No, the hypothetical just required a pause in buying (not selling) equities each time the market turned south.

It's a daft article, IMO.  If you had the suggested foresight, why wouldn't you run a leveraged long/short strategy and make an absolute fortune?


----------



## joe sod

Just revisiting this thread because it is a great insight into the thought processes of investors as a big market sell off is happening. First we saw the recovery and acceleration of the technology bull market which has been in place since financial crash, these stocks accelerated past their pre market crash levels to extraordinary new highs. This was explained by the financial guys as "the acceleration of the trend already in place".
 Now with the good news of the vaccines and the prospects of the economy opening up properly, most of the really depressed stocks like banking and oil stocks had a huge recovery and some of the big tech stocks actually sold off. The financial guys called this "the great rotation", money moving back into these very depressed stocks . 

These financial guys never predict anything but love coming up with fancy jargon to describe what's just happened trying to give the impression that they knew all along, charlatans. They never admit mistakes


----------



## Jim2007

> Just revisiting this thread because it is a great insight into the thought processes of investors as a big market sell off is happening.



You're confusing investors with traders and speculators.  I spent 30 years in the industry and in my experience most investors don't pay much attention to what is going on a daily basis.  They'll check their situation may be once a year or so, maybe make a few changes and that's about it.


----------



## WolfeTone

joe sod said:


> These financial guys never predict anything but love coming up with fancy jargon to describe what's just happened trying to give the impression that they knew all along, charlatans. They never admit mistakes



Very true. I think it is agreed that nobody can time the market, but with a little research you may be able to time a trend?

That is, as a small independent investor, I pick sectors that I believe will have favourable market conditions over the foreseeable to long-term future. 
There are of course an innumerable amount of factors that can derail any analysis and turn it on its head at any given moment. So I tend to keep things simple. 
One such sector, or rather a niche in the IT secto, that I consider will have favourable market conditions is in remote access and support. Vaccine or no, my instinct is that there will be/is already a greater impetus to remote working on a much, much more grander scale than we already have. Companies that specialise in this type of work will benefit. 
So regardless of what is happening in markets today, if you believe a sector will have favourable market conditions, then some research on companies that operate in that sector is your best option over the long term, in my opinion.


----------



## Gordon Gekko

With respect, you seem to have no idea how markets work.

The idea that someone sitting at their kitchen table here in Ireland can think “hmm, I think remote working will do well” and get a jump on the market is laughable. It’s already in the price

The vast vast vast majority of people who manage their own investments will do badly.

They will sell in months like March 2020 and buy at times like 2007.

There are stats to back all of that up; I have seen Fidelity stuff, for example, where the average self-managed investor in the US makes about 2% per annum versus 6% for a normal 60/40 portfolio.

ETFs and cheap funds are great, but not if you’re chopping in and out. An adviser adds most value when hand-holding and getting someone to stick to their plan.


----------



## WolfeTone

Gordon Gekko said:


> The vast vast vast majority of people who manage their own investments will do badly.
> 
> They will sell in months like March 2020 and buy at times like 2007.



If I was trying to trade the markets I would agree with you. But I'm not, I buy and hold for the long term. I'm doing far better on my own than listening to the advice of experts who cost me dearly in the past - (do you remember when bank stocks were a practical safe haven and reliable stock in any portfolio?).
I don't pay much store to the 99% guff regurgitated daily on business news feeds. Its all filler.
It's easier to analyse a companys accounts and analyst projections and, relative to what is occuring in our daily lives, make a reasonable judgement on the future prospects for any particular company.
It's not rocket science, as much or as little information is available to whoever wants it.

Much more fulfilling doing this by myself and if it all goes pear-shaped I only have myself to blame.


----------



## SPC100

WolfeTone said:


> It's easier to analyse a companys accounts and analyst projections and, relative to what is occuring in our daily lives, make a reasonable judgement on the future prospects for any particular company.
> It's not rocket science, as much or as little information is available to whoever wants it.



It's easier to just buy passive index or two!

Have you read some books like random walk down wall street? Selecting a few companies, you are more likely to have more extreme returns than the market. Might be better might be worse. Google might be usurped. Msft could be discovered to be full of spies and backdoors. Amazon might be made illegal. Any safe bet today can look dangerous in hindsight.

What did your analysts say about banks back in the day?

Aside: please have a look at us estate taxes if you are holding american companies directly.


----------



## moneymakeover

The last advice to listen to is the analysts!


----------



## WolfeTone

SPC100 said:


> It's easier to just buy passive index or two!



Yes, but why hand to others what you can do yourself, and without a fee? 



SPC100 said:


> Selecting a few companies, you are more likely to have more extreme returns than the market. Might be better might be worse. Google might be usurped. Msft could be discovered to be full of spies and backdoors. Amazon might be made illegal. Any safe bet today can look dangerous in hindsight.



Or i could get hit by a bus? 

I have small investments in a number of companies across a range of sectors, expanding my interests when I think it is appropriate and in the company that I choose. 
I merely mentioned remote IT access and supports as a niche part of IT sector that I think will grow significantly over the coming years. As it happens, I bought stock in a European company that specialises in this area. Its revenues have been increasing steadily over the last four years, its debt has reduced significantly, it has offices in America, Europe and Asia. 
It employees over a thousand people and in tune with my own view, a number of analysts recommend it as a buy. 
That, and other information available on its website, suggest to me it is a well managed company and combined with my own view that this is an area ripe for growth, has persuaded to invest a sum of funds in this company.


----------



## moneymakeover

I suppose things get oversold and if you are ready with your cash sitting in your broker account you can snap up a bargain. Companies like the cruise lines, air lines, plane manufacturers have all jumped up since March.
Pharma. Etc. There are opportunities even for the little guy.


----------



## WolfeTone

moneymakeover said:


> Companies like the cruise lines, air lines, plane manufacturers have all jumped up since March.



True, but I would not interest myself in these sectors. I'm not saying that they should be avoided but they would not interest me. And that is the difference between handing over your income to someone else to invest your money for you. Investing in areas that you have no control over, as opposed to doing it yourself and building a portfolio that reflects your own outlook and understanding of investment opportunities.


----------



## NiallSparky

WolfeTone said:


> Yes, but why hand to others what you can do yourself, and without a fee?



What sort of broker are you using that costs no fees? And why do they not let you buy a passive ETF with the same lack of fees?


----------



## Gordon Gekko

So why do people who “do it themselves” do far worse than people who have their money managed?


----------



## DublinHead54

Wall Street Diverging from Main Street.........


----------



## WolfeTone

NiallSparky said:


> What sort of broker are you using that costs no fees? And why do they not let you buy a passive ETF with the same lack of fees?



I manage my own funds, paying commission on purchase. I don't pay anyone to manage it for me. 



Gordon Gekko said:


> So why do people who “do it themseves” do far worse than people who have their money managed?



Probably because of what you said they do... buy in March and then sell on the drop. I don't do that. If I think a particular sector has favourable conditions then I look for companies that have track record of operating in the sector and by their own published documents they appears to be well managed and good financial health then I consider buying into it. 
Like I said its not rocket science, so what am I missing here?


----------



## Sarenco

WolfeTone said:


> so what am I missing here?


You are competing with professionals with far greater resources than you to pick stocks they believe will outperform the broader market.

I don't think I can consistently outsmart the market, so I don't even try.


----------



## PGF2016

moneymakeover said:


> Companies like the cruise lines, air lines, plane manufacturers have all jumped up since March.


Except the ones that have gone bust. 

Ryanair is at it's highest point (or at least it was earlier in the week) in the last few years. I'd guess because some of the competition have gone out of business.


----------



## WolfeTone

Sarenco said:


> You are competing with professionals with far greater resources than you to pick stocks they believe will outperform the broader market.



I'm under no illusions that I could possibly compete with professionals in trying to outperform the broader market. 
So that is why I do not compete this way. 
I identify companies that I consider are well managed, in good financial health and, in my opinion, in a good position to exploit growth opportunities in their respective industries. In such instances I consider taking a small stake. I have been doing this for about 5yrs and it is proving not only to be successful, but also much more fulfilling than having to rely on others to invest my money for me. 

Think of it this way, some people have hobbies - in cars, antiques, art, sport, music etc which they invest a great deal of time and money indulging in. Sometimes to great cost, others to great reward. Either way they get can great personal fulfillment out of it. 
I simply started to collect shares in companies that I think are good value. It is working well for me so far so I see no reason to do it any other way.


----------



## SGWidow

Sarenco said:


> You are competing with professionals with far greater resources than you to pick stocks they believe will outperform the broader market.



I came across this quote which I believe - it's from Charlie Ellis - an interesting fella


The evidence of investment managers' success with market timing is impressive - and overwhelmingly negative


----------



## galway_blow_in

im as of this weekend back to where i was ( portfolio valuation wise )  before the covid fuelled sell off in february  , i didnt hold on to everything i had at the start of the year , in fact i bailed out of all three of them in april when my portfolio was down 30%  , i was in two well known irish companies plus a well known social media company , all three had extremely sharp falls , especially the irish building materials company ,  a particular electric car maker and a well known irish bank brought me back to where i am

not a great lasting strategy and i intend to get out of both in the coming weeks and simply diversify more , could just as easily have seen both the bank and the auto maker go the other way , i did genuinely believe one was seriously over sold and the other on an unstoppable upward trojectory of cultish proportions , the september sell off was a big opportunity and i went in big

thinking of putting a sizeable chunk into the irish REIT,s , the on the ground market is very strong but the REIT,s are still quite depressed


----------



## Itchy

@galway_blow_in what would your portfolio have done had you done nothing?

I personally sold 2 holdings in Apr in order to have cash on hand for some subsequent opportunities. Both holdings had been underperformers coming into the market highs in Feb. I used about 25% of the cash I generated to buy two further holdings, both up 50-60% since. However, the market came back so quick I wasn't able to get in at what I wanted at the time. Of the two I sold, one had recovered in line with the market, but the other is a few weeks from 2x'ing. I'm still looking at my cash


----------



## Gordon Gekko

It’s funny, I have no idea how individual companies have done over the last while, other than snippets I pick up here and there. I just buy as much of a cheap global equity fund as the tax rules allow and avoid checking the value. Covid, trade wars, Brexit...I ignore them all. I couldn’t tell you how my fund has done over the last few years; in fact, I don’t think I’ve checked it during 2020. It’ll be interesting to see how my hassle-free strategy does over the 35 years I hope to be in it...versus fellas at their kitchen table trying to make sense of Tesla through the prism of accountancy


----------



## moneymakeover

Gordon Gekko said:


> cheap global equity fund


When you say cheap, you mean the fees?


----------



## WolfeTone

Gordon Gekko said:


> I couldn’t tell you how my fund has done over the last few years



That is weird indeed. You seem so confident of your strategy, yet you have no idea how it is performing.


----------



## Gordon Gekko

moneymakeover said:


> When you say cheap, you mean the fees?



Yes, I mean fees


----------



## Gordon Gekko

WolfeTone said:


> That is weird indeed. You seem so confident of your strategy, yet you have no idea how it is performing.



The fund more or less tracks the performance of global equities.

And, yes, I have confidence that 35 years of monthly investing in global equities should do very well.


----------



## WolfeTone

Gordon Gekko said:


> And, yes, I have confidence that 35 years of monthly investing in global equities should do very well.



Don't get me wrong, I'm sure over such a timeframe you are correct. But there are poor performing equity funds. Just thought it odd not to check it occasionally, even once a year.


----------



## Jim2007

Gordon Gekko said:


> And, yes, I have confidence that 35 years of monthly investing in global equities should do very well.



Well you are unlikely to under perform the general market, unless the tracking error is bad, but that is it.  I would not consider the base line to “do very well“.  I’d expect a well balanced portfolio to out perform such an index over the long haul.


----------



## SGWidow

Hi Jim,



Jim2007 said:


> I’d expect a well balanced portfolio to out perform such an index over the long haul.



Your expectation is the polar opposite of mine.



SGWidow said:


> The evidence of investment managers' success with market timing is impressive - and overwhelmingly negative



I'd genuinely be interested in seeing authoritative data to support your assertion.

My big surprise this morning is learning that Gordon Gekko seems to turning his back of the value add of Wall Street types!


----------



## galway_blow_in

Itchy said:


> @galway_blow_in what would your portfolio have done had you done nothing?
> 
> I personally sold 2 holdings in Apr in order to have cash on hand for some subsequent opportunities. Both holdings had been underperformers coming into the market highs in Feb. I used about 25% of the cash I generated to buy two further holdings, both up 50-60% since. However, the market came back so quick I wasn't able to get in at what I wanted at the time. Of the two I sold, one had recovered in line with the market, but the other is a few weeks from 2x'ing. I'm still looking at my cash



It would be slightly lower as the construction materials company was my largest holding by a distance and its still below where it was at the beginning of this year 

I'm not advocating what I did , im too heavy in a well known electric car company and will lighten up , in fact I sold 15% on Friday gone by


----------



## galway_blow_in

Gordon Gekko said:


> It’s funny, I have no idea how individual companies have done over the last while, other than snippets I pick up here and there. I just buy as much of a cheap global equity fund as the tax rules allow and avoid checking the value. Covid, trade wars, Brexit...I ignore them all. I couldn’t tell you how my fund has done over the last few years; in fact, I don’t think I’ve checked it during 2020. It’ll be interesting to see how my hassle-free strategy does over the 35 years I hope to be in it...versus fellas at their kitchen table trying to make sense of Tesla through the prism of accountancy



Find it extraordinary that someone could completely ignore fund movements in 2020,  did you manage the same feat of discipline in 2008 ?


----------



## Sarenco

The MSCI World Index is up over 10%, year to date.

Anybody that bailed in March must be feeling pretty foolish...


----------



## Gordon Gekko

Jim2007 said:


> Well you are unlikely to under perform the general market, unless the tracking error is bad, but that is it.  I would not consider the base line to “do very well“.  I’d expect a well balanced portfolio to out perform such an index over the long haul.



What’s your basis for thinking that?

I’m amazed that you don’t think the base case for a 35 year investment in global equities is it doing “very well”.

And I believe you’re completely wrong to think that a balanced portfolio should outperform global equities over time. The opposite is the case.


----------



## Gordon Gekko

galway_blow_in said:


> Find it extraordinary that someone could completely ignore fund movements in 2020,  did you manage the same feat of discipline in 2008 ?



In 2008 I didn’t have enough invested for it to be relevant.

I obviously know markets fell significantly in March of this year and that they’ve recovered but I genuinely don’t know how much my fund fell in March or exactly how much it’s recovered because I don’t check it.

I believe that’s the recipe for success; invest in global equities, ignore the media and world events, and then get on with life.


----------



## galway_blow_in

Gordon Gekko said:


> In 2008 I didn’t have enough invested for it to be relevant.
> 
> I obviously know markets fell significantly in March of this year and that they’ve recovered but I genuinely don’t know how much my fund fell in March or exactly how much it’s recovered because I don’t check it.
> 
> I believe that’s the recipe for success; invest in global equities, ignore the media and world events, and then get on with life.



simple but unquestionably true


----------



## moneymakeover

Gordon Gekko said:


> tax rules allow


This is because it's your pension fund?

35 years and then retirement?

Presumably then it goes into arf, so it will be more than 35 years?


----------



## Gordon Gekko

Yep, hopefully 75 years.

i.e. it kicked off at age 25 and fingers crossed at least one of us makes it to the big 100

That’s how I think about my investment time horizon anyway


----------



## moneymakeover

My pension has an app that warns me that I've too much in equities even though it's only 47%

It says "you urgently need to review your investment choice" 

I only imagine what it would say if I had 100% in equities!


----------



## Sarenco

Gordon Gekko said:


> Yep, hopefully 75 years.


That would only be true if you made 100% of your pension contributions at 25 and bought an annuity at 100, with no withdrawals in the interim.

The reality is that retirement savings are gradually built up over time (with increasing contributions and compounding returns) and then gradually spent down over time so your time horizon is constantly shifting.

There's no way to precisely calculate your investment horizon in advance, but I think a reasonable estimate would be half your life expectancy at a particular age.  That would give you a crude estimate of the average time that each euro will remain invested in the market.

So, on that basis, a 40 year-old has an investment horizon of roughly 22.5 years, whereas a 60 year-old has an investment horizon of roughly 12.5 years.


----------



## Gordon Gekko

Sarenco said:


> That would only be true if you made 100% of your pension contributions at 25 and bought an annuity at 100, with no withdrawals in the interim.
> 
> The reality is that retirement savings are gradually built up over time (with increasing contributions and compounding returns) and then gradually spent down over time so your time horizon is constantly shifting.
> 
> There's no way to precisely calculate your investment horizon in advance, but I think a reasonable estimate would be half your life expectancy at a particular age.  That would give you a crude estimate of the average time that each euro will remain invested in the market.
> 
> So, on that basis, a 40 year-old has an investment horizon of roughly 22.5 years, whereas a 60 year-old has an investment horizon of roughly 12.5 years.



You should re-read my post.

I said “that’s how I think about my investment time horizon”, not “my investment time horizon is 75 years”.


----------



## Itchy

galway_blow_in said:


> I'm not advocating what I did , im too heavy in a well known electric car company and will lighten up , in fact I sold 15% on Friday gone by



Im sure you've done well. And likewise, I recently sold an airline stock that has recovered substantially from the lows. More as a management exercise than any loss of faith in the business. Though there is something to acting, making either a buy or a sell, in response to the immediate environment e.g. a large gap up/down, when the fundamentals haven't really changed. I know of an electric car company that is about to be included in a large index and will likely benefit from substantial institutional buying in the near term. I wonder would I have sold to lighten up in the same circumstance?! Being more mindful is the name of the game, I think.



galway_blow_in said:


> Find it extraordinary that someone could completely ignore fund movements in 2020,  did you manage the same feat of discipline in 2008 ?





Gordon Gekko said:


> I believe that’s the recipe for success; invest in global equities, ignore the media and world events, and then get on with life.



As a practice I record what I sell. So I know that I would have done better had I done nothing rather than sell and reallocate. A lesson that I learned from this year (and 2018 to a lesser extent), even though I knew that it was a good time to buy, I didn't pull the trigger, partly because of a lack of resources and partly because of the rapid comeback. As I am normally 100% in equities, it requires me to liquidate a holding in order to reallocate and its not something I can do well i.e. pick my underperformers out of my portfolio. So I solved my resources problem by (unpopular opinion alert) changing to margin account. Whether I pull the trigger in a similar circumstance will be the test!


----------



## Sarenco

Gordon Gekko said:


> I said “that’s how I think about my investment time horizon”


Well, your thinking is flawed in that case! 

Will you still think about an investment horizon of 75 years when you are 90 years old?

Of course you won't.


----------



## Gordon Gekko

Sarenco said:


> Well, your thinking is flawed in that case!
> 
> Will you still think about an investment horizon of 75 years when you are 90 years old?
> 
> Of course you won't.



You’re nearly there.

I think about my (hopefully) 75 year ‘investment journey’.

And it’s a world away from the people we come across navel gazing about individual companies are trying to time the Covid recovery.


----------



## Sarenco

Gordon Gekko said:


> I think about my (hopefully) 75 year ‘investment journey’.


Fair enough but "investment horizon" is a term used to identify the length of time an investor is aiming to maintain their portfolio before selling securities.

It's an important concept from an asset allocation perspective.


----------



## Gordon Gekko

Sarenco said:


> Fair enough but "investment horizon" is a term used to identify the length of time an investor is aiming to maintain their portfolio before selling securities.
> 
> It's an important concept from an asset allocation perspective.



I’m aware of that Sarenco...


----------



## Jim2007

Gordon Gekko said:


> What’s your basis for thinking that?



Thirst years plus working on projects in the area performance and attribution.



Gordon Gekko said:


> I’m amazed that you don’t think the base case for a 35 year investment in global equities is it doing “very well”.
> 
> And I believe you’re completely wrong to think that a balanced portfolio should outperform global equities over time. The opposite is the case.



Well admittedly we all started out working for Garry Brinson back in the day... but everyone I started out with did to better than the averages and we're all retired now in our mid 50s.


----------



## joe sod

I think the lesson from this thread or my takings from it anyway is that when you invest in  stock markets you have to be prepared to accept 30 and 40% falls in your portfolio values and these will now come rapidly and not react to them. The crash in March was the fastest in stock market history , but also the mini crashes in 2016 and 2018 were also very rapid, (so quick that they were forgotten about but obviously many investors got shaken out of the markets then aswell)
Sure even Warren Buffett made big mistakes selling airlines and banks at their lows back in April, then he buys barrick gold and sells half of it again a few months later. Whatever happened to "my favourite holding period is forever"


----------



## WolfeTone

There is a lot of fluff written about the efficiency of the market, about all known information already priced in, etc. This is true to a certain extent but nothing can account or quantify sentiment.
At the end of the day it is entirely plausible that traders may perceive different outcomes from the exact same piece of information. Or take different actions on the same considering any strategy they may have. It's why there are buyers and sellers.
It's why buyers and sellers pitch their prices outside the market price, they consider value to be at different points of the price scale despite having the exact same information.


----------



## Sarenco

It’s amazing that the S&P500 returned 18% in 2020.

Some rebound from the March lows.


----------



## Gordon Gekko

Sarenco said:


> It’s amazing that the S&P500 returned 18% in 2020.
> 
> Some rebound from the March lows.



Ask most people to predict the performance of the S&P when the planet is in lockdown and engulfed by a pandemic...I doubt many would pick +18%

-40%, -60%, -30% might be typical guesses


----------



## MrEarl

Out of interest, has anyone scratched under the surface of that S&P500 growth calculation, to see what the main drivers were?

In particular, I'm wondering what part Tesla played in the calculation, given it only joined the S&P500 on 21st December etc.


----------



## moneymakeover

Main drivers:
Interest rates and money supply
Printing of money in both USA and Europe
Powell reduced rates as demanded by Trump
Key part of Trump policy was to keep stock markets high
Also in pandemic main stocks to grow were internet/tech stocks, Facebook, Apple, Amazon, Netflix, Google


----------



## Gordon Gekko

I do think it’s gas that if Marty McFly had showed up in a DeLorean back in February 2020 and told someone what was about to happen, the person would probably have lost their shirt!


----------



## joe sod

What if he showed up in a Tesla in 2050, will it be like the DeLorean? maybe by then people  will be actually flying around in hoverboards given that we were supposed to be doing that by now. Instead we are confined to quarters by a virus the same as we were a century ago. It looks like the future just got pushed back into the em future


----------



## galway_blow_in

Tesla is unstoppable , i sold out at $670 , no regrets as i had a lot in it from $ 350 in september , it might well reach $2000 by the end of this year ? , good luck to those still riding the bubble


----------



## Cricketer

Daddy Ireland said:


> Heads up to you all now. I am advising to come out of the market/pensions tomorrow (despite losses aleeady incurred) especially those people within 5 years of retirement and get into cash for the foreseeable future. Unless a vaccine is found for this virus in the next several weeks the stock markets are going down way further.





Gordon Gekko said:


> If people “knew”, then equity-type returns wouldn’t be available because they’d be guaranteed and everyone would invest in equities! One can only look at previous shocks and events and lean on the crutch that is one’s time-horizon.
> 
> Where will markets be next week? I haven’t a clue.
> 
> Where will markets be next month? I haven’t a clue.
> 
> Where will markets be in 10 years’ time? I would bet my house that they’ll be higher than they are now.



I'm smiling in hindsight at these posts from March 2020. Has Gordon had the last - or only the most recent - laugh?


----------



## Brendan Burgess

Cricketer said:


> only the most recent - laugh?



All we can say is that it is the most recent laugh so far.

The stock market is there for the long term. 

Anything could happen, as he so rightly points out.

No one has bragging rights yet.

Brendan


----------



## joe sod

The lesson from March and 2008 though is that if you invest in stock markets and especially the most loved stocks of the day you have to be prepared for 50% falls. Aswell as that the reason the market recovered so quickly is because of massive money printing by all the major central banks. Most of this money went to governments and this is ending up in peoples bank accounts as PUP payments etc. Most of this money is new euros, dollars and pounds which people cannot spend because of the pandemic. Therefore it is ending up in the stock markets especially in the most loved stocks like Tesla , and in bitcoin. Nobody could have predicted that though back in march


----------



## Gordon Gekko

I’m not saying I did, but I do think that people could have predicted it.

What happened in 2008? We had a crisis, and the authorities intervened. They got it right in the US and eventually got it right in Europe after some early messing.

Fast forward to 2020, and we had a crisis. It was pretty obvious that the authorities would intervene. The playbook now is “whatever it takes”.

When you stand back from it, humanity has delivered in 2020. The financial system and governments have stepped up to the plate. And science plus capital have delivered hope in the form of the vaccines.

I think the lessons that were learned during the financial crisis have helped us as a species massively this year. Here in Europe, we didn’t have to wait for Goldman Sachs alumnus Super Mario to say “whatever it takes”. We just did “whatever it takes”.


----------



## SPC100

I think eurostoxx 50 and 600 are still below their Feb high as is the ftse.


----------



## Cricketer

Brendan Burgess said:


> I don't believe I can time the market, but it just seems mad at the moment. I won't back the conviction by taking it all out. But I have taken 25% out.


Are you still 25% in cash Brendan?


----------



## Brendan Burgess

Cricketer said:


> Are you still 25% in cash Brendan?



Yes.  

It's a strange experience.

Because I am still 75% in equities, I want to see the stock market go up.  But there is a tinge of regret that I sold out.

But overall, I don't really worry too much about whether the market is overvalued because I have moved some of it to cash.

Brendan


----------



## Gordon Gekko

I think you’re in a good place. If markets go up, you’re 75% invested, which is great.

And if they fall:

a) You took 25% out, more power to you
b) You can reinvest the 25%

The key thing is having the conviction to reinvest the 25%. The best approach would be to make it rules-based. For example, if markets come back 10% or 15% from their current level, you will redeploy your 25%, no questions asked. If you don’t make it rules-based, everyone has a tendency to procrastinate and do nothing out of fear that markets will fall further.


----------



## Brendan Burgess

Gordon Gekko said:


> The key thing is having the conviction to reinvest the 25%.



This is the real difficulty. 

When one is fully invested, there is a nervousness about how high the markets are. 

I am very easy about the markets now.  

Brendan


----------



## Cricketer

Brendan Burgess said:


> I am very easy about the markets now


Nervousness - 25% = Easy


----------



## galway_blow_in

SPC100 said:


> I think eurostoxx 50 and 600 are still below their Feb high as is the ftse.



hardly surprising ?

both over exposed to banks and energy which are miles off pre covid drop


----------



## joe sod

A year ago today marked the end of the end of the corona panic sell off, some markets were down 30 to 40% remember easily forgotten now also the tech stocks went on to make massive gains benefitting from the "stay at home" theme. Unfortunately all of the interesting real time posts that were put up in those weeks in march have been edited out by moderators thereby deleting a valuable record of how investors react when their investments are collapsing and how difficult it is to actually not react to the news. I dont understand why this specific thread has been heavily edited but very little else has.


----------



## galway_blow_in

up 4% year to date , happy enough , ive only three positions , two irish companies and one well known american E commerce company 

gained 9.65% in 2020 which was good and almost all down to a particular EV company turning things around for me but an irish bank also delivered , was still under water as late as August 1st of last year


----------



## RedOnion

joe sod said:


> Unfortunately all of the interesting real time posts that were put up in those weeks in march have been edited out by moderators


There are a few other threads that might contain the interesting posts you're referring to?





__





						Coronavirus and the markets
					

The coronavirus makes the markets more democratic.  There are no experts.  There is no advantage accruing to drivers of supercomputers.  The market has priced in all available information, but the market has no experience in pricing something like this. Price is driven by emotion, a cool head is...



					www.askaboutmoney.com
				








__





						Time to buy in
					

With global markets suffering their biggest weekly losses since the crash is it time to consider buying in?



					www.askaboutmoney.com
				








__





						Longest Bull Market in History
					

I think it's worth noting that as of yesterday, 22 August 2018, the S&P500 recorded its longest bull market in history - 3,453 days without a correction of 20% or more.  I don't think that constitutes actionable information but it's interesting nonetheless.



					www.askaboutmoney.com
				








__





						My shares are down 30% - what should I do?
					

My fund has lost 10% in the last week. Do I say stop and cash out now or sit tight?



					www.askaboutmoney.com


----------



## jim

joe sod said:


> A year ago today marked the end of the end of the corona panic sell off, some markets were down 30 to 40% remember easily forgotten now also the tech stocks went on to make massive gains benefitting from the "stay at home" theme. Unfortunately all of the interesting real time posts that were put up in those weeks in march have been edited out by moderators thereby deleting a valuable record of how investors react when their investments are collapsing and how difficult it is to actually not react to the news. I dont understand why this specific thread has been heavily edited but very little else has.


Thats interesting  who would have edited that information and why? I agree that they would have provided a great record of investor sentiment at the time.


----------



## Brendan Burgess

joe sod said:


> Unfortunately all of the interesting real time posts that were put up in those weeks in march have been edited out by moderators thereby deleting a valuable record of how investors react when their investments are collapsing and how difficult it is to actually not react to the news. I dont understand why this specific thread has been heavily edited but very little else has.



Hi Joe

May I suggest that you read the thread title? 

"My shares have fallen 30% what should I do?" "Is this a good time to invest in the stock market?"​This is a practical thread and it would have been no use at all to anyone who was genuinely worried to wade through multiple pages of duplicate stuff. 

I think you will find quite a few threads which went to multiple pages, where I or someone else , summarised the thread, and later deleted the posts.

But to help you in researching your paper for the Irish Society of Conspiracy Theorists Annual Conference, I will, when I get time, make a copy of this thread and undelete all the posts so you can wade through the stuff yourself. 



Brendan


----------



## joe sod

@Brendan Burgess I take your points, I'm not suggesting conspiracy theories or anything like that I just think that one of the big benefits of internet forums is that they record peoples reactions as major events are happening. One of the crucial aspects to investing in stock markets is to hold your nerve when major upheavals happen, that is easy when everything is normal but early march 2020 was not normal and this thread was a record of that, thats all.
Maybe doing editing on very old stuff from a decade ago might be a better idea, but its your creation (askaboutmoney) and a very good one at that


----------



## NotMyRealName

Well here's my view, albeit late, on the OP's predicament. 

 January 2020, with no greater insight than I thought markets may drop, I considered converting my entire pension pot into a rollover cash fund and sucking up the 1% AMC and the -0.5% fund performance ( and prevailing inflation) as I had only 4 years to NRA and to protect my 25% lump sum value, to some extent.  This thinking did not have deep economic research etc.....it was just a view. I thought, that in the event of a correction ( unknown unknowns) I'd be disciplined and buy back in. I thought of maybe a 10% correction or more..... And also that a subsequent ARF would have a longer timeframe for overall appreciation
I didn't act...( Inertia)
I watched a 20% + fall in my pot value ( even allowing for its "balance and diversity") but consoled myself with my 4 year horizon. I've often thought of anyone who realized their lump sum around March last year....
So today, not only have the steep "losses" been reversed, but the pot has tagged on another 6% or so....
And I have another opportunity to do what I considered in Jan 2020..... and with only 3 years to NRA I have not made a decision on that yet..... This is part of the psychology involved. 

I have not read back the thread but hope the OP sat tight...

My view in Jan 2020 and March 2021 is the same though, about markets. They're skittish and when a stampede starts diversification doesn't matter a jot... everything gets sold.
 There's no point trying to identify the possible reasons for a stampede to sell.....or for that matter, a surge to buy..
Sometimes, when you need to protect your sanity you need to leave when the party is in full swing


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## Marc

Always interesting to revisit these subjects a year later and see the wide range of opinions and advice about what people should do during perfectly normal market events.

By “perfectly normal” I mean that a 30% drop is well within historical norms and should be absolutely expected.

I have revisited the advice we gave to our clients on the 24th March last year (which just happened to be almost the exact bottom of the market) and which was to dial up equity exposure slightly and in particular to increase exposure to smaller companies and value stocks.









						Coronavirus one year on - Everlake
					

We don't subscribe to any market timing strategy because we don't possess a crystal ball but from time to time it is clearly appropriate for a nudge on the tiller and to trim the sails.....




					globalwealth.ie
				




No crystal ball just market history and fundamentals providing a reasonable guide


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## NotMyRealName

Just to be clear, I wasn't offering advice.....just explaining my turbulent thinking.....

However, a question.....

"_Even if you had been unlucky and bought at the very top in September 1929 you would still have averaged 1.86%pa taking in the Great Depression and World War II. To put that into context today that's about 18 years interest from the bank each and every year!"

What would money on deposit, or in bonds have done over the 15 years p.a. versus 1.8% because it's not 1.8% p.a. versus todays return that would count.....or is that thinking flawed?

Also, I'm hoping we don't have to hope for a World War-like event for explosive growth if a crash happens 







_


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## Brendan Burgess

joe sod said:


> I dont understand why this specific thread has been heavily edited but very little else has.





joe sod said:


> I'm not suggesting conspiracy theories



I don't see how you are not suggesting something underhand. That while this thread was heavily edited, few other threads have been.

Anyway, it was a huge amount of work so far, and  I have done the easiest bit. 

Is that enough you give you the insight you need?

Brendan


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## joe sod

Touche


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## Marc

NotMyRealName said:


> Just to be clear, I wasn't offering advice.....just explaining my turbulent thinking.....
> 
> However, a question.....
> 
> "_Even if you had been unlucky and bought at the very top in September 1929 you would still have averaged 1.86%pa taking in the Great Depression and World War II. To put that into context today that's about 18 years interest from the bank each and every year!"
> 
> What would money on deposit, or in bonds have done over the 15 years p.a. versus 1.8% because it's not 1.8% p.a. versus todays return that would count.....or is that thinking flawed?
> 
> Also, I'm hoping we don't have to hope for a World War-like event for explosive growth if a crash happens _




Its a good point. Here is the data for inflation, T Bills and short term bonds over that period compared to US Equities









Source: Ibbotson data courtesy of © Stocks, Bonds, Bills and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated works by Roger C. Ibbotson and Rex A. Sinquefield).Currency: USD Copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.


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## joe sod

galway_blow_in said:


> up 4% year to date , happy enough , ive only three positions , two irish companies and one well known american E commerce company
> gained 9.65% in 2020 which was good and almost all down to a particular EV company turning things around for me but an irish bank also delivered , was still under water as late as August 1st of last year


Do you still own the bank shares , they have really only performed strongly in the last month or so. Also explains why the iseq has had such a great month , banks still dominate the index. There appears to be a rotation out of us and tech stocks back to the unfashionable sectors like banks as the vaccine rollout cranks up and the "old economy " come back to life


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## NotMyRealName

Great work Marc, I tip my hat to you. I did not know the answer to my question when I posed it, but baselines are important when making comparisons.

I'm glad the OP is back in positive territory again although there is a difference between 1 year return and Year to date...

The OP could pose the question again.....this time asking
....."_My shares are up 4% ,what should I do?" _

That's when the psychology reveals itself.
One of the reasons that timing markets doesn't work is that we may not accurately evaluate ,or accept ,what a reasonable profit is. So when it's there, we don't take it.....we think it can be more.
The problem is that markets "take the escalator up and the elevator down". I can imagine ( not identify... _imagine _) many possible causes for a market drop.....MANY.. although it probably won't be one of them....if it happens.
I can't think of 1 event that would cause a market surge of of a similar magnitude ( say 20% or so) in a single day.

I don't know what the OP's investment timeline is but that's important.

I have a conflicted view on all of this as I have significant market exposure through pension and ETFs but I also have a good cash reserve fund.


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## galway_blow_in

joe sod said:


> Do you still own the bank shares , they have really only performed strongly in the last month or so. Also explains why the iseq has had such a great month , banks still dominate the index. There appears to be a rotation out of us and tech stocks back to the unfashionable sectors like banks as the vaccine rollout cranks up and the "old economy " come back to life



No, i dont , im content to have done what i did with the bank in question , it doesnt pay a dividend where as the REIT,s im in do , the e comerce company does not but the growth is so good , i dont mind


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## joe sod

NotMyRealName said:


> 'm glad the OP is back in positive territory again although there is a difference between 1 year return and Year to date...


there was no "original poster" to this thread it was basically a reboot of another thread where investors were worried about the carnage on the markets in early march 2020, it was the fastest stock market sell off in financial history , the hot areas of the markets like Tesla and bitcoin had the biggest falls I remember. But there was no refuge because even "safe" government bonds started selling off aswell that was probably the reason the central banks stepped in so fast.


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## cremeegg

galway_blow_in said:


> up 4% year to date , happy enough , ive only three positions , two irish companies and one well known american E commerce company
> 
> gained 9.65% in 2020 which was good and almost all down to a particular EV company turning things around for me but an irish bank also delivered , was still under water as late as August 1st of last year



With just 3 stocks your position is very risky. I suspect you know that.

The MSCI return in 2020 was 15.9% so your 9.65% was a very poor return. I wonder was the risk you took justified.


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## galway_blow_in

cremeegg said:


> With just 3 stocks your position is very risky. I suspect you know that.
> 
> The MSCI return in 2020 was 15.9% so your 9.65% was a very poor return. I wonder was the risk you took justified.



It wasn't a poor return as had I held the three stocks I started with on January 1st to December 31st ,I'd be looking at an even lower return,  owning the market is difficult in Ireland due to fund rules


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## cremeegg

galway_blow_in said:


> It wasn't a poor return as had I held the three stocks I started with on January 1st to December 31st ,I'd be looking at an even lower return,  owning the market is difficult in Ireland due to fund rules


I don't understand ?


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## galway_blow_in

cremeegg said:


> I don't understand ?



i began the year ( january 1st ) with three particular stocks which i bought towards the end of 2019 , had i simply held on to those stocks through 2020 , i would not have achieved a 9% performance.

on owning the MSCI index , i realise it outperformed my choices but the rules around owning funds in Ireland make that option unattractive to me as i cant put gains against past losses as that is not allowed with irish domiciled funds


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## cremeegg

I was suggesting the return on the MSCI as a benchmark rather than as a alternative investment.


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## galway_blow_in

cremeegg said:


> I was suggesting the return on the MSCI as a benchmark rather than as a alternative investment.



OK,  are you clear now otherwise?


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## joe sod

The last year especially 2021 has been the best period ever for me with investments, not in terms of performance but in terms of absolute gains . I havn't bought or sold that much since before the corona but all my investments have got revalued upwards. I missed out on alot of the revaluation after the corona sell off as I wasn't invested that much in the US technology boom, although I did benefit from investing in the "old tech " revaluations after 2011 when the dot com techs like Microsoft, Intel and Cisco got revalued. In the last year the hated banking stocks and financials along with energy Europe and UK markets are finally getting the big uplift as the "great rotation" theme now has the big wind in its sails.
However the corona sell off of March 2020 hit my portfolio very hard as I was overweight in all the above areas and had little US tech exposure, just shows its best not to react to markets when they go crazy. But March 2020 was a violent sell off its easy to forget that now because it was all over so fast


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## moneymakeover

There was a thread, unfortunately closed, "the longest bull market in history"

My question, there is "noise" now in the markets and a recent 3% drop, I'm wondering is the bull market due to reverse?

The factors I see are: fed printing and easing make it impossible for markets to reverse, essentially inflation has pushed up stocks irreversibly.

On the other hand inflation is coming along with interest rate rises: will that cause the stock market to drop?

Say if fed increases interest rates, then there will be sell off in bonds? Even more reason to be in equities?

Thinking of say pension, is there a reason to rethink portfolio?


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## Steven Barrett

moneymakeover said:


> There was a thread, unfortunately closed, "the longest bull market in history"
> 
> My question, there is "noise" now in the markets and a recent 3% drop, I'm wondering is the bull market due to reverse?
> 
> The factors I see are: fed printing and easing make it impossible for markets to reverse, essentially inflation has pushed up stocks irreversibly.
> 
> On the other hand inflation is coming along with interest rate rises: will that cause the stock market to drop?
> 
> Say if fed increases interest rates, then there will be sell off in bonds? Even more reason to be in equities?
> 
> *Thinking of say pension, is there a reason to rethink portfolio?*


Are you trying to time the market? 

When using projections for future growth of equities, we use 5% - 6% annualised return. the last 10 years has an annualised return of 14.33%. There is bound to be some falls and returns will reduce more in line with their long term mean, which still produces good returns. 

If you want to protect what you have, you should create a sale point on all of your investments and when it has made a certain gain, sell it and stick it in cash. Otherwise, you are guessing when you hit the top of the market. Central banks buying bonds has changed the rules of the game too. Covid shutdown should have caused a recession but it didn't because of bond buying and PUP payments. Will the next big event get a bailout too? Who knows. We don't know what it is yet. 


Steven
www.bluewaterfp.ie


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## Marc

moneymakeover said:


> There was a thread, unfortunately closed, "the longest bull market in history"
> 
> My question, there is "noise" now in the markets and a recent 3% drop, I'm wondering is the bull market due to reverse?
> 
> The factors I see are: fed printing and easing make it impossible for markets to reverse, essentially inflation has pushed up stocks irreversibly.
> 
> On the other hand inflation is coming along with interest rate rises: will that cause the stock market to drop?
> 
> Say if fed increases interest rates, then there will be sell off in bonds? Even more reason to be in equities?
> 
> Thinking of say pension, is there a reason to rethink portfolio?

















						Time in the Market, not Timing the Market - Everlake
					

When should I invest? The answer is always now because investors are rewarded for time IN the market not timing the market.




					globalwealth.ie


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## moneymakeover

My own basic understanding of the pros and cons currently

Cons
Energy issues, gas prices, China crisis
Climate change feeding into energy crisis
US government uncertainty Ruth the debt ceiling
US disagreement about the infrastructure spend 1.5 trillion/3.5 trillion
Tapering of fed purchases
Increase US, UK, euro interest rates from low base.
5 years of solid 14% annual stock market. Must be time for a change
Still in pandemic
Chip shortages
Supply chain issues

Pros
Huge amount of cash in the system. Has to go somewhere.
General global political stability
Low interest rates
High demand for goods
Strong labour supply (from pandemic unemployed)


Overall I'm leaning towards continued stock market gains. The pros still outweigh the cons. That could change.


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## joe sod

But you must be prepared for rapid sell offs like what happened in March 2020, falls of 30% and more. We are talking about an energy crisis now and shortages of gas and petroleum and rising prices. Last year we briefly had a "negative" oil prices due to traders needing to dump it at any price. There were ridiculous headlines like "The End of Oil" and energy company shares were selling for ridiculous prices, how silly and premature that looks now. But I bet many investors dumped energy stocks back then based on those headlines.


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