galway_blow_in
Registered User
- Messages
- 2,020
Only if they've exclusively invested in the U. S market
European markets are below 2007 levels
Copy of "My shares have fallen 30%, what should I do?"
- Thread starter Brendan Burgess
- Start date
- Status
Only if they've exclusively invested in the U. S market
European markets are below 2007 levels
elacsaplau
Registered User
- Messages
- 892
Well, if that's the case - great!
Presumably, you are aware of the on-going debate whereby certain posters recommend all-in equity for ARFs? Such folk would triumphantly make comments like the following...…."I don't want 30% in defensive assets which pay nothing - as 6% of 30% is an annual loss of 1.8% and I ain't paying that brother for a better night's sleep!"
On many occasions, I warned against such silliness - often a pretty lonesome voice. There were a few notable and to be commended exceptions. I do not recall you being one. Indeed, I seem to recall you being an all-in equity in retirement man. Is that fair? Anyway and also, the advocates of such silliness seemed completely deaf to any risk warnings.
Whatever the case, so long as folk realise that all-in equity in retirement is a very, very dodgy play, I'm relaxed!
To answer your question, the context and meaning of "complete meltdown" were clearly explained in post #8...….
Have a look at 'total return' rather than just price index.
And being invested exclusively in European shares wouldn't even start to be diversified.
JSnowWinterfell
Registered User
- Messages
- 64
There is an emotional aspect to consider, it is very hard to sell a portfolio that is 30% down, especially on a portfolio of substantial size. Equally, it is difficult to look rationally and objectively at the market when it is returning almost 30% in a year (S&P 2019). It is very easy to post on this forum the approach taken but I doubt anyone invests with zero emotion.
The warning signs of this crash were there to be seen, we just chose to ignore and I include myself. I read an article published on reuters three weeks ago that talked about how there was a flight to quality after the initial Covid outbreak in China but US stocks were still going up. It showed when this happened before a sharp decrease followed. The rational was that US stocks have been the biggest winner over the last 10 years, and nobody wants to give that up (herd mentality). I read it, but I didn't react.
I am sure we have all watched 'The Big Short' there is a focus on two Hedge Fund managers who identified the problem and bet against the market. I wouldn't call this predicting the market, but it is people using evidence and taking a view. That view may prove to be wrong, or it may be wrong for a long time.
The warning signs of this crash were there to be seen, we just chose to ignore and I include myself. I read an article published on reuters three weeks ago that talked about how there was a flight to quality after the initial Covid outbreak in China but US stocks were still going up. It showed when this happened before a sharp decrease followed. The rational was that US stocks have been the biggest winner over the last 10 years, and nobody wants to give that up (herd mentality). I read it, but I didn't react.
I am sure we have all watched 'The Big Short' there is a focus on two Hedge Fund managers who identified the problem and bet against the market. I wouldn't call this predicting the market, but it is people using evidence and taking a view. That view may prove to be wrong, or it may be wrong for a long time.
Investadvice
Registered User
- Messages
- 22
Let's wait a few months and see where said punter is.
Outside of the FANGS who mostly have positive net cash positions the rest of the stock market inflated prices through debt funded share buy backs.
The US economy has been built over the decade investing 5% of GDP for 3% growth.
So yeah the people who stayed in the market doubled their money up to end of Feb, I expect by end of June they may be back where they started.
On the other hand if they had jumped at end of Feb they would have double the in the bank.
galway_blow_in
Registered User
- Messages
- 2,020
i know that and i didnt imply anyone should be exclusively in the european market ,i mean that only someone who avoided everything bar the U..S market is up 100% since 2007
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.
so you needed to be diversified by investing in the "overvalued" US market, even though on many posts here today people are saying it was obviously over valued and was the "longest bull market in history". So if you deliberately chose to reduce your exposure to the US markets and increase exposure to the rest of the world, that was still wrong , right.
So the only correct strategy then was not invest in the US, not invest in Europe, not invest in UK, not invest in emerging markets but stay in cash for the last 5 years, but what cash, euros, pounds or dollars, and this is the very cash that the worlds central banks have been printing trillions of since the financial crash.
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.
Did you read the context of the post? The period since 2007. So the US market has been overvalued the entire time?
Yes, but even if you invested exclusively in European stocks, you're still up. Significantly.
You need to look at total return indexes, not just price. Large Cap European stocks pay higher dividends than US stocks. Lots of large European companies were removed from indexes, when they were bought by US companies. So a price index doesn't show the full story.
Brendan Burgess
Founder
- Messages
- 53,770
Hi Duke
I have amended the first post to include your Camp. Am I summarising it ok?
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.
I have amended the first post to include your Camp. Am I summarising it ok?
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.
Duke of Marmalade
Registered User
- Messages
- 4,596
I could never have put it so eloquently.
Gordon Gekko
Registered User
- Messages
- 7,848
I will always be invested 100% in equities because we’ll have a material level of DB already. Clearly that’s not for everyone.
Gordon Gekko
Registered User
- Messages
- 7,848
I’m talking about someone who’s globally invested, where the US represents the bulk (50-60%).
Gordon Gekko
Registered User
- Messages
- 7,848
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.
elacsaplau
Registered User
- Messages
- 892
I don't recall the DB element being mentioned previously - That means you are not "all-in" equity with your retirement saving. As I pointed out in #14, I am referring to folk who absolutely or predominantly depend on their ARF. Anyway, hopefully, this message is done, once and for all, now.
There are no easy answers here. An investment plan, drafted in calm waters, may seem reasonable at the time of drafting. When the storm comes, folk will react differently. Some will be sanguine, others will panic. Having a plan is one thing, how one reacts when punched on the nose, another - i.e. one only discovers one's true risk tolerance during the storm. Also, this storm may be different to previous ones?!
Gordon Gekko
Registered User
- Messages
- 7,848
The DB element is not mine. But the key to a 100% equity strategy is conviction; if times like now make you nervous and have you questioning the plan, then perhaps the plan’s not for you.
The “maybe this storm is different” narrative is a dangerous one. Different to what? 9/11, the Global Financial Crisis, the Cuban Missile Crisis, World War II? Markets will recover.
The “maybe this storm is different” narrative is a dangerous one. Different to what? 9/11, the Global Financial Crisis, the Cuban Missile Crisis, World War II? Markets will recover.
- Status