Copy of "My shares have fallen 30%, what should I do?"

Brendan Burgess said:

Hi Willow

I don't think so.

Most people will have the option of moving from a pension into an ARF on retirement, so there will be no need for them to exit the market.

It would be a different matter if you were obliged to buy an annuity.

Brendan

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Sorry Brendan, I put that badly. I don't want to exit the market. What I meant to ask was if it was wise to switch funds now, amid this Covid-19 crisis, from equity based to a less risky option such as a fund based primarily on bonds and cash. (Is this the same as exiting the market?) Bearing in mind in my case the fund dropped in value by appx 40k in three weeks and looks set to continue free falling for a considerable time. It looks as though while efforts to contain the virus intensify, markets continue to drop. It may take a number of years to recoup losses. Am I right that conventional wisdom still applies and still do nothing because when/if I buy an ARF in say 18 months, markets will probably 'rectify' the losses?

Littlewillow said:

Am I right that conventional wisdom still applies and still do nothing because when/if I buy an ARF in say 18 months, markets will probably 'rectify' the losses?

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Hi Willow

Sorry, but you will just have to read the different opinions on this thread. There is no conventional wisdom.

I set out 3 camps in the first post.

Exiting the market means switching out of equities.

Brendan

Thanks Brendan. I understand now - just a little unclear about the timeframe, (we are always reminded pensions investment is a long term endeavour) which is why I originally tried to post the question in the pensions forum but got deleted.

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.

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.

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?

What has happened with the Chinese market? It was hammered, then they took steps to get the virus under control, and then their market recovered.

Listen to the experts.

Gordon Gekko said:

What has happened with the Chinese market? It was hammered, then they took steps to get the virus under control, and then their market recovered.

Listen to the experts.

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I checked the SSE index. It never actually got hammered but in any event it is now at its lowest point in 6 months. Point me in the direction of your experts please.

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