Fall in stock markets and Investment decision

G

Gorteen

Registered User
Messages
80
Given the news today of a fall in global markets including US, Japan, Europe and recent large scale selling of stock by Warren Buffet to reduce exposure to equities, it is assumed these are indicators of a pending recession.

I was about to invest a significant amount (€200k approx) in an actively managed fund, possibly the Goodbody Dividend Income 4 fund. Is now a good time to complete this investment or is there merit in holding off for the moment? Interested in hearing peoples views...
 
Sounds like trying to time the market to me, which might work out well, or might not...
All we can say for sure is it's a better time to buy than last week - but who knows if this is a temporary dip or not.

There's almost certainly a bigger market "correction" ahead, but who can be sure when this is or what the bottom will be.

Consider dollar cost averaging your lump sum in over the next 12 - 18 months?
 
Stay cool and don't panic. Just watch. Everything will bounce back in a while.
I don' think this is a big melt down. The stock exchange used to be a good indicator decades ago how the economy will perform in a few months ahead. Unfortunately that is no more- the stock exchange has become a gambling hall and is beyond every rule we learned when we were young.
Gold used to be a good indicator as well. It fell by about 85 dollars today- so nobody was looking for a safe harbour. Gold was pumped up in the last few months. It is a big bubble. If you have a lot of it- get rid of a good bit to save your profit- unless you want to take part in the next hausse. Peak Gold is over for now- until it is pumped up again!
Nothing is real anymore- it is all a big show.
 
Gorteen said:
I was about to invest a significant amount (€200k approx) in an actively managed fund, possibly the Goodbody Dividend Income 4 fund. Is now a good time to complete this investment or is there merit in holding off for the moment? Interested in hearing peoples views...
Click to expand...
No one rings a bell to mark the bottom of a rout (sadly).

I've always heard the mantra time in market rather than timing the market but suppose this is as good a time as any.
 
Gorteen said:
Warren Buffet to reduce exposure to equities, it is assumed these are indicators of a pending recession.
Click to expand...
Buffet is no longer a great sage , he has made a few mistakes and doesn't actually follow what he says like buying forever. He has been sitting in cash and bonds for years now, he missed out on the technology revolution belatedly investing in apple late in its evolution and now selling half his holdings. He also sold out of airlines at a big loss during the covid slump and missed out on the big rebound. He sold tesco shares a decade ago also at a loss during its slump and missed out on its big rebound. He has jumped in and out of oil stocks but missed the huge increase in value of oil stocks since russian invasion. So he doesn't do as he says holding on to stocks for the long term
 
Gorteen said:
I was about to invest a significant amount (€200k approx) in an actively managed fund, possibly the Goodbody Dividend Income 4 fund. Is now a good time to complete this investment or is there merit in holding off for the moment? Interested in hearing peoples views...
Click to expand...
If you are investing in an actively managed fund, you have already made the decision that the fund management team are best placed to manage your investment on your behalf until you decide to cash in. So if you are having second thoughts now on the ability of the management team in the current investment climate, will you really ever be happy that they are acting on your best interests? If you go actively managed you are making the assumption that the funds will achieve higher returns than passive index following, but with the same risk as your benchmark index. Otherwise you would just buy an index tracker, but with lower costs. So are you happy the actively managed route is for you? If you are, and by anybody's standards 200k is a lot of money to invest in one team's ability to manage your money successfully, you could e.g. consider investing in say two funds, or in two funds and an index tracker; or just trackers?
 
Last edited:
PMU said:
If you go actively managed you are making the assumption that the funds will achieve higher returns than passive index following, but with the same risk as your benchmark index.
Click to expand...

It's a mixed asset fund, which had just 70% in equities (20% Bonds) at the end of June. It has an ESMA risk rating of 4 (on a scale of 1 - 7).
 
For what it’s worth, here’s the strategy I used to invest a lump of cash into the markets.
It was cash transferred into a DC scheme.

You decide your ESMA risk rating (volatility rating) that you are comfortable with. Able to sleep with.

I read that statistically to long term invest, it would be better to invest in one lump sum.
Time in the market.

However, psychologically, I would be more comfortable ‘dollar cost averaging’ into the market.
Getting closer to an average buy price over a period of time. More sleep.
So I went ‘each way’.

I invested 40% of the cash straight up. Say 80k of 200k.

I then planned on investing 10k of the cash balance each month. Over the next twelve months.

However, if the fund price dropped 5% or more during the month I brought forward the next transfer.

Took a bit of monitoring and recording but I enjoyed it.
 
My concern is how geographically exposed i am, as an Irish investor. I’m exposed to big tech via simply living here and dependent on our economy (see Irish times 10th august 24 “Ireland’s unbalanced economy”)

… and if I’m “savvy” and invest in diversified global equities too, these are often in reality comprises of 60% US tech. So without ever choosing “tech stocks”, what happens in that sector has massive effects. Options ?
 
Southwesterner said:
My concern is how geographically exposed i am, as an Irish investor. I’m exposed to big tech via simply living here and dependent on our economy (see Irish times 10th august 24 “Ireland’s unbalanced economy”)

… and if I’m “savvy” and invest in diversified global equities too, these are often in reality comprises of 60% US tech. So without ever choosing “tech stocks”, what happens in that sector has massive effects. Options ?
Click to expand...

Not necessarily an Irish problem. The S&P500 is dominated by 6/7 tech stocks. The sell off was started in Japan, so it just shows how interconnected financial markets are.

It just goes back to basics of portfolio management. Stock markets are riskiest, bonds next and cash least risky.

Invest only a portion of your portfolio in stock markets. To reduce risk in equities the option was to invest in indices but that dynamic is changing given the dominance of a few stocks within the s&p500.

However if there is a global sell off there's not much that can be done if you're solely invested in that asset class.
 
Southwesterner said:
My concern is how geographically exposed i am, as an Irish investor. I’m exposed to big tech via simply living here and dependent on our economy (see Irish times 10th august 24 “Ireland’s unbalanced economy”)

… and if I’m “savvy” and invest in diversified global equities too, these are often in reality comprises of 60% US tech. So without ever choosing “tech stocks”, what happens in that sector has massive effects. Options ?
Click to expand...
That’s an astute observation.
 
If you want to reduce tech and/or US concentration, there are other indexes that you could invest in such as MSCI Europe, MSCI Emerging Markets or US Small Caps etc. They have all underperformed in comparison to S&P500 or MSCI World in the last few years (especially emerging markets, dragged down by China's woes). But who knows what the next few years will bring.
 
Persius said:
If you want to reduce tech and/or US concentration, there are other indexes that you could invest in such as MSCI Europe, MSCI Emerging Markets or US Small Caps etc. They have all underperformed in comparison to S&P500 or MSCI World in the last few years (especially emerging markets, dragged down by China's woes). But who knows what the next few years will bring.
Click to expand...
Thanks Persius for this. My interest is long-term passive investing in balanced index, because I understand that this generally performs well, if one has long enough to wait, and can rebalance portfolio when it makes sense to do so. I appreciate these suggestions.

And on reflection: even if the next few years bring turbulence in tech, it is likely to come back eventually. I imagine that even if tech is in for a rough ride, it is still the sector that 'provides the shovels' (as per the gold rush analogy) to the changing world we are living in.
 
Southwesterner said:
And on reflection: even if the next few years bring turbulence in tech, it is likely to come back eventually. I imagine that even if tech is in for a rough ride, it is still the sector that 'provides the shovels' (as per the gold rush analogy) to the changing world we are living in.
Click to expand...
But you must remember "eventually " can be a very long time, tech was also steam engines, railways, internal combustion engines, telegraphy. People seem to put the information technology sector as exclusively "tech" . The companies or even sectors making the "shovels" now might be only really producing shovels in the future metaphorically speaking. In other words their "tech" just becomes a commodity, look at intel, IBM, Nokia etc , they were producing the "shovels " of tech 20 years ago now they are only producing shovels
 
Southwesterner said:
My concern is how geographically exposed i am, as an Irish investor. I’m exposed to big tech via simply living here and dependent on our economy (see Irish times 10th august 24 “Ireland’s unbalanced economy”)
Click to expand...


I think you are more at risk from the high taxation and spendaholic policies of Irish politicians causing an economic crash, than from the possible withdrawal / reduction of foreign investment in Ireland. But you have the option to spread your risk and invest in successful businesses elsewhere in the eurozone, by e.g. buying a Eurostoxx tracker and / or a eurozone managed fund (e.g. as sold by Zurich).


Southwesterner said:
… and if I’m “savvy” and invest in diversified global equities too, these are often in reality comprises of 60% US tech. So without ever choosing “tech stocks”, what happens in that sector has massive effects. Options ?
Click to expand...
In relation to this point, you might find it profitable to read the article in last Saturday’s (10 Aug) (UK) Times. Here the deputy financial editor Holly Mead suggested investing in a global tracker if you are uncomfortable with uncertainty. You can read it all here: Why I’m putting all my money in just one global tracker fund (thetimes.com)
 
VWCE and chill…
Holding that fund, you can already see it adjusting its holdings as time goes on - e.g. MSFT overtaking AAPL by market cap. If big tech declined over time, or the EU grew, similar reallocation would happen.
 
That sell off August 5th was all about the " carry trade " in yen, a bunch of funds had to sell to cover losses

I bought more of ATT ( Allianz investment technology) that day, I think it's a really decent growth vehicle
 
You must log in or register to reply here.
Back
Top