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

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
 
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!
 
Gordon Gekko said:
Yep, hopefully 75 years.
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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.
 
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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.
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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”.
 
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
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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 ?
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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.
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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 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.
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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.
 
Gordon Gekko said:
I think about my (hopefully) 75 year ‘investment journey’.
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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.
 
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.
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I’m aware of that Sarenco...
 
Gordon Gekko said:
What’s your basis for thinking that?
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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.
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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.
 
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"
 
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.
 
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Sarenco said:
It’s amazing that the S&P500 returned 18% in 2020.

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