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

Cricketer said:

only the most recent - laugh?

Click to expand...

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

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

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”.

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

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.

Click to expand...

Are you still 25% in cash Brendan?

Cricketer said:

Are you still 25% in cash Brendan?

Click to expand...

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

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.

Gordon Gekko said:

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

Click to expand...

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

Brendan Burgess said:

I am very easy about the markets now

Click to expand...

Nervousness - 25% = Easy

SPC100 said:

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

Click to expand...

hardly surprising ?

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

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.

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

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

Click to expand...

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

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.

Click to expand...

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.

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.

Click to expand...

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

@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

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

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.


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

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

joe sod said:

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

Click to expand...

joe sod said:

I'm not suggesting conspiracy theories

Click to expand...

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