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

Gordon Gekko said:
We are through the worst of it and things will slowly return to normal. It’s estimated that it will cost the Exchequer €15-20bn. A lot of money but backstopped by Europe and stuck on the never-never at 0%, is it really that big a deal?

Yes we might have 25% unemployment but people quote that like it’s a surprise; we’ve chosen to do that to save lives. Those jobs will return in the main.

I believe that the global economy and the Irish economy will thrive in the aftermath of this; the errors in 2009-11 around austerity etc won’t be repeated.
Click to expand...

An opinion backed up by some detailed reasoning. Be careful the next thing you know people will be accusing you of making predictions or claiming to be an expert.;)

The is a very satisfying post Gordon, I can see what you think and why you think it. Any reader can improve their own ideas by considering your points.

I hope that you are correct in saying that the jobs will return. My concern would be that they will not return in the short term and that they will be different jobs requiring different skills when the do return.

It is not that I dont think that the world will recover, it is that the markets dont reflect how bumpy the ride will be. Negative oil prices ??
 
This thread got alot of posts during the market panic of march/april 2020, the fastest sell off and recovery in history. The recovery has been very narrow dominated by the US tech giants with much of the global markets still down significantly from january 2020, however the predictions that the rapid recovery of march were a short term bounce have not been borne out, bear market rallies dont last so long. The bond markets were not the safe haven of previous bear markets with government bonds also selling off heavily by mid march in the rush for cash, this was actually the real reason why the central banks intervened so rapidly.
 
Hi Joe

The future is uncertain.

I don't think that we can say that we were right not to sell off and really won't know for some years to come.

Brendan
 
joe sod said:
The recovery has been very narrow dominated by the US tech giants with much of the global markets still down significantly from january 2020,
Click to expand...
Global stocks have gained about 30% over the past two months, from their low on 23 March, as measured by the MSCI World Index. That's hardly a "narrow recovery".
joe sod said:
The bond markets were not the safe haven of previous bear markets with government bonds also selling off heavily by mid march in the rush for cash, this was actually the real reason why the central banks intervened so rapidly.
Click to expand...
Euro Government Bonds delivered a positive return when stock prices were plummeting back in Feb/March. So, bonds did indeed prove to be a safe haven during this period.

In any event, this tells us nothing about the future.
 
Brendan Burgess said:
The future is uncertain.

I don't think that we can say that we were right not to sell off and really won't know for some years to come.
Click to expand...
Yes but I think all precedents have been broken in the last decade therefore trying to predict the future based on precedents from past crashes or booms no longer works. Therefore you will just have to cope with more volatility falls and rises of 30% or more in rapid succession, these things no longer roll along in easily predictable timelines.
 
joe sod said:
these things no longer roll along in easily predictable timelines.
Click to expand...

Hi Joe

I don't think that they ever did?

When the market was at big highs in the past, I often "felt" it was too high, but never so confident that I sold out.

And when it had fallen, I often felt that the fall was justified but while I expected it to recover, I did not know when it would recover.

Brendan
 
Its been a great week for european investors , finally the european markets are starting to outperform and also the euro is rising against the dollar a very good sign. There have been many false dawns since the financial crash in 2008 but it looks like some money is moving out of the over priced US stock markets and US dollar. The theme music has changed Europe has handled the corona virus pandemic much more sure footed than the US, its very likely that a european company will get to the corona virus vaccine first and of course the race riots in the US are not a good backdrop. Suddenly Europe looks like a safe haven.
 
joe sod said:
Suddenly Europe looks like a safe haven.
Click to expand...

I arrived at the opposite conclusion.

Now it's looking very risky.

I know that I can't time the stock markets but I am now reevaluating the points made by Creme egg and others earlier in the thread. How can these companies be worth more or less the same as they were 6 months ago? They were a bit frothy then, they must be even more frothy now.

Brendan
 
Last edited:
Sarenco said:
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.
Click to expand...

I think that this is a very good point.

Fundamentally, I don't believe in timing the stock markets. But with the huge recent recovery, the risk must be much higher now than it was 3 months ago. (Unless you think that the impact of Covid will be a lot less than we thought three months ago.)

I am seriously thinking of converting about 25% of my equity portfolio to cash.

If the market continues to increase, as I hope it will, I will be still making plenty of money.
If the market drops, I will be able to buy back in at a lower price.

But I still face three big barriers in doing this.

1) When will it be right to buy back in? My general philosophy is to be 100% invested in equities.
2) I will have a big CGT liability.
3) Where do I put the cash? I guess it will just have to sit in a current account.

Brendan
 
By the way, as this is a very interesting thread, I have gone back and edited it substantially.

There was a lot of repetition.
There were quite a few meanderings off topic.

I have it down from 13 pages to 5. I might go back in again and see if I can reduce it further.

Brendan
 
  • Like
Reactions: jim
Brendan Burgess said:
I have it down from 13 pages to 5. I might go back in again and see if I can reduce it further.
Click to expand...

but surely by editing out comments you remove the thought process during a sell off, thats one of the big strengths of a blog like this that it is a record of what people are actually thinking when their stocks are falling by thousands a day, in other words its real. I think it is not good to edit out stuff especially in a rare thread like this where people were genuinely in fear of their investments and pensions.
 
Hi Joe
Did you read what I have edited out?
Duplication and off topic stuff.

The thought process is still there and very clear.

Brendan
 
Daddy Ireland said:
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.
Click to expand...
I hope nobody followed this terrible advice.

The S&P500 is up nearly 40% from its 23 March low.
 
As Gordon said at the time in response to Daddy's post:

Gordon Gekko said:
This post is a disgrace. Possibly the worst contribution and most reckless advice that I’ve ever seen on AAM. A combination of ‘Monday Morning Quarterbacking’ at its very worst and complete ignorance of how investment markets and investors behave. Please ignore it.
Click to expand...

The problem with Daddy's comment was the confidence with which it was delivered. He stated it as a matter of fact. I did consider deleting it at the time, but I thought that Gordon's response made its deletion unnecessary.

And, of course, Daddy could still be proven correct.

Brendan
 
At this stage markets (The S&P 500) have recovered to the point they were at before the Corona virus began to dominate the news.

So it would appear that the virus was, economically at least, no big deal.

I hope that is true, but I don't believe it. I think that the markets have failed to adequately reflect the impact of corona on the economy.

In a sense the markets cannot be wrong, if the S&P is trading at 3,200 then it is trading at 3,200. However if the profits in the economy over the next few years are much less than would support that valuation, we may be in for a very bumpy ride.
 
Brendan Burgess said:
Hi Gordon

That is true. But surely that has to be unwound at some stage?

For a long term investor, the unwinding of this stimulus could be catastrophic.

Brendan
Click to expand...

Perhaps, but I don’t think so. Yes, it will all have to be unwound but only when things normalise.

Europe made a pigs ear of things post the financial crisis with austerity and interest rate increases(!). The US on the other hand got it right. Importantly, lessons were learned.

I believe that any unwind will coincide with the normalising of the economy.
 
From reading the posts on this thread back in March, some people had sold out and gone to cash, more were sitting tight and hoping the sell off would not be too bad, alot of people were not invested at all but saying they were waiting for another big fall before they would buy anything. However virtually nobody was buying the market back in March yet the markets have risen by 40% from the lows. Even Warren Buffett got it wrong he sold out of the airlines at their lows, some are up 100% since he sold out. If everyone is so pessimistic and bearish who is buying this market ??
 
I invested €45,000 in equities in March and April. It has done very well so far but I have no idea if I was brave, foolish or a bit of both. It's a long term investment so I'm prepared to watch the ebbs and flows with some amusement (or bemusement). Only when I sell will I know for sure. Not that I'm responsible for movements in global markets!
 
You must log in or register to reply here.
Back
Top