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

wow well done, had money on the sidelines but got caught up in the "this is only the beginning!!!!1" hysteria, easy to say in hindsight however

I think this Fed pump has to be unwound at some stage but, as ever, the question is when
I'm hoping for a pullback somewhere here and for sentiment to go more negative again but could just as easily keep pumping
 
This thread ...

Lots of subjective sentiment, gut feeling (and remember what Carl Sagan said about that), a smattering of confusing/meaningless jargon and some people who seem to think that they can read the runes and predict the future. But not too much in the way of hard data or recognition that timing the market and predicting the future is a mug's game.

If you think that capitalism is collapsing (and maybe it is) then we're all screwed. If you don't and, even with all the unknowns about COVID-19, the current situation is another dip to be ridden out on the roller coaster that is the markets then (depending on specific personal circumstances and according to your portfolio needs) you should invest.

Everything else seems like pointless idle chatter.
 
Reactions: jim
ClubMan said:
Everything else seems like pointless idle chatter.
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is this not a bit arrogant afterall you have 43,000 posts yourself on this site, are they all worthy contributions I doubt it, I bet some are pointless idle chatter aswell ? By the way I agree with the general thrust of what you said but I dont agree with arrogant smack downs of other contributions.
 
ClubMan said:
Lots of subjective sentiment, gut feeling (and remember what Carl Sagan said about that), a smattering of confusing/meaningless jargon and some people who seem to think that they can read the runes and predict the future.
Click to expand...

You should have seen it before I edited it. I think I reduced it from 13 pages to 6.

Brendan
 
Gordon Gekko said:
You’re ignoring the massive and unprecedented fiscal stimulus. Yes, the economies have taken a hit but the government and central banks have intervened.
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This is probably the best explanation for what we have witnessed.

What does it mean in economic terms. If a quarter of the workforce wasn't working for two months, that must represent a large reduction in wealth created. Some of it may be just missed haircuts, but some of it must be significant missed wealth.

So the governments of the world borrowed money to plug the gap, they disbursed this money in several ways, from wage subsidies, to lump sum donations to big companies (Lufthansa), to supported borrowing for SMEs.

Even apart from the idea that this must be unwound at some stage, (must it?), I suppose the governments will have to carry the liabilities, I don't expect that the wage subsidies will have to be repaid.

However this is just reshuffling of existing wealth, and investors who can borrow cheaply seem to be supporting the share price of those companies which benefit. There is still a reduction in real wealth which must become an issue t some point. Maybe
 
Another false dawn for a big market crash, yet again it's turned tails and gone back up. With the massive central banks intervention and money printing sitting out the markets in cash and waiting for a 50 percent correction looks like the wrong strategy. You actually need to take a position now, whether it's bonds, precious metals , commodities, European stocks, bit coin or tech stocks you have to place your bet. That's the real effect of money printing you can't sit in cash for very long
 
joe sod said:
You actually need to take a position now,
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My mistake was thinking it was all or nothing. "I can't time the market so I must be 100% in stocks."

The discussion on this thread helped me clarified my thoughts. I still can't time the market, but
  1. It must be riskier now that it has been for some time
  2. It must have been wrong before Covid or else it's wrong now because it's about the same
I sold down 25% of my shares last week.

My reasoning was
  1. If there is a crash - I will be hedged a bit
  2. If the stock market continues rising, my 75% will continue rising

I would be better off today had I not sold off last week. But I would be even more jittery today after yesterday's rises.

I am comfortable now with 75% equity and 25% cash.

Brendan
 
I think it's interesting to compare the performance over the last 40 years of an all-equity portfolio (S&P500) with a traditional portfolio made up of 60% equities (S&P500) and 40% bonds (10-Year Treasuries) -
  1. 100% equities - annualised return 11.33%; worst year -37.45%; maximum drawdown -50.97%
  2. 60/40 portfolio - annualised return 10.46%; worst year -14.00%; maximum drawdown -26.46%.
So the all-equity portfolio only modestly outperformed the 60/40 portfolio over the full 40-year period but was far more volatile.
 
'We are, you might say, in a time when the smart money lacks all conviction, while the dumb money is filled with a passionate intensity."

Paul Krugman with a different explanation as to why the market is in a bubble. Note, that the market is in a bubble is so obvious that he doesn't even discuss it. Why is the question that interests him.

Opinion | Market Madness in the Pandemic (Published 2020)

Why are investors rushing to buy junk?
www.nytimes.com
 
Or as Keynes put it

In abnormal times in particular, when the hypothesis of an indefinite continuance of the existing state of affairs is less plausible than usual even though there are no express grounds to anticipate a definite change, the market will be subject to waves of optimistic and pessimistic sentiment, which are unreasoning and yet in a sense legitimate where no solid basis exists for a reasonable calculation.
 
@Brendan Burgess This is a genuine question, I'm not being smart, just genuinely interested: are you not trying to time the market? I keep reading advice that it's a mug's game...
 
Hi Cricketer

As I have explained in an earlier post, I used to think it was "all in the market or all out of the market."

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.

Brendan
 

This came up before Brendan as it is something I have done in the past with a PRB that I own and have re-balanced from 100% equities to 70/80% equities and up again albeit not very often. I was pretty strongly told that I was trying to time the market.
 
What would the difference in total return be? I'd say that would be a fair whack if you are comparing the two over a 40 year timeline.
 
Sunny said:
re-balanced from 100% equities to 70/80% equities and up again albeit not very often.
Click to expand...

I think that this is the key.

This is the first time I have ever done it.

And it has three big problems , so it's not a clear decision

1) When do I go back in?
2) What do I do with the cash in the meantime?
3) I have to pay CGT on the realised gains which would have run on if I had not sold.

Brendan
 
Tickle said:
What would the difference in total return be? I'd say that would be a fair whack if you are comparing the two over a 40 year timeline.
Click to expand...
$10,000 invested in the all-equity portfolio at the start of the 40 year period would be worth $765,523 today.

$10,000 invested in the 60/40 portfolio at the start of the same period (with annual rebalancing) would be worth $557,257 today.
 
Sarenco said:
So the all-equity portfolio only modestly outperformed the 60/40 portfolio over the full 40-year period but was far more volatile.
Click to expand...


Sarenco said:
$10,000 invested in the all-equity portfolio at the start of the 40 year period would be worth $765,523 today.

$10,000 invested in the 60/40 portfolio at the start of the same period (with annual rebalancing) would be worth $557,257 today.
Click to expand...

Am I reading this correctly? One is earning 37% more. That is not modest in my opnion.

Brendan
 
Also, those figures are for annual re-balancing Brendan over 40 years which is not what you are suggesting.
 
If you go for a split portfolio at the start, you really need to re-balance regularly otherwise it's just a gamble as to whether you timing was right at the time you invested.

Either you are using a 60/40 or whatever split or you are not
 
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