Stock market correction or bear market/crash? Either way I bailed.


the dividend deduction is a natural occurrence which will happen even the broader market is roaring higher , the big sell off in the market right now means its a real hit if you need to sell units for income , take my portfolio , i had 144 k in the market last july but 50 k of it was in cash ( of which i used 20 k to buy glanbia shares a few days ago ) , the whole portfolio ( VEA + EZU etf,s + 50k cash ) was worth 153 k three weeks ago , its worth less than where i started last july today as it was all ex U.S , had i taken out 10 k for income three weeks ago , it was happy days , today if i needed to take out income , im back to 133k , now had i taken out 10 k three weeks ago and the market roared higher another several percent , id also be left wondering should i have waited for a better opportunity to retrieve units

what im saying is , selling units for income involves too much observing the market as your capital can be severely eroded based on where the market is
 
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galway_blow_in said:
i repeat , a 5% paying stock doesnt drop by 5% every quarter so your point is flawed
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I changed to amount, rather than percentage, because you needed 5k in your example, and we couldn't work with an annual dividend scenario. Can you tell me what happens when a share quoted at 100k when it goes ex-div after declaring a 5k dividend?
 
RedOnion said:
I changed to amount, rather than percentage, because you needed 5k in your example, and we couldn't work with an annual dividend scenario. Can you tell me what happens when a share quoted at 100k when it goes ex-div after declaring a 5k dividend?
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not getting into the mechanics of ex dividend , i understand it

im making the point that sharp sell offs greatly hinder and challenge the notion of selling units for income , you deplete your original holding , now im referring to funds rather than individual stocks in my own case , i didnt need to sell lately and dont need to sell anytime soon but were i to , i would be eating into my capital severely today compared to three weeks ago , corrections are nothing to worry about for those who dont need or want to take income from there portfolios but if you wanted to draw down 6% per annum , forget it ! , your timing would invariably be off
 
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Receiving a cash dividend and not reinvesting it in the same stock is exactly the same thing financially as selling stocks to the value of the dividend. That's the case regardless of market movements.
 
Sarenco said:
Receiving a cash dividend and not reinvesting it in the same stock is exactly the same thing financially as selling stocks to the value of the dividend. That's the case regardless of market movements.
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Nope. Not unless it is a capital dividend and even then is is suspect.
 
Sorry Jim but you're wrong.

The payment of a dividend results a permanent reduction of the share price relative to what the price would have been had the dividend not been paid. Dividends are not a free lunch.

A lot of posters seem to struggle with this concept for some reason.
 
delfio said:
Listening to Paul Somerfield in the radio few moments ago was scary.
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I heard this interview and likewise got a shiver up my spine. I do have LT shares invested in the US, and at some point I want to realign some of those shares, but I can wait till all this blows over. Assuming it does.:0)
 
DeclanDublin said:
I heard this interview and likewise got a shiver up my spine. I do have LT shares invested in the US, and at some point I want to realign some of those shares, but I can wait till all this blows over. Assuming it does.:0)
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Everything got sold off indiscriminately , the US, European, Asian, even bonds, there were no safe havens. If you wanted to switch I presume now is as good a time as any unless you just want to go into cash. I'm no expert by the way just an article was reading made that point.
 
Sarenco said:
Receiving a cash dividend and not reinvesting it in the same stock is exactly the same thing financially as selling stocks to the value of the dividend. That's the case regardless of market movements.
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the annoying part is europe doesnt have the same issues surrounding impending rate rises that the u.s does , nor does it have anything like the same lofty valuations , it still sold off every bit as hard as the u.s market and refused to bounce back until wall st had stabilised so hopefully europe is up monday

europe has no mind of its own at all, the PE of the market could be 10 and it would tank after a wall st correction , you might as well just own the s + p if your going to be a passive investor in stocks , you have liquidity , the lowest management fees and the most diversified fund around
 
DK123 said:
GUYS.BUY GOOD SHARES WHEN THEY ARE CHEAP AND KEEP THEM FOREVER.NO NEED TO MONITOR THE STOCK MARKET DAY AFTER DAY.NEVER WASTE A GOOD CRISIS.
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I disagree with the need to use the capital letters to make a point but I agree with the message. What I mean is that we have a four weeks rule anyway that needs to be respected (and paying CGT is a loss in the short term) so unless we monitor the ups and downs of the same share and speculate on it then as long as we diversify and compensate losing shares with overheated ones what's the sense in keeping checking? Also share investing is for the long run (minimum 20 years-period in my opinion) so my view is let's just sit back, relax and hope... Or am I missing something? I am reading "The Naked Trader" at present and unless ISA accounts are introduced in Ireland the same way they are treated in UK then we would need to look at share investments only as long term investment right because of the taxation regime... I don't see a way out...
 
The hullaballo in the stock markets in recent days got me reviewing my investment strategy (such as it is) and conclude that the reasons I bought the particular stocks ( in the US in particular) were still valid. Basic, underlying profitability, sound management, good product stream, and a reasonable (but not excessive) dividend income. These fundamentals are still sound. I don't need to liquidate assets, and I'm in this for the long-haul. So I'm staying put. The only concern I have is that, as a result of market price shifts, one stock amounts to a very substantial amount of my entire dollar investment. I want to correct this, but over time, to avoid CGT as best I can.
 
Hi Love Trees.Sorry about the capital letters.This is only a small malfunction in my laptop.I agree completely with what you say.Also see [google]the Coffee Can Portfolio.The Ultimate in Long Term investing and do not "churn" shares or funds as you waste too much in commissions.Big education for me to learn what dividends really are a few posts back.Another saying i like is "Buy good shares/funds when the market is down and dont just do something,stand there"
 
dub_nerd said:
Personally I shifted my pension into cash at the start of the week (or tried to -- it didn't happen until near the week end because the company seems to have a turning circle like the Titanic).
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This is a problem with anyone trying to time the market when dealing with pension companies - they are not very efficient when receiving instructions and takes days to act on them. This is why timing the market is a very dangerous thing to attempt
Obviously if you have you own self administered pension fund with a stock-broker account, this is a different matter as you have much more control.

Gordon Gekko said:
How old are you?
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Gordon, I know what you are going to say here, but there are people who will try and time the market to a degree. Currently the S&P has pulled back to early December 2017 levels - which are still pretty good returns for most people. Some people don't like this level of volatility and cannot handle it no matter what the age is. The massive challenge they will have is when to time putting the money back in - especially since most pension funds only allow 3 transactions cost free per year.



Edit to say there is no getting away from the fact that people are nervous about their pension funds, no matter what their ages and most people know someone who was royally stung during the last financial crises. Its hard to blame people for trying to time the market - or at least minimise potential losses in excess of 50%.
 
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gnf_ireland said:
This is a problem with anyone trying to time the market when dealing with pension companies - they are not very efficient
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That really is not the problem at all.

The problem is that to time the market correctly, one has to get two decisions correct - the top of the market and the bottom of the market, or near enough to them.

Let's say that I anticipated last week's fall and sold off my stock market investments.
I would be wondering now if I should get back in after a 10% fall. Or maybe wait until they fall a bit further?
Say they drop another 10%?

I would feel so clever that I would probably wait. Then suddenly the stock market increases. Is that the beginning of the recovery or a dead cat bounce? I would probably wait.

Next thing stocks are higher than the price I sold them at.

Many people are saying that there is a bubble in American stocks. So maybe it is right to sell. But if you do, get back in again when they are fairly priced. Don't try to time the exact bottom.

Brendan
 
Brendan Burgess said:
That really is not the problem at all.
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I guess Brendan this is the difference between proactively timing the market so you made the call a number of weeks ago versus reactively trying to time the market, when you are reacting to the events as they happened last week.
If you are reactive rather than proactive, there is an additional complication of the insurance companies non-real time platforms and the volatility during the last week. If you sent a sell instruction to say Zurich on Monday, who knows what price you would get for the units until they were sold.
Its another complication in the timing issue

Brendan Burgess said:
The problem is that to time the market correctly, one has to get two decisions correct - the top of the market and the bottom of the market, or near enough to them.
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Absolutely - to get it right then people need to try and time the top and the bottom of the market. This is only know retrospectively, so anything other than that is simply a best guess at that moment in time.

Brendan Burgess said:
I would feel so clever that I would probably wait. Then suddenly the stock market increases. Is that the beginning of the recovery or a dead cat bounce? I would probably wait.
Next thing stocks are higher than the price I sold them at.
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Yes, this is of course a risk - and one I imagine a large number of people will get hit with, especially in volatile markets

Brendan Burgess said:
Many people are saying that there is a bubble in American stocks. So maybe it is right to sell. But if you do, get back in again when they are fairly priced. Don't try to time the exact bottom.
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Solid advice
 
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