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


Landlord,
Would you not end up repeating the process that you have just been through. Gold goes up and down. Chill out and be honest with yourself regarding your attitude to risk.
 

gold is a far riskier buy than equities , it also pays no income , gold has no intrinsic value whatsoever

maybe you just invested too much , the markets trend is not up in the short term right now , technically its pretty horrible on nearly every index


a good way to manage risk is to use your age as an investment guide , if someone is twenty five years old , they invest 25% in bonds and 75% in equities , if someone is forty , they invest 40% in bonds and 60% in equities
 
Sarenco said:
No problem. Do you agree with the sentiment?
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yes , if your investing a set amount every month or year over decades

you wont make a fortune or anything close to it however , you would probably do as well investing a lump sum in a house today , provided its in a reasonably good location , it is likely to be worth more in twenty years , just like equities

not everyone can afford a house of course but for lump sum investors , its a less risky asset in my opinion ( if you have to borrow to buy a house , thats a different matter )
 
Of course, the safest investment of all is simply to pay down debt - totally free of commissions, fees and taxes with a guaranteed rate of return equivalent to the interest that would otherwise have to be paid on the loan.
 

Exactly, so here is the thing, the financial institutions are not heavily involved in shorting as you seem to think, simply because most of them are not allowed to do. Take for instance the insurance companies - they are almost always restricted to bonds and equities. Then there are the pension funds, who while being allowed to hold more equities than insurance companies are still restricted when it comes to shorting as well. And as for the asset managers you mentioned, they are for the most part exactly that, they do very little trading on their own account - if you take the time to read over their financial statements for say the last 5 years you will see very little profits coming from trading on their own account. Which leaves the funds and while may funds are allowed to leverage their holdings, very few except the hedge funds are allowed to undertake shorting on the scale you are suggesting. You mentioned Bill Ackman, who is of course a hedge fund manager of sorts, so no surprises there either.

When it comes to shorting, you short equities - not the market. And for a big fund or institution it is a very risky exercise because you need an incredible short to make it worth your while and there is always the danger of a short squeeze as for example in the case of VW back in 2008 or Corn in 2010. Which is exactly why most institutions do very limited shorting if at all.

Furthermore, if shorting was as rampant as you suggest, then one would expect to see large blocks of shorted equities being bought by there institutions on a major down turn and this is not the case, in fact if you look at the order books most often you will see the opposite, as fund managers try to dump a dog before they have to report to the fundholders. So yes of course shorting can and does impact certain equities from time to time, it is not nearly as rampant as you would have us believe.
 
DCD said:
Landlord,
Would you not end up repeating the process that you have just been through. Gold goes up and down. Chill out and be honest with yourself regarding your attitude to risk.
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Possibly/probably. To be honest I don't think I am ready to invest in anything at the moment, but I am enjoying exploring options if only to track the upward learning curve.
I have to admit I am feeling quite satisfied with myself knowing that my original chosen funds have dropped by another 5 ish% in the last few days. I am fully aware of course that that could completely reverse by next week.
It's probably not appropriate to talk about a game of gambling, but for those who have played Texas Holdum poker.........I feel like I am prepared to go "All in" again at some stage but not till I have a better hand. For those that never bet (invest), there stake will eventually get eaten away on the "blinds" (or inflation!!)
 

you really didnt loose that much , 10% isnt a huge scalp at a time like this, the s+p alone is down not far off that this year

did you buy individual stocks or a broad market etf
 
"maybe you just invested too much , the markets trend is not up in the short term right now , technically its pretty horrible on nearly every index"

so is technical analysis a self fulfilling prophesy, for example if event x happens then the market should do y, therefore market participants do y because the prophecy says thats whats supposed to happen. Then you have all these computers programmed to do y if x happens.
 
galway_blow_in said:
you really didnt loose that much , 10% isnt a huge scalp at a time like this, the s+p alone is down not far off that this year

did you buy individual stocks or a broad market etf
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This was my portfolio, 4 EU UCITS ETFs and 2 US stocks......
 
My Big Bang theory......

(I actually went to the same school as Stephen Hawking.....but you would never know it from my grades ha ha)

Firstly I have absolutely no background in economics or business and until the start of this year new nothing about the stock market.
I guess the consensus of opinion on this thread is that you cannot time the stock market. But I wonder if timing the stock market on a macro time scale is becoming more predictable. Take the "doomsday" chart below for example.......




The dot com bubble in 2000, (8 years later) the credit/housing bubble in 2008 and (8 years later approaching 2016) the debt bubble.
I guess I'm saying if the markets were left alone to their own devices the volatility would be much reduced and the trends would be flatter and more linear.
However Markets are massively interfered with.
At a national level are own government interfered with the housing market for years, with property incentives, Section23, allowing banks to lend at 5 times ones salary, 0% deposit mortgages etc. This contributed to the property price bubble in Ireland before the crash in 2008
This interference is now happening more and more on a global scale with the ECB and FED...Quantitive easing 1, 2 and 3 has pumped trillions into the economy, I believe artificially inflating the markets. I keep asking myself where is all this new currency coming from and where is it going? Is it not just adding to the already huge global debt burden? Any time this century there has been any economic downturn the solution always seems to be "ah sure we will just print more money" and simply borrow our way out of the problem.
It's almost like the "Double or Quits game", where every time there is an economic downturn (I.e. Loosing a game) governments just double the amount of money they print until they win!!! And we all know how that game ends!!! Could potentially monetary policy over the last few years not just be contributing to this boom and bust cycle but amplifying it.
Timing the stock market on a micro scale as in minutes, hours or even weeks to me does sound ridiculous, but I would like to place my head above the parapet and suggest that due to global government policy (interference), inflating the bubble and using statistical trends, that there may very well be a downward turn in the economy within the next couple of years. I'm not saying that megaphone chart above is going to be 100% accurate, but I would like to think for me it could be used as a rough guide as to when to re-enter the stock market.
 
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One might argue that there is always some undervalued market. So why not invest in one now. Russia and Greece are cheap. But most stay away as there are compelling arguments against it. Yet there are always reasons to stay out of the markets. One might wait for next bear but I think its a very hard strategy to stick to in the long term.
 
If you are worried about quantitive easing and central banks creating money surely then the riskiest asset to hold is cash. Surely in that scenario despite the market shenanigans it is better to hold shares in real companies. Im no expert Ive been invested in all the wrong sectors this time oil and commodities. Despite the money printing assets like these are falling rather than rising as if we are in a deflationary rising interest rate environment. I think there is more of a herd like movement in markets now than ever before. The natural ebb and flow of the markets is being exagerrated by computer trading so the markets seem to be moving more in sync rather than randomly. I think the gyrations in the oil price are almost divorced from the actual real life supply/ demand situation.
 

Thanks Joe, yep I am looking at gold and other asset classes that might hold their value in a downturn. But it's inflation and potentially hyper inflation that I am concerned about. Seems crazy to suggest that when the FED seem unable to stimulate inflation. All this money being printed is not spurring inflation, so I guess it's just being given to the banks who aren't lending it out.
 
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Those who look at their portfolio once a month see it below their initial investment 2/3 of the time. Those who look at the same portfolio once a year see it in profit 2/3 of the time.

One of your biggest problems landlord, is that you are looking at the funds all the time. You're even looking at them now to justify to yourself that you made the right decision. You had a 15 year investment period. Looking at the portfolio once a year is enough.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 

Agreed!!
In fact my biggest downfall was downloading those stock tracking apps for the iPhone. If there is a next time they will be deleted from my phone.
 

Sarenco, your chart which you used to highlight the lack of any real return from gold over the last 200 years actually demonstrates very well what I was concerned about in an earlier post. In 1971 President Nixon took the dollar off the gold standard and changed it to the dollar stand. As can be seen from your chart, from approximately 1971 ( due to deficit spending) the dollar has massively devalued which has had a significant impact on the price of gold (up and down). Yes the true value of gold is generally only realised when there is fear in the market, but with another potential round of quantitive easing on the way, I believe the continuous devaluation of worldwide currencies and the huge worldwide debt is going to ignite the next gold rush!!
I read about Glencore last week before it crashed and the potential domino effect from its fall. I am now reading about the huge impending derivative (particularly Deutsche bank) and bond market crash. I have to admit I don't fully understand everything I'm reading as I have no background in economics. However the implications for the markets seem incredible.
 
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Well, all I'll say is that equities always have to climb a wall of worry - there is no particular reason to believe that this time is different.

You could (and I would) argue that bearishness on financial markets is particularly elevated at the moment (there have been massive outflows from equity funds and ETFs in recent weeks), which is itself a contrarian buy signal.

Successful long-term investing is largely about managing your own fears. If holding a small pile of gold coins helps you invest in productive assets, then fire ahead.

To me gold, is nothing more than a useless, shiny rock. I'll pass.
 
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