When will the downward spiral in the stockmarket end?

J

Janman07

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I have been making (seeming sensible) investments for a few years now with help from AAM, financial advisors and a good bit of study on the subject.

I feel like I am doing things by the book - diversification, euro cost averaging, maximising pension tax relief, buying on weakness etc., yet every time I check the value of my 'investments' things have gotten worse.

Would anyone care to speculate as to when things are going to turn around? Should I continue to average down or should I sit tight until things improve? I would be way ahead if I had just put the money on deposit. In fact the only thing propping up my portfolio at this stage is bank interest from regular savers etc.

Pleased to hear opinions.
 
Re: When will the downward spiral end?

you are only long the market. You can make money as market falls also.
 
Re: When will the downward spiral end?

You'll need to remember you're in it for the long hall and need to be able to sit out these dips. If I remember correctly, at the beginning of the SSIA scheme, most people who had gone for equity funds were losing money, but after 2-3 years they'd caught up with the deposit funds. By the time most SSIAs matured last year, the equity funds were looking very nice.
 
Re: When will the downward spiral end?

It's beginning to look and feel like a bit more than a dip. Did you see the ISEQ today? Yikes.
 
Re: When will the downward spiral end?

Short answer - bottom out Q3 2009 to Q1 2010.

The ISEQ is on a one way path with a 3.76% loss today. It is caught immediately in a currency void strangling the economy, namely sterling and dollar continually weakening. The medium term outlook for building stocks and financials [which are tied disproportionably in the construction lending], these two sectors make up too much of a weighting on the index, combine this to house price growth going negative and America entering recession, could IMO drag the index all the way down to the 2004 lows. International investors no longer see Ireland as a good opportunity on a low P/E, but as a problem that can malign further. The money crisis of available corporate finance will affect through 2008 and a good part of 2009, again IMO and subjective, this only weakens any opportunity to recover further. Averaging and all the other book strategies are not applicable. It seems to me like a mother of trouble has yet to come over the hill, market sentiment always overshoots on the way up and on the way down.

Watch the unemployment figures this year. A greater weighting of my investments, prior to Christmas have been converted back to cash. But I will await the next buying opportunity. Its sectors outside Ireland, possibly if stg to euro goes to 90p then convergent Telco’s possibly and other anti cyclical stocks will be seriously looked at.

I tend to be bullish and see the glass half full etc, but with the stats etc, I've never been more bearish. The last 10 years of extraordinary increase in money supply, globally, has to be reset.
 
Re: When will the downward spiral end?

These things are cyclical.
Ireland's ecomony has been a strange thing, so it's hard to use as a barometer.
Use the US economy instead. Remember the adage, "when the US catches a cold, the rest of the world catches the flu". Obviously, because of the bizarre behaviour of Irish economy this doesn't apply to us (remember the dot-com recession of 2000-2003, affected all sectors worldwide, except in Ireland where only IT was affected.)
The US markets peaked in March 2000 (Y2K anyone?), the economy hit rececssion in mid-2001 (pre 9-11, I'll remind you). Came out if it all in 2003.
I expect the US economy to come out of this sometime in 2010.

As for this...

SPC100 said:
This is easy, buy, buy, with every spare penny.

As you can't predict the bottom, keep on buying with all your excess cash each month (from salary-living expenses).
Click to expand...

I would totally disregard this advice. The markets are going south. It's better to buy when the markets are going up, and that won't be for a couple of years.
You know where the bottom is when you've passed it, and you look back and see it a few months behind you.
Nobody but a dreamer expects to be able to buy shares at their bottom price. But if there's been a series of gains after a long time of losses, then you can mark that as the bottom. Then you buy equities. And you can probably start offloading them as theY rise past the prices of Jan 2008, and pick up more bargains as other home traders level out.
Dow Jones dropped 2.5% today after the bell.
ISEQ dropped 250 points today.
If you'd bought this morning, you'd already be a loser!
 
Re: When will the downward spiral end?

SPC100 said:
academics show that your long term return is based on the length of time you are invested in the market, and that attempting to time the market is futile
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To me all the information says the market is heading south on a long break. So buying at this time is a zero based proposition. Is this definitive - No. But it's like walking home alone from the pub, ahead is a drunken crowd of hoodies, brandishing knifes. Do you walk past? You don't know for sure, but you have a good idea it'll be ugly. That's the crossroads we are at. Instinct says stop, wait for them to pass. Same with the markets.
 
Re: When will the downward spiral end?

I believe I have read that frequently the largest gains in the market after bear markets are on a just few days,
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Very true SPC100 and very good advice. Stay invested. Other advice on this thread totally disregard!
You have to stay invested. Timing entry and exit points from cash is a mugs game.
That said allocating a small % of wealth to follow trend via puts and shorts etc helps to hedge losses from overall portfolio, but the main tenet remains stay invested as if you don't you will miss the upturn which NOBODY can predict.
A lot of loose and dangerous sentiment on this thread that the newbie investor could easily be sucked into!
In summary asset allocate, hedge and hold for long term.
 
Re: When will the downward spiral end?

I'm shocked that someone would encourage the OP to continue to invest in equities in the current climate! The idea of averaging into equities at present is foolish. In general, timing the market is tough but it's "easy" as SPC100 put it to see that there are tough times ahead in the US, UK and Ireland. You don't have to get in at the bottom and out at the top, just be there on the up. Be it fundamentals or tech analysis, or just common sense, these 3 markets are in trouble.

In the US, the financials are only suffering with subprime at the moment. Wait until the CDS and CDO problems start. The whispers have been of recession for a while now and with Goldmans announcing they thought it was here and Bernanke's statement mdiweek you can take it as a given.

What do you think the fall out for Ireland is going to be? I know people working for major US financials over here have already suffered at bonus time this year. Where do you think the job cuts are going to happen? Dublin has a significant number of US financials here for back office, CDS and CDO. These will be hit.Friends of mine have recently taken voluntary redundancy at a large US micro chip manufacturer in Ireland. They say the majority of the rest of the staff are all waiting for it. If(when) these job cuts hit Ireland, do you think they'll come back after a recession? I doubt it, cheaper labour will take them. Will the sovereign funds not have a say where the US financials should relocate their back office work?
How will this affect the ISEQ, when will it recover?

There is money to be made at present in shorting the markets, hard and soft commodities, certain currencies but the only stocks that should be looked at are those in the defensive sectors, utilities etc.
 
Re: When will the downward spiral end?

Janman07 said:
I have been making (seeming sensible) investments for a few years ...... yet every time I check the value of my 'investments' things have gotten worse.

Would anyone care to speculate as to when things are going to turn around?
Click to expand...

How long have investments been getting worse? Since the beginning or just over the last number or months?

Where is your diversification, just in Ireland, across Irish sectors? What sectors,what are they dependent on? Is your pension further diversified from other investments? How do these correlate?

What "things" are you reliant on turning around?

If you could be more specific (without being too specific:) ) maybe you will get some more helpful advice.
 
Re: When will the downward spiral end?

markowitzman said:
Very true SPC100 and very good advice. Stay invested.
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http://uk.finance.yahoo.com/q/bc?s=%5EFTSE&t=my

If you invested in a FTSE tracker in 1998 per the above chart then in real terms, against indexation, the account would remain in negative territory. That is excluding any entry commission or sizeable management charges that gobbles the fund continually. Where is the timing in this scenario? IMO the market is in the Millenium scenario that will continually downtrend.

The OP may not be sophisicated in terms of adopting shorts and puts. Other than through spreadbetting, I would not know where to buy these but I understand the merit of the hedge. If the OP invested in five ETFs at €2000, in diversified markets and sectors this would be rationale, or in a large investment house with low switching costs? Maybe this is the case.


markowitzman said:
A small % of wealth to follow trend via puts and shorts etc helps to hedge losses from overall portfolio
Click to expand...

Outside individual shares how can you short, spreadbets?


markowitzman said:
A lot of loose and dangerous sentiment on this thread that the newbie investor could easily be sucked into! In summary asset allocate, hedge and hold for long term.
Click to expand...


US, UK and Irish property are speculative instruments that pay dividends, of sorts. Would you recommend investors to throw part of their hard earned money into these areas at the moment? These too are cyclical and are as difficult to predict? Averaging or buying more in a market like this to me is sheer foolish. But each to their own.
 
MichaelDes - any decent online broker will have a trading platform that allows you to trade options, futures , options on futures etc so it's as easy to be short the market as it is to be long. They are not instruments for the novice imo but that's a different story.
 
If I could find a graph of the Dow Jones (or any index) on the web, giving the last 20 years, I could explain. But frankly, I don't have the time to go get a good example. Apologies.

Yes, in the long term you will always be a winner, if you have a diversified portfolio.
Yes, hold onto what you have, I never said otherwise.
Yes, keep investing, just not in shares at present.
The big four are equities, bonds, properties and cash.
The markets are going south. Property is on the slide. Try bonds.

If a market is dropping from 10 to 9 to 8 to 7 to 6 this is not a time to buy.
But if it then goes to 5 to 4 to 5 to 6 there's good reason to believe that 4 was the bottom. 6 on the way up is a better time to buy that 8 or 7 or 6 on the way down.

Note, by bottom I mean (and a graph would be handy here) a big bottom (we're talking J-Lo here:)). Not the troughs in a steady oscillation. I mean a distinct downward spike.
 
US, UK and Irish property are speculative instruments that pay dividends, of sorts. Would you recommend investors to throw part of their hard earned money into these areas at the moment?
Click to expand...
Yes.........I have this week bought another Irish property from a very motivated seller. All this hype is panicking "investors" into dumping very good assets for the long term.
Outside individual shares how can you short, spreadbets?
Click to expand...
Options etc etc.
 
Of course, it doesn't actually matter if you make 5%, 10% or lose 5%, 10%. You have to spend the money to realise the value of it, to enjoy it.
You can't take it to the other side, and you've no inkling what your grandchildren will do with it.

There's some adage along the lines that an entrepreneur spends his/her life creating a business, his/her sons/daughters spend their lives enjoying the fruits of that business, his/her grandsons/granddaughters spend their lives wasting that business. Same can apply for investments.
 
Once the global property markets (mainly the US, the UK and yes Ireland)have significantly readjusted then the stock markets will start to return to normal.
 
I agree with a long term play on shares and have started to invest into the irish market,the old adage "buy value" comes into play now,I also believe that over the next 6 months is a good time to purchase an investment property in ireland,buyer markets can be short lived
 
barryl said:
I agree with a long term play on shares and have started to invest into the irish market,the old adage "buy value" comes into play now,I also believe that over the next 6 months is a good time to purchase an investment property in ireland,buyer markets can be short lived
Click to expand...


What yield on property do you think would make a good purchase price?
 
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