"My shares have fallen 30% what should I do?" "Is this a good time to invest in the stock market?"
- Thread starter Brendan Burgess
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Say you have a 60/40 equity strategy. At the end of the year equities have done well and now your portfolio has drifted to 70% equity due to the increase in value. A rebalance would involve selling down the required amount of equities to bring you back to 60/40.
its a good quote but everywhere I look there are articles and youtube videos all with the same theme, "Dont get caught by this rally", "The market is about to crash", "Its a suckers rally" and not just since the coronavirus crash long before it aswell. Nobody is ebullient with the exception of bitcoin and Tesla investors. Everyone hates this rally but yet the stock market keeps rising but who is doing all the buying?
Presumably he is referring to the US market. The thread title also refers to 'the stock market'. I think it's worth bearing in mind that there are many different stock markets and comments that are applicable for some do not apply to all.
Cremeegg, the only reason I'm quoting your particular post is that while I agree that the US markets are in a bubble I don't think it would apply to Europe.
Priceless
Well people whose alternative is getting negative returns on cash is one suggestion
Here are some others
The run-up in stock prices that took place between mid-May and Thursday’s sudden plummet was driven, to an important extent, by investors rushing into very dubious companies — what one observer called a “flight to crap.” That sudden plummet has since been largely reversed.
Although there is some dispute about how important they were, most of the evidence suggests that a major role in this apparent bubble was played by small investors — “retail bros” — pursuing get-rich-quick dreams. Some of these exuberant investors were people who normally bet on sports and were looking for an alternative source of excitement. And as the Hertz example shows, they didn’t care much about quality.
Its the sports guys. Love it !
most of the rally was driven by tech , the FAANGS, they are a bigger proportion of the market than they were before Covid, therefore if you buy the S&P index now you are buying more FAANGS and less of everything else than you were beforehand. Even if you are buying a global index the FAANGS are now a larger proportion even of that.
You are referring to the robinhood trading app where small guys made or lost money betting on the carnage after the corona virus sell off. Surely that is small compared to the FAANGS and their valuations now.
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confused12
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Algorithms
From reading your posts I know you have investments in Ryanair, CRH and Berkshire (I think you mentioned that at some stage), I dont know what else you own but Ryanair and Berkshire are still down substantially since before Covid . Im just wondering did you sell 25% of everything despite their performance or did you discriminate and only sell some stocks. In any case why did you not just add to stocks like Berkshire ? My point is that the stock market recovery has been extremely narrow, focussed on the US technology stocks, if you dont own any of these you have not really recovered that much. Even in the case of Berkshire the performance would be much worse except for his holding in Apple which has compensated for everything else. Im not being critical by the way Im just trying to find out more your thinking
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Brendan Burgess
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Hi Joe
I don't try to pick winners or losers.
I have a portfolio of about 10 stocks.
Some had become overweight , so I sold off 4 of my heavier stocks to achieve the 25% reduction while rebalancing my portfolio.
Brendan
I don't try to pick winners or losers.
I have a portfolio of about 10 stocks.
Some had become overweight , so I sold off 4 of my heavier stocks to achieve the 25% reduction while rebalancing my portfolio.
Brendan
Gordon Gekko
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It’s very concentrated though as has been previously discussed. Not for the faint-hearted!
Brendan Burgess
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Terry Smith has a good article on the issue in the current FT
Google: There are only two types of investors
When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it. It’s safer and more profitable to be in the latter camp.
...
Imagine that over this 50-year period there were two competing investment strategies. One is to invest an equal amount every trading day throughout the period irrespective of market conditions — so-called pound (or dollar) cost averaging which many investors actually apply by making regular contributions into a pension, Isa or regular savings plan.
The other strategy requires enough foresight for the investor to invest the same amount daily, but to stop investing when the market turns down and save the cash. This money is only invested when the Dow makes a new bottom, hitting its low point in any period of decline (hence why it’s known as an “absolute bottom buying strategy”).
... Over the 50-year period, the second strategy would have produced returns 22 per cent higher than the first. It sounds impressive — perhaps a little less so when you break it down to an 0.4 per cent outperformance per year. But think of the time and effort you would have to spend monitoring markets to get those calls just right.
...
Google: There are only two types of investors
When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it. It’s safer and more profitable to be in the latter camp.
...
Imagine that over this 50-year period there were two competing investment strategies. One is to invest an equal amount every trading day throughout the period irrespective of market conditions — so-called pound (or dollar) cost averaging which many investors actually apply by making regular contributions into a pension, Isa or regular savings plan.
The other strategy requires enough foresight for the investor to invest the same amount daily, but to stop investing when the market turns down and save the cash. This money is only invested when the Dow makes a new bottom, hitting its low point in any period of decline (hence why it’s known as an “absolute bottom buying strategy”).
... Over the 50-year period, the second strategy would have produced returns 22 per cent higher than the first. It sounds impressive — perhaps a little less so when you break it down to an 0.4 per cent outperformance per year. But think of the time and effort you would have to spend monitoring markets to get those calls just right.
...
You are all overthinking this. The market, specifically the S&P 500 is at 3,200 approx the same level it started the year. So the Coronavirus epidemic has had no impact other than a short lived dip. Maybe thats reasonable, maybe it's not.
I am reminded of the story about the barber who gave JP Morgan a stock tip. When JP returned to the bank after his haircut he asked his analysts to review the tip he had been given. The analysts agreed with the barber, JP decided that if the idea that shares were always a buy had reached the barbers, there was no greater fool left and sold down all his equity holdings.
To make a return on shares requires either future profits to justify the purchase price, or a greater fool to take them off your hands.
I can't see either.
I am reminded of the story about the barber who gave JP Morgan a stock tip. When JP returned to the bank after his haircut he asked his analysts to review the tip he had been given. The analysts agreed with the barber, JP decided that if the idea that shares were always a buy had reached the barbers, there was no greater fool left and sold down all his equity holdings.
To make a return on shares requires either future profits to justify the purchase price, or a greater fool to take them off your hands.
I can't see either.
Brendan Burgess
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confused12
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This implies that anyone can perfectly time the bottom, which is impossible
Now that you mention it I think it was.