what the blazes is going on in the markets today and yesterday

blinko

what the blazes is going on in the markets today and yesterday

woke up and look at my folio and everything is red AARRGGHHHH is this just a short term correction or a long term one

Deemy

I see it as a healthy correction, which means that its not over yet

I think it will continue to gyrate lower into September, how low ? Good question, ive long penciled in below 5400, will have to see how it goes over the coming weeks. Yeh, I am still a bull and would see it as an excellant buying opporunity once it shows that it HAS bottomed.

Already many stocks are starting to look inviting, imagine how inviting they will be on a sub 5400 FTSE

cheerfulcat

blinko wrote:

what the blazes is going on in the markets today and yesterday

woke up and look at my folio and everything is red AARRGGHHHH is this just a short term correction or a long term one

It's impossible to say right now whether this is a correction or a return to a longer-term downturn; no-one knows for sure, nor can anyone know until it's over...if you are generally happy with your choice of investments you could view any pullback as a buying opportunity :T

HTH

Cheerfulcat

moneytroll

"I think it will continue to gyrate lower into September, how low ? Good question, ive long penciled in below 5400, will have to see how it goes over the coming weeks."

what do you base it on? + why would it be "over"? markets always fell, but they also always recovered. this seems like a short-term minor correction (so far). there's no way to know where it will go from here (+ there's not much point thinking about it anyway, imo)
but, yes, could be a good buying opportunity..

Deemy

What has gone up the strongest is likely to fall the hardest

So 10% drop on the ftse may be rideable but 20 or 30% on indivual stocks makes it worth while to get out and get back in at much lower prices ! As I note the metals and oils are taking a battering, Look at Tullow Oil now down to about £3.65 from about £4.30 last week ! Thats about 15% in a few days, since basically the buying and selling comes down to what the individual stocks are doing, some may well bottom out long before the FTSE does ! others may lag, some may fall harder, whilst others may even rise. So its on a stock by stock basis to time re-entry, or whether to just ride out the decline.

But, each to ones own

moneytroll

"others may lag, some may fall harder, whilst others may even rise. So its on a stock by stock basis to time re-entry, or whether to just ride out the decline."

i do respect and am very interested to read about different approaches and please don't take it as any sort of criticism etc, but.., isn't "market timing" (if that's what you are implying) extremely unreliable? there's no way to know when the bottom is precisely nor where the top is. so you'd miss out on the biggest gains just after a massive drop or get out of the market way too early. you would also constantly need to follow every little bit of news/worry about it etc. is it worth it?
i am becoming more and more convinced by a buy and hold approach. either funds, but especially HYP (the one Ed and motley fool go on about) seems a very sensible, solid option compared to anything else, regardless of market conditions, imho.
however, you are completely right about "each to ones own" bit and i am very interested to read different opinions etc.

Deemy

The way I see it.

If ones analysis increasingly points to a downturn, then you should take profits off the table and start liquidating some of your portfolio, then the more the market confirms its distributing across the highs the more you should look to liquidate.

Theres no point in making profits and then watch them disappear, since the last bear market taught us a valuable lesson ! That what goes up CAN AND DOES come down - HARD !

So yeh I started liquidating in early Nov and finished in mid Feb and have since been waiting and watching mostly from the sidelines. Offcourse I understood that the risk is that I may have to pay higher prices to buy back in than where I liquidated, but thats a risk worth taken given the percieved probability of a significant correction which was likely to hit the stocks that have made the most profits harder than the market as a whole.

Buy and hold... works... until it does not work

I try and play the bull and bear market cycles.. note a 10% correction on the indices over 3 to 6 months in my view is a bear market. BUt what I saw in Nov was that the market has had a very good run and is overextended and needs to have a siginificant correction that may or may not turn into something far worse !!!

So I decided okay time to take soem chips off the table see how it pans out over the coming months. I could verywell have left them on the table.... but what if the expected correction turned into a rout ! I can't predict the future so preferred to play safe.

cloud_dog

The buy and hold is far less stressfull but, think of all the fun you're missing out on :rolleyes:

Neck on the chopping block time.............. Its possible we are seeing a correction within commodities and commodity based shares and I am relatively confident that this continue with its uptrend in time (touching lots of wood). With soooo much of the FTSE (for example) having a commodities / oil & gas weighting I think it will follow that trend. The main reason I think commodities (especially gold) will rebound / continue to go up is because the worlds' currency (the dollar) is goona continue to fall / depreciate.

Having said that I think there is a sizeable correction (or whatever you want to call it, 'free'?) around the corner, just can't see the corner.

Of course I could be completely wrong about my first bit and the latest correction is the start of the faaaaaaalllllllllll

cloud_dog

Chrismaths

A) Tullow oil hit 2 dry wells, which is why they fell out of bed. Goes with the territory of investing in those types of companies.

Market timing is notoriously hard to do - but it also generates the largest portion of returns. Although I'm no fan of HYP - it's no different from the 101 other 'foolproof' methods of investing, in that no system exists to make money all the time - if you are an unsophisticated investor, the buy and hold method is the least worst. It avoids the behavioural finance problem of buy high, sell low - but I'd expect it to underperform long term. This is because there are more or less no companies that consistently produce excess returns over a 20 year period. The market just doesn't work like that.

moneytroll

"Market timing is notoriously hard to do - but it also generates the largest portion of returns. Although I'm no fan of HYP - it's no different from the 101 other 'foolproof' methods of investing, in that no system exists to make money all the time - if you are an unsophisticated investor, the buy and hold method is the least worst. It avoids the behavioural finance problem of buy high, sell low - but I'd expect it to underperform long term. This is because there are more or less no companies that consistently produce excess returns over a 20 year period. The market just doesn't work like that."

I somehow thought that it's the other way around: it's the unsophisticated investors that try to time the market (no offence to anybody please). the data i came across points to the fact that if someone succeeded once to time the market right, there will be many other times when they'll get it wrong, wiping out the the previous profits. there are very few exceptional stock pickers around (indeed in single numbers) who succeeded over 15 years (by a tiny margin) to outperform the indeces, how can we expect to do any better or at least as good?
Having fun is one thing, but pretending you can outplay the market is another. I think it's important to accept this..

+ yes, many big companies do tend to exist for a looong time and continue to pay dividents from what i gathered. we are not talking about "excess" returns, but just returns (and over long term that can be perseived as excessive, when compared to cash or the majority of people who failed to time the markets right) which is good enough.
Sorry, i don't have much data at hand so that this discussion might be a little pointless. But thanks for the opinions.

moneytroll

"Buy and hold... works... until it does not work"

Again, doesn't this apply more to market timing? Buy and hold works all the time*, even if in modest proportions, from what past data suggests anyway (past no guide to future, bla bla) Eventually greed will take over at one poiint or another if you try to time things I would have thought.
There are always "freaks"/exceptions of course...
anyway, just a thought.. i am very happy for the people who would prove me wrong and do outplay the market/time it correctly all of the time etc.

*by that i mean over very long term, but you know that

PS: but i am getting the feeling that i will soon be eaten alive for my comments :-), so i better withdraw from the conversation