Surviving Downturns

Old_Slaphead

Thrugelmir wrote: »

Black Monday in October 1987. The board went entirely red. Over the course of a few days FTSE lost around 22%.

'87 was an interesting one because we didn't have t'interweb in them days and if you wanted to sell - tough - the brokers weren't answering their phones.

For some protection in these heady times I include some multi manager diversified, managed and absolute return funds in the mix.

atush

Since 1987. but then I had only a few sotcks given to me by my Grandfather, watched my mother deal with her large (paper because she didn't panic) loss.

I also saw the dot com crash (got holding some baltimore but others did well for me like Arm)

9/11 and the other crashes since then.

I don't know why, but I do know I never sold on a panic. I did try to catch a falling knife a few times, but tended to hold steady and just carried on investing monthly.

And increased buying when/if I had cash after a major correction (picked up some great stocks after 9/11).

I basically took a step back after big corrections waiting for the dust to fall.

jimjames

My first was 1998. Then 2000, 2003 and 2007.

Not yet had the 5th one but it will happen.

Looks like FTSE has recovered most that it dropped last week, in a single day.

Realising they happen and that adding more at the dips can be of benefit long term is one way to handle it but it is hard when the news headlines all say sell.

Ark_Welder

Thrugelmir wrote: »

I've always bought Private Equity investment trusts after a sizable fall. As discounts seem to widen significantly for no apparent reason.

Perhaps two reasons that I can think of. First being the nature and frequency of how the underlying assets are valued (or is that two reasons?): if the assets are unquoted then valuations are likely made from book costs and discounted cash flows etc, i.e. valuations that might not change a great deal over shortish timescales, so the NAV holds up better than intra-day quoted assets such as equities. Second (or third) PE realisations tend to benefit from good market conditions - more-so going the IPO route or a trade buyer - so a downturn might result in a higher level of selling of the PE IT, with market makers lowering prices further to in reaction (or anticipation), and to flush out buyers. Widening discounts being the main problem when holding illiquid assets as an asset diversifier, such as PE or property, via a listed vehicle. But hey! I'm 'DIY Retail' so I have to invest how I can...:( ...without stumping up for a professional

gadgetmind

Ark_Welder wrote: »

Second (or third) PE realisations tend to benefit from good market conditions - more-so going the IPO route or a trade buyer

That's the main one IMO.

I do pick up some PE from time to time, but you really do have to be confident and patient.

Totton

A_Flock_Of_Sheep wrote: »

I was wondering what your methods are for keeping cool and collected when there is a major downturn.

Major downturns always present opportunities so move into cash or equivalents when you can and be prepared to take the opportunities that arise, sure you will not catch the bottom so be prepared for further falls.

gadgetmind

Totton wrote: »

Major downturns always present opportunities so move into cash or equivalents when you can.

So is now a time to move into cash or not? And how do we know when it's the bottom?

Perhaps you can make sure you let us all know when and how you make these decisions regarding radical changes to your portfolio in the future so that we can learn from your prescience?

dealer_wins

For the long term regular investor downturns should mean nothing. Just keep putting the monthly amount away!

jabba42

Good time to buy the good companies that have been hammered. Buffet keeps 20 billion ready for the next smash so he can go and buy his favourite companies at a discount.