What's happened to my portfolio in the last 2 weeks?!

bowlhead99

margaretclare wrote: »

How on earth does anyone know what money they might or might not need within a decade? I have not got a crystal ball and never had one!

But you can imagine what your needs are likely to be.

For example, I know I would rather do without £x of salary each month so that I could avoid some taxes and have it available to me in 20-30 years time when I'm looking to retire. Maybe, I might "need" it within a decade but I know I'll definitely also need it, and the returns from it, in retirement... so on balance I know I would rather not keep £y of salary per month in a low interest rainy day savings fund because there is only so much of a wet day I expect to have, that would possibly be more important than having something to live off between the ages 60-100.

In the same way, there is only so much I need to put away as emergency cash for the next 1-5 years instead of putting away for the next 5-15 or 15-25 years in an investment ISA at a better return.

I've never had a crystal ball but never needed one, because I know that over a 10 year period, 3% inflation is going to erode my £100 to £75 in real terms unless I invest it in something that equals or beats inflation. The pursuit of inflation-equalling or inflation-beating returns allows me to actually make the most out of the true value of my salary and not resign myself to having it dwindle away and then be spent on £6 loaves of bread and £10 pints of beer somewhere down the line.

So, I commit a certain amount of money into a pension and a certain amount of money into an investment plan and a certain amount of money into shorter term savings and a certain amount of money into an emergency fund. I know that the savings (for holidays or cars or house deposits or maintenance) *and* the investment plan can theoretically be liquidated to give me a bigger emergency fund in a real big emergency, but I try not to because I recognise that if cashing in my investments for short term needs is my plan, there is a risk I'll end up having to sell out of my investments at short notice and perhaps lose money on them.

So, like Masonic said, investing without first holding cash savings is not the best way of doing it. In that situation it would be sensible to only be putting a small portion away for investments that might go up, down, or all over the place over the next decade, and more into known cash savings.

Personally I have actually used S&S ISAs to save up for house deposits and a car, but over a long period of time. Now only a year away from the next car (a 10-year event), it has served me well. As of today, being closer to the planned day of spending, it is high risk to have 95% of the value of that car in investments. If I was cautious I would cash out more of the investments or move into asset classes which I perceive to be safer. However, I've only done a bit of that, as I'm fine with the risk of getting a worse car or simply waiting longer for the car I want. Others might not be.

margaretclare

Yes, DH uses his S&S ISA to save for a new car. In 3 years' time from this March, when he changed the car for a one-year old model, he'll have to decide whether to keep this, which will be 4 years old by then, or go into another 3-year arrangement with Ford for another. As he'll be 82 by then, decisions will need to be made about how long he intends to keep on driving or whether the 4-year old car will start to cost too much in terms of maintenance.

I did tap into mine last year for cosmetic surgery, which I've never regretted. I shouldn't have been able to save in any other way. Cash savings @ 1% or thereabouts? In a pig's ear.

masonic

margaretclare wrote: »

Yes, DH uses his S&S ISA to save for a new car. In 3 years' time from this March, when he changed the car for a one-year old model, he'll have to decide whether to keep this, which will be 4 years old by then, or go into another 3-year arrangement with Ford for another. As he'll be 82 by then, decisions will need to be made about how long he intends to keep on driving or whether the 4-year old car will start to cost too much in terms of maintenance.

I did tap into mine last year for cosmetic surgery, which I've never regretted. I shouldn't have been able to save in any other way. Cash savings @ 1% or thereabouts? In a pig's ear.

I think my statement was explained pretty well by others, but to further clarify I intended the word 'need' to indicate spending that could not be put off or avoided should that need arise (which may or may not include a house deposit, depending on circumstances).

The other distinction I'd draw is between El Selb's position, where he has just started investing and would therefore be at risk of being in the market for a short time and experiencing significant erosion of his original capital vs. someone who has already been investing for several years and has presumably experienced enough market upside to be able to better weather a inopportunely timed market correction.

Glen_Clark

Took another battering today. And yet when you look at a graph of the FTSE these swings seem pretty normal. And I can see no reason for a major fall?

bowlhead99

A bunch of bad news today

- Shire's suitors reconsidering buying them due to new proposed US rules - wipes off over 20% of what was a £30bn company (of course, only back to where it was somewhere earlier this year, but big hit to take). AZN and Smith & Nephew both fell 3% ish as both could have been tax-inversion takeover targets...

Other company news, Balfour Beatty shares got a boost due to new incoming CEO at end of year, not so good news for Qinetiq that he's leaving - down over 10%!

- Crude oil down again - two year low was hit yesterday

- market digesting unemployment roughly in line with expectation but wage growth not very good (0.7% annually including bonuses, 0.9% excluding) ; negative real terms wage growth hardly good news so makes it more likely that interest rises will be put off again due to BoE fears the economy can't handle it...

- US, reports on manufacturing in the state of New York and U.S. wholesale prices missed expectations (manufacturing report was a reading of 6 in October, economists polled by Marketwatch had predicted 21+); a reading on retail sales showed a decline for the first time in eight months. Bank of America posting more losses for last quarter, though 3rd quarter loss was probably not as bad as the consensus expected; JPM fell 5%, so overall a key financials tracker index was down over 3%.

- Seeing the poor results from the US at US opening, European stocks generally fell even further on fears of contraction in global growth - so now the Stoxx Europe 600 is down over 10% YTD, which is 'correction' territory.

You're right the 'swings' don't seem so bad, we certainly didn't complain when things were moving positively by the same amounts. But we're seeing consistent daily falls as the data coming out isn't great... US drops will drive Asian drops which will drive European drops which will drive US drops the next day and so on - not looking pretty out there. Actually Asia did OK last night rebounding from some of yesterday's losses, and the US has gone back up after 1-2pm ish their time after we closed, so they might only end up 2% down on the S&P and Dow instead of the 3% it was looking close to being at one point.

Still, S&P down 2%ish is perilously close to the biggest one-day drop for a couple of years. It was only a month ago when S&P made its record high - and it's now 9% below that and in loss territory for the year so far. To be honest, I haven't checked that headline whether the 'down for the year' is including divis, but it's certainly not great news for bulls.

At some point last year we were seeing bizarre moves on the markets linked to projected Fed and BoE activity, because good bits of economic news made it more likely that money printing taps would be turned off, so markets would fall or get jittery on good data and vice versa. Now it seems we're reverting to normal because markets are wobbling when poor news comes out. A few groups are now projecting UK interest rate rises will now be pushed back to next August because of fears around the quality of the economic data... so that means the interest rates will stay low for a bit more, which should be good for markets, but with fear in the air people are now thinking 'hey, poor data is bad, right?', which is probably the right way to be thinking at least.

I'm not dumping all my stocks but I think there will be some people on this site and elsewhere who have got into investing in the last few years and only really seen broadly positive moves in their '5 year return' charts from all the investment funds, who will be a little shocked that things can drop 5-10% in a month after all... :cool:

AlwaysLearnin

Might be time to transfer the matured fix rate cash ISA amounts over to S&S and drip feed in...

Mistermeaner

Did i do the right thing flogging a load of my equities on monday then?

doe808

Added some more BP. to the long term portfolio today. Few other things on the radar too.

takesyourchances

ggb1979 wrote: »

Did i do the right thing flogging a load of my equities on monday then?

Are you planning to buy into equities again? If so, you may end up buying back in at a higher price. Nothing is lost until you sell at a loss, so if investing for the long term there is no reason to sell.

I bought some more tonight and will be drip feeding as normal.

Financial_Saddler

ggb1979 wrote: »

Did i do the right thing flogging a load of my equities on monday then?

If your risk and volatility appetite cannot stomach a market shakeout, then you did the right thing.
However, you have now given yourself the not insignificant problem of timing when, if ever, you get back into the market.If you are a typical investor, you will invariably miss a good chunk of any upswing.