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

puk999

El_Selb wrote: »

as I don’t need my money in the next 2-3 of years at least (if I decide to buy a house) – the last 2 weeks isn’t an issue.

If you might need the money before 5 years then stocks and funds are very risky. 5 years is considered the very minimum time. The market could see a steep downturn within the next year that takes 3 or 4 years to recover from (for example). If you need the money to be there in the short term, better to eliminate the risk and keep it in cash.

Thrugelmir

El_Selb wrote: »

Although I should probably resist urges to buy something a bit more exciting like Tesco

What's exciting about Tesco's? The knives are just being sharpened for the forthcoming battle. Tesco's will survive but at what cost to the underlying business. M&S once was the darling of the High Street. Not that you would think that now.

Eco_Miser

puk999 wrote: »

If you might need the money before 5 years then stocks and funds are very risky. 5 years is considered the very minimum time. The market could see a steep downturn within the next year that takes 3 or 4 years to recover from (for example). If you need the money to be there in the short term, better to eliminate the risk and keep it in cash.

Could you explain why 5 years? I could hold funds for 10 years, then have them crash 50% a week before I want to cash them in to buy a house; or I could hold for just 3 years and be up 30%.

PenguinJim

In your example, Eco Miser, you could be rebalancing during those 10 years, funnelling money out of the stocks that show high gains and moving them into a less risky "deposit pot" as time goes by, so it's not a case of buying today and ignoring them completely until 8/10/2024.

I agree that five years seems arbitrary, but in a fit of stating the obvious, I'm going to say:

20>19>18>17>16>15>14>13>12>11>10>9>8>7>6>5>4>3>2>1

El Selb, I'm more concerned for you now that we know you're also saving for a house deposit (and if you're not, perhaps you should be!). Have you got your 5%/4%/3% bank accounts maxed out already?

Every penny I've invested, I've also written off. If every one of my shares and funds was suddenly worth 0p tomorrow, I'd be sad for days, but it's all money I could lose, which is why I've thrown it into the stock market. Even losing every penny, we'll still finish paying our 20-year mortgage comfortably in under seven years total. It doesn't sound like you have the same breathing space with your funds?

May I suggest forgetting about the market for a year or two, leaving your funds/shares where they are, and focusing next on a ginormous wodge of super-safe cash doing ~4%? You can always throw some of that cash at the markets within seconds if there's a crash next year, but in the meantime you'll get your emergency fund covered many times over, and be ready to grab a nice house at the drop of a hat.

chile_paul

PenguinJim wrote: »

In your example, Eco Miser, you could be rebalancing during those 10 years, funnelling money out of the stocks that show high gains and moving them into a less risky "deposit pot" as time goes by, so it's not a case of buying today and ignoring them completely until 8/10/2024.

I agree that five years seems arbitrary, but in a fit of stating the obvious, I'm going to say:

20>19>18>17>16>15>14>13>12>11>10>9>8>7>6>5>4>3>2>1

El Selb, I'm more concerned for you now that we know you're also saving for a house deposit (and if you're not, perhaps you should be!). Have you got your 5%/4%/3% bank accounts maxed out already?

Every penny I've invested, I've also written off. If every one of my shares and funds was suddenly worth 0p tomorrow, I'd be sad for days, but it's all money I could lose, which is why I've thrown it into the stock market. Even losing every penny, we'll still finish paying our 20-year mortgage comfortably in under seven years total. It doesn't sound like you have the same breathing space with your funds?

May I suggest forgetting about the market for a year or two, leaving your funds/shares where they are, and focusing next on a ginormous wodge of super-safe cash doing ~4%? You can always throw some of that cash at the markets within seconds if there's a crash next year, but in the meantime you'll get your emergency fund covered many times over, and be ready to grab a nice house at the drop of a hat.

PenguinJim I have to disagree to a certain extent with your view on risk. The chances of all investments falling to 0p overnight is precisely 0% and if that did happen we would all have a lot more to worry about than the value of our investments.

I think the question that El Selb has got to ask is whether, if the values of investment did fall by a more realistic 20 - 30% in a year, they would be happy delaying that house purchase for 2-3 years until the markets recovered. If you are happy within yourself to wait that little bit longer to buy a house then there is no reason not to be investing. If however you've got a target move in date and all of your focus is on getting in on that date then you should have your money somewhere safer.

Glen_Clark

The risks of being out of the market are greater than the risks of being in it*
*Warren Buffet

ChesterDog

...and on the bright side, if they keep going down for the rest of the week/month, then you are down by that percentage of a smaller amount of capital, so that's like a win. :-)

Well, almost...

gkerr4

bowlhead99 wrote: »

Yes this is the internet and we don't all have to agree, hopefully none of us are so precious that we can't take a point that contradicts our own.

N1AK is right, in what I was getting at. There is no such thing as "hoping they will double to even just give a modest return."

If they have doubled, they have just given a 100% return which is not all modest. It is 100%+ up!

If something has dropped 50% it needs to deliver 100%+ back up to get you back where you started. It was likely a badly timed investment. But it would be ridiculous to say, "oh, there's no point holding that, or buying that, because even if it goes up 100% growth that's a net zero return and I can't afford to take risks for a potential zero percent return.

If you dump it, then *whatever you choose to buy as replacement* will need to deliver 100% return to get you back to zero. There are very few such investments around. You simply need to recalibrate expectations and decide: if I was investing £x today, would I invest £x in deal A with the chance to increase my holdings substantially, based on my assessment of the prospects? Or should I give up and focus on my other opportunities in deal B that could give me a good return too?

People will fall back to their comfort zone in terms of taking new risk. But it doesn't mean they are, or should be, considering the original value at all. They are looking forward at returns from a current valuation. As such, if you buy or hold, say, Tesco from 180p, you should not think "no point holding this stock because after ten years of getting 7% return I am back to 360p which is only zero percent from some historic start price". Instead you may say, "I am going to hold this retailer from 180p for ten years of getting 7% return which will double my money from here and is a perfectly reasonable investment".

As such, dumping a stock simply because its market value is not what you paid for it, is silly.

indeed - we're not going to agree on this i doubt.

my point on the "double up" comment was that if you followed our example and bought at £3 and it dropped to £2 - then it would need to double to £4 just to give you 30% return.

again though - i think we are mistaking "stock picking" for "Financial plan" - my sell off at -12% is a financial plan and the stock in question is irrelevant. its simply about minimising losses. I've no doubt i've lost out on 'some' opportunities as a result - but i am also sure I've been saved from some crippling losses also.

Ive really worked hard over the past couple of years in the discipline if selling losers and letting winners run - it IS working for me - thats all i can say.

PenguinJim

chile_paul wrote: »

PenguinJim I have to disagree to a certain extent with your view on risk. The chances of all investments falling to 0p overnight is precisely 0% and if that did happen we would all have a lot more to worry about than the value of our investments.

I said my investments falling to 0p, and I was making the point that I'm investing what I can afford to lose. I did consider choosing an arbitrary non-0 amount for that sentence, but realised that it while it would be more accurate, it would not be helpful, and raising questions about how I reached whatever random figure I'd chosen would simply detract from the overall point. The Voodoo Shark effect.

In no way am I saying or hinting that every single stock in every market in the world will be worth 0p tomorrow.

gkerr4

bowlhead99 wrote: »

If something has dropped 50% it needs to deliver 100%+ back up to get you back where you started. It was likely a badly timed investment. But it would be ridiculous to say, "oh, there's no point holding that, or buying that, because even if it goes up 100% growth that's a net zero return and I can't afford to take risks for a potential zero percent return.

As such, dumping a stock simply because its market value is not what you paid for it, is silly.

My point on this would be that 'yes' it may be worth buying a stock that is 50% down on the basis that it could be a recovery play.

but in my book you shouldn't still be holding it - as you'd have got shot of it at the -12% mark. You may well have re-evaluated at the -50% mark when you feel it has 'bottomed out' - theres still a lot of scope for getting burned of course.

as for dumping being silly - well i would consider NOT selling the road to the poor house