Good time to sell funds?

chucknorris

Kendall80 wrote: »

Interesting responses gents thanks.


Masonic - with the possibility of rate rises here and in the US do you honestly think that's a how a ftse 100 tracker would play out?


Judging by the tone of the responses I wonder how many on here stayed invested and simply endured the 2008 crash. Of course you would've made your money back by now unless you'd chosen a really awful portfolio. Personally - I hope to keep up with the latest news so that I can sell the majority of my funds at the beginning of any 30-40% downer. Why lose gains when you don't have to?

I suspect sometime soon (perhaps even now) you will look back and cringe when you read your post(s) again. When you invest in equities you have to accept that the market could at any time collapse, but as well as the risks, there are the rewards if you can stay in the market for the long term.

When I first started investing in funds, I was put off by the prospect of a large fall, yet with property I accepted that it would happen, and was comfortable with it, in the knowledge that the yields were good, and the market would eventually recover. Somehow at first I didn't think the same about equities, but I have come around now and realised that it is a similar situation.

But what I haven't quite got my head around yet, is whether to also hold cash/bonds to invest further when the market dips. I think that this is quite subjective, and it is therefore difficult to take/give advice from/to others for that very reason.

jimjames

Kendall80 wrote: »

Interesting responses gents thanks.


Masonic - with the possibility of rate rises here and in the US do you honestly think that's a how a ftse 100 tracker would play out?


Judging by the tone of the responses I wonder how many on here stayed invested and simply endured the 2008 crash. Of course you would've made your money back by now unless you'd chosen a really awful portfolio. Personally - I hope to keep up with the latest news so that I can sell the majority of my funds at the beginning of any 30-40% downer. Why lose gains when you don't have to?

I kept invested in 2008, yes I was down 50% at points but well up now.

It is entirely possible the markets could rise another 30% before any major correction. Even with the massive crash in 1987 the FTSE ended the year higher than it began.

It really is impossible to know if it's the start of a massive fall or short correction. There's an excellent chart that shows investor behaviour that might be of interest if I can locate it.

bowlhead99

jimjames wrote: »

It really is impossible to know if it's the start of a massive fall or short correction. There's an excellent chart that shows investor behaviour that might be of interest if I can locate it.

You mean this one...

TheTracker

I find that the best time to buy/sell funds is around 11am on a Wednesday a couple of times a year. I can do it with tea and biscuits, and subsequently entering the figures on 3, 5, 10-year return tracking spreadsheets gives me a pleasurable impetus for continuing to work the remainder of the week.

Rollinghome

InvestInPoker wrote: »

You can't time the markets.

Except of course, a lot of people pay others to do exactly that for them - fund managers.

The manager of actively managed funds may have core holdings but are likely to move at least some their allocations from one sector or part of the world depending on what they read as the future prospects. On an individual share level what they are doing is much the same.

Someone who invests invariably passively, without trying to invest during dips, is being consistent if they say that no one can time the markets. For the rest of us it might better to say "Personally, I'm rubbish at timing markets but if someone else thinks they can, then good luck to them, they'll need it". There's a vast difference between being consistently right, which is improbable, and being wrong slightly less often than right, which may be less improbable.

InvestInPoker

Rollinghome wrote: »

Except of course, a lot of people pay others to do exactly that for them - fund managers.

Yep very true, and I do use some active funds myself along with my passive allocations. I agree with you but with the added extra that investors that can "beat the market" are few and far between compared to the total number of investors. I also think your average buyer (and average fund manager) vastly over-estimate their own abilities at timing/beating the market.


I also (of course after saying the above) do not believe the whole "efficient market" theory. There are for certain some things that can be exploited over time to gain an edge on the "market". The likes of Warren Buffet and Neil Woodford who's successes are clearly from skill and not pure luck are proof of this. I believe most markets are very nearly efficient, but not quite what academic economists theorise.

jimjames

Rollinghome wrote: »

Except of course, a lot of people pay others to do exactly that for them - fund managers.

The manager of actively managed funds may have core holdings but are likely to move at least some their allocations from one sector or part of the world depending on what they read as the future prospects. On an individual share level what they are doing is much the same.
.

I guess it depends if you are using a fund manager to time the market or to beat the market by selecting specific shares.

I do think there's a difference even if it's subtle - paying a manager to find a share that meets certain criteria for the long term isn't the same as pulling money out of the market to reinvest at a lower level.

HSVX

InvestInPoker wrote: »

Yep very true, and I do use some active funds myself along with my passive allocations. I agree with you but with the added extra that investors that can "beat the market" are few and far between compared to the total number of investors. I also think your average buyer (and average fund manager) vastly over-estimate their own abilities at timing/beating the market.


I also (of course after saying the above) do not believe the whole "efficient market" theory. There are for certain some things that can be exploited over time to gain an edge on the "market". The likes of Warren Buffet and Neil Woodford who's successes are clearly from skill and not pure luck are proof of this. I believe most markets are very nearly efficient, but not quite what academic economists theorise.

Having studied economics I would agree. Efficient market hypotheses have very strong/unrealistic assumptions and they are definitely not perfect. It's whether they are imperfect enough for exploitations to be possible and profitable in some cases (like you said, Warren Buffet and Woodford, to name a couple, prove these exceptions exist).

Rollinghome

InvestInPoker wrote: »

There are for certain some things that can be exploited over time to gain an edge on the "market". The likes of Warren Buffet and Neil Woodford who's successes are clearly from skill and not pure luck are proof of this. I believe most markets are very nearly efficient, but not quite what academic economists theorise.

I'd suggest that Buffet and Woodford are actually examples who make less use of timing than most (and that might be significant to their success). But at the same time we should be careful about saying "You can't beat the market" without defining exactly what we mean.

InvestInPoker wrote: »

I also think your average buyer (and average fund manager) vastly over-estimate their own abilities at timing/beating the market.

To say "Your average buyer vastly-over estimate their own ablities at timing the market" is rather different to saying that it is impossible for an unknown individual, to an undefined extent or level of success, in undefined circumstances.

It's interesting that several people here like to use the phrase but then tell us how much they piled into the market in 2009 after the crash or seem to think that certain shares are currently cheap.

So rather than too routinely insisting that other people can't time the market we'd probably be better to point out the difficulty and limitations - and and if they aren't aware of the difficulty it may then be safe to assume they'd probably be better not trying.

kangoora

Well, there's nothing to say the current bull market won't continue - the longest one on record was for 13 years between 1987 and 2000 (a slow one until late 90's but still a bull market). You'd be a long time awaiting a correction if you pull out now and if that repeats - about 9 years probably. Meanwhile you'd be losing all the gains and dividend reinvestment over that period.

An optimist might say that we will move smoothly from QE to a booming world economy for 5 more years thanks to QE tiding everyone over until the world economy picks up. A pessimist might say because of QE the markets are going to crash at some point when QE is cut back. They've both got one thing in common, one of them is going to be wrong.

You're obviously on the pessimist side of the fence. Personally I tend to agree but I've picked some more defensive allocations in my portfolio just in case - not yanked all (or most) of my money out on the expectation of a crash in <6 months time which might not happen for 5+ years.