This correction-type thingy...

Damage

Glen_Clark wrote: »

If you sell now, how will you know when to buy back in?

At my current level of understanding, I would have gained an advantage if the price was lower than when I sold the fund. That's selling high and buying low, isn't it? Or, if the market has gone up, then I simply buy when I'm ready and actually know what I'm doing (which is the purpose of my sell-off). I would then have (stupidly) sold low and bought high, but I really don't think - all things considered - that the market has bottomed out and is now going to go up.

Does anyone currently think that the market has actually bottomed out and is now going to go up? The impression I get is that most people think the opposite, but if I am wrong then I'm not going to suffer to any significant extent emotionally or financially, whilst at the same time I'd have learned something, so either way is fine by me.

Damage

badger09 wrote: »

@ atush and Gadfium

If you have a look at some of Damage's earlier posts, you will see that he/she was rather impetuous and leapt into investing through HL without much basic knowledge. He/she very soon acknowledged this and has embarked on substantial research.

I hope I'm not misrepresenting, but he/she has opted to get back as soon as possible to where he/she was before the 'blind leap', in order to make a fresh start armed with some more knowledge. I have every sympathy with their thought process, even though I chose a very different route, but was in grave danger of paralysis by analysis

Yes, that's spot on!

I'm confident that I won't ultimately make a mess of this. I've read some great books, and have a load more lined up, but it will take a while to work through.

ChesterDog

Damage, you sound like you are going to be okay ultimately, but it's worth remembering that however many people think the market has bottomed out, has further to fall, is about to skyrocket, or anything else, they are quite likely to be wrong. :-)

And if they happen to be right this time, they will probably be wrong the next.

Markets do what markets do. They act like a rollercoaster in reverse; ultimately the prevailing direction is upwards, but along the way...

Predicting it short-term is like weather forecasting. Sometimes even the most scientific, expert, well-reasoned prediction turns out to be total tosh.

That's why you must always just stick to the plan.

Damage

bottleandahalf wrote: »

I am in the exact same boat mate. I jumped in without reading up etc and have decided to sell 90% of my funds at this time and start afresh as I was more or less level from where I was at the start of the year.

I see it as a fresh start to be able to drip feed in for the next 18-24 months, instead of 'Investing like a bull in a China shop'. Pardon the pun.

Timescale is 25-30 years.

I was a bit lost to start with, but saw Tim Hale's book 'Smarter Investing' mentioned on here a few times, so I started with that. From there I read 'A Random Walk Down Wall Street' by Burton Malkiel, which was along the same lines as 'Smarter Investing'. These are biased towards buy and hold investing approaches, and adopt the academic perspective which is at odds with trading and market-timing methods.

I was looking for some alternative perspectives, so read some good books about trading, trading psychology, and technical analysis. The general attitude of these books was broadly critical of the above-mentioned perspective, so I think they helped provide a balanced view.

Damage

ChesterDog wrote: »

Damage, you sound like you are going to be okay ultimately, but it's worth remembering that however many people think the market has bottomed out, has further to fall, is about to skyrocket, or anything else, they are quite likely to be wrong. :-)

And if they happen to be right this time, they will probably be wrong the next.

Markets do what markets do. They act like a rollercoaster in reverse; ultimately the prevailing direction is upwards, but along the way...

Predicting it short-term is like weather forecasting. Sometimes even the most scientific, expert, well-reasoned prediction turns out to be total tosh.

That's why you must always just stick to the plan regardless.

Yes, that's one thing I have learned: around 90% of professionals get it wrong as well, so it may well turn out that I have a natural talent and was as bad as them all along!

It seems from what I have been reading so far that the reason why virtually nobody can beat the market consistently is less to do with the nature of the market than it is to do with how an individual participant's mind works. Mark Douglas' books 'The Disciplined Trader' and 'Trading in the Zone' were very revealing in that respect. Also, Jack Schwager's book 'The New Market Wizards' surely goes some way towards making a mockery of the random walk hypothesis.

colsten

Damage wrote: »

.......... biased towards buy and hold investing approaches, and adopt the academic perspective which is at odds with trading and market-timing methods.

Anything that questions "buy and hold investing approaches" is not talking about investing but about trading. Most people aren't into trading. Investments are long-term commitments, i.e. "buy and hold" (and re-balance as needed over time).

You can argue until the cows come home whether passive or active investments are better. There will always be some people for and some against either.

I have concluded that those who are for active investments invariably have ulterior motives, which are often very difficult to detect. IMO, for people who don't have the time/inclination for trading and who just want to invest, passive is - as Tim Hale says - smarter. There is no evidence that active investments produce better results than passive ones, and there is no evidence that the vast majority of the public has any appetite for trading.

Damage

colsten wrote: »

Anything that questions "buy and hold investing approaches" is not talking about investing but about trading. Most people aren't into trading. Investments are long-term commitments, i.e. "buy and hold" (and re-balance as needed over time).

You can argue until the cows come home whether passive or active investments are better. There will always be some people for and some against either.

I have concluded that those who are for active investments invariably have ulterior motives, which are often very difficult to detect. IMO, for people who don't have the time/inclination for trading and who just want to invest, passive is - as Tim Hale says - smarter. There is no evidence that active investments produce better results than passive ones, and there is no evidence that the vast majority of the public has any appetite for trading.

Yes, I appreciate the differences, but as far as I can see, it's all the same thing but with a different focus. It's all dependent upon the same forces and mechanisms, but for the timescale.

A typical 'buy and hold' period can look no different from a day trade in graphical representation, if you ignore the scale of the chart. Wouldn't you agree? I think with that in mind, one can't readily dismiss either side of the argument on the basis of it being either 'trading' or 'investing'.

I think that what is the better approach depends on the individual, but that's a different argument from the one that claims the other doesn't exist. Despite aspects of technical analysis (and related methods) sometimes appearing to be mumbo-jumbo (at least in its interpretation and usage), it seems beyond doubt that it is valid, based upon the evidence. I get the impression that things get dismissed on the basis of agency (or at least where it plays a big part), as that isn't readily explained by the scientific method.

masonic

Damage wrote: »

Yes, I appreciate the differences, but as far as I can see, it's all the same thing but with a different focus. It's all dependent upon the same forces and mechanisms, but for the timescale.

A typical 'buy and hold' period can look no different from a day trade in graphical representation, if you ignore the scale of the chart. Wouldn't you agree? I think with that in mind, one can't readily dismiss either side of the argument on the basis of it being either 'trading' or 'investing'.

What you seem to be missing is that over the short term, price movements are essentially random, but over the long term they are not. Invest for less than a year and your odds of losing money are not much better than evens, but invest over 20 years or more and the odds of a loss are considerably less than 1 in 10. So you can't just ignore the time scale on the chart and claim investing short term is in any way equivalent to doing so long term. One is a matter of luck and the other is a near certainty.

talexuser

Damage wrote: »

A typical 'buy and hold' period can look no different from a day trade in graphical representation, if you ignore the scale of the chart.

Yes, and an apple can be exactly the same as a pear if you ignore the fact it is an apple.

Biggles

masonic wrote: »

Don't you recognise a spammer when you see one

Absolutely! Spam button clicked!