Current market carnage - anyone selling or buying?

Superscrooge

BrockStoker wrote: »

I completely understand that timing the market is not easy and hit & miss at the best of times, BUT, I don't see why trying to buy when prices are low is WORSE than just blindly buying at an arbitrary time?

Sure your timing might not be perfect every time, but in the times I've tried to buy when the market has been low I've paid significantly less for shares than I paid when I first started buying/selling (and did not wait for a better opportunity) even when my timing has not been perfect.

Granted high management charges will eat away at your returns significantly over the long term and so is an important consideration, but it seems to me that if you get an initial boost by timing the market, even if you do not get it perfect, there's a high chance you can begin your investment with an extra few % at least, which over time should significantly add to your returns thanks to compounding, and much more so than 0.X of a percent difference in management fees. So why is one tactic frowned on whilst the other is encouraged?

If you successfully time the market and buy when prices are low. Then everyone would agree market timing has worked to your advantage. The problem is that most investors lose money through getting their timing wrong.

Quote from Peter Lynch in the below article;

“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves'

http://davisadvisors.com/davissma/downloads/WGI.pdf

There are also lots of articles quoting back calculations where it is shown that most investors trying to time the market would have been better off investing at the first opportunity.

I think of it in a similar way to passive investing.

Over the long term passive funds will beat the majority of actively managed funds. But there will always be some actively managed funds that beat the index. In the same way most investors will not successfully time the market, but there will always be those that do.

Hence the quote 'It's time in the market not timing that counts'

Regarding your comment that an initial extra few % is more important than a slightly higher management fee. I would have to disagree.

A slightly larger annual management fee, because it is applied to your investment every year has a much bigger effect on reducing your investment returns over the years.

N1AK

I completely understand that timing the market is not easy and hit & miss at the best of times, BUT, I don't see why trying to buy when prices are low is WORSE than just blindly buying at an arbitrary time?

Because blindly buying at regular intervals means you will follow the market. Trying to time the market means your success or failure will lead your return to diverge from the market. Making money from timing the market means one of two things:

• You got lucky
• You are better at predicting the market than the people who control the majority of value in the market

I take the view that 99%+ of people who believe that it is the latter are deluding themselves (or other people).

N1AK

Personally we'll be buying in the next couple of days, and repeatedly over the next 3 months. I invest regularly and to use up our ISA allowances we'll be investing more heavily during that period (which isn't ideal).

Dird

I started around Christmas. Was up £8 a week ago, checked last night...down £30 from my initial investment...time to panic sell xD

Chickereeeee

BrockStoker wrote: »

For example, I had 50K available, of which I've spent 12K, so I have two 19K shots left should the price dip significantly lower over the next few days/weeks.

And if the price goes (or even shoots) up?

C

crux

Personally as a regular buyer of securities for the foreseeable - I'd be quite happy to see a multi year bear market develop about now.

BrockStoker

Chickereeeee wrote: »

And if the price goes (or even shoots) up?

C

Wait for the next dip in price. At times like this you usually don't have to wait long for another dip. Of course, too much waiting cash is not a good idea, risking you being out of the market with a large chunk of your portfolio if there is no dip for a long time. So there is risk involved, but I think if you want some growth in times like these, you have to take some risks.

Superscrooge

Whatever our various investing strategy's. Lets just hope we are all successful!!

Pagg

I've a SSISA that's been going now for 4 years. This year is the first with a downside so far, accentuated by taking a dip into Asian markets right at the top, ouch. I'm about 2% down at the moment on April, but not concerned as it's for the long term. Even China will come round eventually

Chickereeeee

BrockStoker wrote: »

Wait for the next dip in price.

Which may be next wednesday or 5 years away. Nobody knows.

C