Should I sell ?

50Twuncle

I have a not considerable sum (80% ISA) invested with a investment management company in a good spread of fixed interest uk, fixed interest overseas, equities (uk, usa and asian)
Since the Brexit vote - I have seen the value rise on a daily basis which I believe is due - not to corporate heath but to the drop in value of the £...
Which leaves me with a question - How much further can the £ drop ?
Is now the time to sell up and cash in my "winnings" ?
What will FTSE do - it is currently over 7000 !!

ColdIron

Do you need the money? Where do you think will be a better home for it than investments in the years to come?

50Twuncle

ColdIron wrote: »

Do you need the money? Where do you think will be a better home for it than investments in the years to come?

No - I don't need the money - but the thought of losing all of the £'s gained fills me with dread - I thought about cashing it all in and holding it as cash for, say 6 months - to see what the market does - with the option of repurchasing the same stock later ...
I assume that if I did instruct the management company to sell - I would not lose my ISA entitlement - if they hold the funds as cash ?

grey_gym_sock

what is this capital for?

if you're planning to spend it, or do something with it, relatively sooner, then you might well cash in some of it - probably not all at once, though, unless you want the money back very soon.

but if it's for the long term - say, over 10 years - then sit tight. nobody knows what the £ will do next, or what the FTSE will do, or any other markets. assuming you have a portfolio which makes sense for your timescale, your willingness to take risk, etc, why change it now?

if you sell, you have a lot of cash, which will probably pay less interest than inflation (at least over the next year, while the inflation from the falling £ works through - though this might be a 1-off, rather than persistent inflation). and you have the problem of market timers: when do you go back into the markets. how far do you wait for them to fall? and if they keep on rising instead, when do you admit you were wrong and buy back in anyway?

and if you really can't resist the urge to tinker, then just sell a bit, not everything.

50Twuncle

grey_gym_sock wrote: »

what is this capital for?

if you're planning to spend it, or do something with it, relatively sooner, then you might well cash in some of it - probably not all at once, though, unless you want the money back very soon.

but if it's for the long term - say, over 10 years - then sit tight. nobody knows what the £ will do next, or what the FTSE will do, or any other markets. assuming you have a portfolio which makes sense for your timescale, your willingness to take risk, etc, why change it now?

if you sell, you have a lot of cash, which will probably pay less interest than inflation (at least over the next year, while the inflation from the falling £ works through - though this might be a 1-off, rather than persistent inflation). and you have the problem of market timers: when do you go back into the markets. how far do you wait for them to fall? and if they keep on rising instead, when do you admit you were wrong and buy back in anyway?

and if you really can't resist the urge to tinker, then just sell a bit, not everything.

The capital is for retirement in perhaps 10 years
You are right - just leave it where it is and keep my finger crossed that there is no catastrophic brexit event....

Glen_Clark

grey_gym_sock wrote: »

when do you go back into the markets. how far do you wait for them to fall? and if they keep on rising instead, when do you admit you were wrong and buy back in anyway?

That decision sounds a lot more difficult than deciding to sell now.

bigadaj

50Twuncle wrote: »

The capital is for retirement in perhaps 10 years
You are right - just leave it where it is and keep my finger crossed that there is no catastrophic brexit event....

Or maybe there is a catastrophic Brexit event on the sense that sterling continues to slide and leads to overseas investments rising in sterling terms.

jimjames

50Twuncle wrote: »

- I thought about cashing it all in and holding it as cash for, say 6 months - to see what the market does - with the option of repurchasing the same stock later ...

What happens if the pound continues to fall and markets continue to rise? At what point do you decide you made a mistake and have to purchase back at a higher level than you sold at?

longleggedhair

Funnily enough I've been feeling the same as the OP. I've always bought and then held & that policy has rewarded me handsomely over the years however I do feel at the minute like hitting the sell button and sitting back and seeing what happens for say the next six months.

It just feels like there is very little upside to the market currently but plenty of downside. I just find it very difficult to sell.....

bowlhead99

longleggedhair wrote: »

Funnily enough I've been feeling the same as the OP. I've always bought and then held & that policy has rewarded me handsomely over the years

If you have a mix of sterling cash and a blend of UK and overseas investments then you will be reasonably well equipped to handle whatever the world throws at you, whether that be sterling devaluation, inflation or market downturns.

Whereas if you are like the large proportion of the UK population who don't have any spare wealth beyond their cash emergency fund and medium-term savings, then you can't participate in the world of 'investments'. This means that unlike the OP, you woudn't have anything growing in value that compensates for your cash's reduced buying power brought on by inflation or exchange rate devaluation, and your wealth would fail to keep pace with the rest of the world around you.

We can commiserate with people in the second camp who were in the position of having no investments because they just weren't wealthy enough to buy any - it's a shame for them, and it has the potential to considerably widen the gap between the haves and have-nots.

You and the OP are wondering whether you should voluntarily join the second group and stop having an investment portfolio. Given you have 'always' bought investments, held them, and been 'rewarded handsomely', I guess you have to ask yourself: was the reward just pure luck, or is a broad investment portfolio a fundamentally a good thing to have as you go through life's trials and tribulations.

If you have evaluated all the different things that could happen in world economics over the next decade and think that the next six months specifically is a time to be in sterling cash rather than any investments, because you're cynical/ sceptical about there being any upside or breakevenside and it is mostly going to be downside... then sure, flip the whole portfolio to cash and roll the dice.

Selling things that have 'had a great run' is not always a bad thing because when people pay more and more money for good performance it highlights the fact that if the performance was less great they would pay less and less money for it. However, the OP observed that corporate health has not been on a great run, just a normal one, so there is nothing that fundamentally needs to reverse from that perspective.

Instead, he notes that much of his recent gains where he saw his portfolio grow on a daily basis were not due to people paying proportionately more and more money for the same assets and earnings, it has been due to them paying more and more *pounds* for the assets and earnings because pounds are worth less to the average citizen of the world.

The lesson that some people will take from that is that it's good to have a decent proportion of your wealth in overseas assets (and domestic assets which have an element of their value linked to foreign currencies) because when pounds become less valuable from time to time, your wealth won't be destroyed. However, some people will not take that lesson. They will just say no that's rubbish, the pound just went down so it must go up next and everyone is paying too much for investments so I must dump this globally diversified investment portfolio now I've called the top of the market.

longleggedhair wrote: »

I do feel at the minute like hitting the sell button and sitting back and seeing what happens for say the next six months.

Well, after you've seen it, will you feel any more qualified to evaluate all possible economic events over the next decade and know the next market direction with certainty to allow you to make a buy/don't buy choice? I doubt that.

If markets have been so kind to you that you have a much greater proportion of your wealth in investments than you used to, versus cash, then obviously you should consider whether you can handle the potential drops that might be experienced by keeping that mix.

But all we can say is if you don't participate in world markets, by sitting in cash instead, you should not be under any illusion that you would be protected from their effects, because they will still translate into how much stuff you can buy for your cash.

longleggedhair

Thank you bowlhead. I must say that was one of the best & most thought provoking posts I have ever read, and I do agree with you fully. As you say none of us have a crystal ball.

However that said I did hit the sell button on Monday. So far at least that looks to have been a good decision. Again one based purely on luck. However I will be using the sale to rebalance when I do eventually buy back in. My exposure to commercial property in particular had become too large purely due to the growth in the value of the trusts I held, so that will take a trim.

The intention is not to be out of the market long a few weeks or months at most, and it will be part of a rebalancing process. The money is currently sat in an online account earning .5% and that is not something I can tolerate for long! But thank you for your thoughtful reply, and fear not I'm going back in soon, the returns I've made over the last decade since I began investing have dwarfed everything else and have made me very comfortable.