Should I sell ?

Ray_Singh-Blue

grey_gym_sock wrote: »

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?

One way is to set a % of peak at which you will buy back in, when eventually there is some sort of correction.

Imagine you bail out of your FTSE100 tracker at 7000 and decide to buy back in at 90% of peak. It could work out in two different ways.

1) WIN. The market soon turns and drops. Lets say the peak was 7300. Within 6 months you buy back in at 90% of 7300 which is 6570. The round trip transaction costs make that similar to buying back in at 6620. If you allow for missed dividends, 6740. Effectively, you have increased the size of your holding by 4% - the value of your holding is 4% more than had you just bought and held.

2) LOSE. You timed the sale perfectly. 7000 is the exact peak. The market instantly drops to 6301, not quite enough to trigger a buy which would happen at 90% of peak , 6300. But then conditions pick up and the market carries on rising steadily. The months tick by. 6500, 6800, 7000, 8000, 9000... there are frequent unudulations but the market does not lose 10% of it value for 10 years, when it sits at 13500 having nudged 15000 two years earlier. You dust off your plan and remember that it is time to buy back in to the market. Allowing for missed dividends, you are effectively buying back in at 22300. Effectively, you have decreased the size of your holding by 69%.

So there is the rub I think - while potential gains are limited, potential "un-gains" are not.

Thrugelmir

50Twuncle wrote: »

Is now the time to sell up and cash in my "winnings" ?

Time in the market is easier than trying to time the market. Don't overlook the fact that the underlying investments will continue to generate income that can be reinvested. Compounding is the investors friend.

BrockStoker

FWIW - if you have not sold by now, IMO you've missed the boat. The next few days (possibly weeks) is the time to buy if anything.

economic

BrockStoker wrote: »

FWIW - if you have not sold by now, IMO you've missed the boat. The next few days (possibly weeks) is the time to buy if anything.

do you know something no one else does? maybe you are certain trump will win?

DrSyn

50Twuncle wrote: »

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 !!

No one can see into the future so no one is able to answer these questions.

If you are that worried, have have thought of selling half and keeping the other half in a cash ISA? Then which ever way it goes, you will at least only be half wrong.

Jumping into & out of the markets will cost money

Trying to time the market is pointless. If you get it correct it will just be by luck.

BrockStoker

economic wrote: »

do you know something no one else does? maybe you are certain trump will win?

No and no.

All asset classes have dropped in value, and will likely drop further till the result is known. Markets hate uncertainty. Would you want to sell anything during this time?

Irrespective of what happens after the result is known, I'd suggest that after a drop is not a bad time to buy. Perhaps things will drop further once the result is known, which is why I am keeping some cash handy, but there is also a good chance of a relief rally once the result is known, so it seems sensible to me to take advantage of the fire sale, whilst hedging my bets by keeping cash handy for afterwards.

darkidoe

I would buy rather than sell at this point. Markets are always quite volatile pre elections, and they tend to settle and stabilise following an election result regardless of the result, perhaps allowing for some volatility if the result is unexpected. They tend to stablise and get used to the result anyway. So I predict the market to continue its upward hike after the elections.

BrockStoker

And just when you think you have markets figured out...

NASDAQ futures pointing to a strong open, and the NIKKEI 225 has already opened strongly.

What info am I missing!? (Edit: Looks like the FBI announcement did it) Perhaps it's a dead cat bounce, but the cat wasn't supposed to die till tues/wed

darkidoe

It all makes sense and doesn't make sense at the same time isn't it. Next thing you know, Trump would have won the election despite the FBI announcement and I will be having a huge laugh at how ridiculous life can be at times...

Pincher

Use up the £11,100 capital gains allowance, with the 20% not in ISA.