Markets - Minor Correction? (Edit: Question Answered)

ffacoffipawb

Thrugelmir said:

ffacoffipawb said:

aroominyork said:

ffacoffipawb said:

Losses this week 10%. Three years of drawdown. Wish I had Adam Sandler's remote control!!

Why is this jeopardising your financial independence? Were you planning to draw down from equities? 

Dividends yes. However it is unsettling when the capital goes down, as this could jeopardise dividends. The shares will only be sold when I am at least 70 (should I live that long) but only if / when I decide to annuitise.

Positive cash generation drives dividends. Historically the bulk of investment return is driven by dividend reinvestment. Law of compounding. 

Dividends used to pay drawdown. Not all of it, about 20% is reinvested.

To pay dividends, companies need to generate profits. The markets are starting to make 2020 seem like 2008. What are the long term impacts of this virus on profitability? That is the worry.

John464

Trump is saying 'Buy the Dip' - falling stock prices reduce his chance of re-election.
But I fear this epidemic will expose the weakness in the US healthcare system
People will avoid going to the doctor to save money, and the virus will spread more than in countries with socialised healthcare.

chucknorris

John464 said:

Trump is saying 'Buy the Dip' - falling stock prices reduce his chance of re-election.
But I fear this epidemic will expose the weakness in the US healthcare system
People will avoid going to the doctor to save money, and the virus will spread more than in countries with socialised healthcare.

I'm covering both extremes, I am buying at value prices, and I am also re-watching the the walking dead series (when money is irrelevant anyway)

Thrugelmir

ffacoffipawb said:

Thrugelmir said:

ffacoffipawb said:

aroominyork said:

ffacoffipawb said:

Losses this week 10%. Three years of drawdown. Wish I had Adam Sandler's remote control!!

Why is this jeopardising your financial independence? Were you planning to draw down from equities? 

Dividends yes. However it is unsettling when the capital goes down, as this could jeopardise dividends. The shares will only be sold when I am at least 70 (should I live that long) but only if / when I decide to annuitise.

Positive cash generation drives dividends. Historically the bulk of investment return is driven by dividend reinvestment. Law of compounding. 

Dividends used to pay drawdown. Not all of it, about 20% is reinvested.

To pay dividends, companies need to generate profits. The markets are starting to make 2020 seem like 2008. What are the long term impacts of this virus on profitability? That is the worry.

Profit is an accounting term .  Profit does not equate to "cash".  

Not like 2008 at all. Entirely different scenario. Was a financial collapse that the Central Banks pulled all the stops out to avoid happening. Read some books on the topic. Really enlightening as to the pressure behind the scenes. 

Thrugelmir

John464 said:

Trump is saying 'Buy the Dip' - falling stock prices reduce his chance of re-election.

Doesn't look good when people have been encouraged to bid up asset prices (by Central Banks) rather than reduce debt levels. To maintain growth in the economy. 

ProDave

This "correction" is long overdue, and has been waiting for a "trigger"

I have mentioned my view before.  Background.  2 years ago I transferred a small DC pension to a different provider in order to put it into a drawdown account.  To do that it had to be sold out and transferred as cash.  the timing worked out well and as a benchmark, the FTSE100 was at 7200 on the day it was transfered to cash.

Since that time I have been waiting for something to give me confidence to re invest it.  My aim is to start drawing it in 3 years time (I have already taken the tax free 25%) and Frankly nothing has given me any confidence that the markets have had much upward potential. We are at the end of one of the longest bull runs in history, and there is so much uncertainty with the B word and now the C word.

In the time I have been watching, the markets have been up a bit and down a bit. But at no point do the graphs look like anything other than marking time.

Given my short timescale, I don't have the luxury of "time in market" my fund has done that.  So I am still sitting it out.  I would rather be discussing how I have lost out a few % in lost dividends, rather than discussing how I lost 25% in a crash with no time to wait for it to recover.

I certainly would not be putting more money in right now to "average down"

For me the sad thing is there is no option with a pension fund to put it into a "guaranteed 1% no risk savings account"

royalmike

Agree with ProDave above market has been looking for a trigger for a year or more would be surprised if most markets dont drop by at least 25% from the highs maybe a lot more, personally sold all my stock in September mostly US and Canada as that was were I was living fault it was about tops then. Put 150,000 in Gold yesterday.  

Novice_investor101

I've just withdrawn a chunk of cash from my premium bonds to pay into my stocks ISA. I won't get the cash until the 5th March, but I'm making a guess unit prices will still be lower than they have been. Good buying opportunity, & my regular contributions will be buying more units too.  

25_Years_On

I notice that the Chinese CSI 300 recovered most of the lost ground in about a month after two weeks of falls. Which I mention out of interest rather than providing any insightful comment.

ffacoffipawb

The Dow just went down the sh1tter in the last 10 minutes. Sigh.

FTSE below 6500 tomorrow pretty much guaranteed.