Markets - Minor Correction? (Edit: Question Answered)

Username999

Stargunner said:

DairyQueen said:

The last thing I would do during a correction would be to sell equities. 

I sold a lot of my equities on Monday morning, but it certainly wasn’t because of panic. This correction has been expected to come for a while and with the coronavirus I expected the markets to drop heavily and I expect them to drop even more,  It was a gamble, but because I thought that a big drop would occur  I would rather sit with my cash protected and buy in again when the threat from the coronavirus subsides. I am already about 8% better off by selling them, but if I am wrong and the markets don’t drop anymore then so be it.

You did well Stargunner, as a trader.
But what was your sell signal, not Coronavirus because that's been around for awhile now?
The markets should get back to the long term trend so I think you'll have plenty of opportunity to 're-invest' for a more realistic long term return.
 

Stargunner

Username999 said

You did well Stargunner, as a trader.
But what was your sell signal, not Coronavirus because that's been around for awhile now?
The markets should get back to the long term trend so I think you'll have plenty of opportunity to 're-invest' for a more realistic long term return.
 

My sell signal was that it was only a matter of time before the coronavirus affected the whole world and wouldn’t just be contained in China. The American markets fell quite heavily on the Friday before and then all the European markets opened down last Monday.

Ciprico

Now others have broken cover....., I also liquidated most of my pension last Monday, when it began to dip. I am not burdened with a deep understanding of financial "matters" and feel one of the benefits of private investors is that we can bale out and hold cash in nervous times without incurring much cost...
My rational was
- Corona is likely to get much worse 
- Especially when Americans (and Europeans) start dying 
-Trump/Bernie
-Trump/China
-Brexit (to a much lesser degree, and the effect it will have on Europe)
-The global market generally being perceived as being over cooked
So I saw lots of downside on different fronts - and not one single reason to be optimistic...!
I can't disagree I am gambling - I crystalised a 2-3% hit coming out, have and will incurr various transactional costs, have nominally saved £30k so far, will buy back in when the indexes have risen by 2-3%. I appreciate there may be double dips, the market could shoot up 20% before I can react, but overall I feel more comfy taking some control. 
This is the first time I have significantly sold out in 25 years but feel there is a perfect storm of many reasons to take breather at this point in time. Time will tell if this is the right decision. I still have £200k+ in Vanguard trackers, so if the market does shoot up unexpectedly I won't be too disappointed, and feel the market has dropped too much to those sell now...
Interesting times...

Thrugelmir

123mat123 said:

Now others have broken cover....., I also liquidated most of my pension last Monday, when it began to dip. I am not burdened with a deep understanding of financial "matters" and feel one of the benefits of private investors is that we can bale out and hold cash in nervous times without incurring much cost...

If people didn't hold contrarian views there'd be no markets to trade in. 

chucknorris

123mat123 said:

• Now others have broken cover....., I also liquidated most of my pension last Monday, when it began to dip. I am not burdened with a deep understanding of financial "matters" and feel one of the benefits of private investors is that we can bale out and hold cash in nervous times without incurring much cost...

You incur a lot of cost (opportunity cost), you just don't know it. There is no way that we would have as much in our retirement portfolio, if we had acted as bearish as you, we made most of our money investing when others like you were selling.

Username999

LOL you just lost £7M!

chucknorris

Username999 said:

LOL you just lost £7M!

No we did not, we are still worth almost £7m, but on reflection I decided it was unnecessary to reveal that to make the point. The point is still valid without large sums being involved.

Ciprico

chucknorris said:

123mat123 said:

• Now others have broken cover....., I also liquidated most of my pension last Monday, when it began to dip. I am not burdened with a deep understanding of financial "matters" and feel one of the benefits of private investors is that we can bale out and hold cash in nervous times without incurring much cost...

You incur a lot of cost (opportunity cost), you just don't know it. There is no way that we would have as much in our retirement portfolio, if we had acted as bearish as you, we made most of our money investing when others like you were selling.

Chuckn
Can you explain what I have lost.....?
I see it that I may lose...or I may win....
And on balance at the moment I prefer to hold cash.
Assuming you hold regular type investments and someone offered you the cash price equivalent from last Monday, or your current portfolio what would you chose now ?

chucknorris

123mat123 said:

chucknorris said:

123mat123 said:

• Now others have broken cover....., I also liquidated most of my pension last Monday, when it began to dip. I am not burdened with a deep understanding of financial "matters" and feel one of the benefits of private investors is that we can bale out and hold cash in nervous times without incurring much cost...

You incur a lot of cost (opportunity cost), you just don't know it. There is no way that we would have as much in our retirement portfolio, if we had acted as bearish as you, we made most of our money investing when others like you were selling.

Chuckn
Can you explain what I have lost.....?
I see it that I may lose...or I may win....
And on balance at the moment I prefer to hold cash.
Assuming you hold regular type investments and someone offered you the cash price equivalent from last Monday, or your current portfolio what would you chose now ?

Do you not understand what opportunity cost is?
No I would not, in fact, I invested a further £250k in British Land between Wednesday and Thursday, rather than selling what I already held. The price that I invested at gives an average yield of just over 6.2%, I am very happy with that. 

masonic

123mat123 said:

Can you explain what I have lost.....?
I see it that I may lose...or I may win....

And on balance at the moment I prefer to hold cash.

You just need to compare your end result with the result you would have achieved if you remained invested throughout and beyond this event. If you are like the vast majority of investors who try to time the market, you'll do worse overall by selling and buying back in, or (even worse) selling up and never buying back in. As well as this opportunity cost, there is also inflation - admittedly low at the moment - but it all adds up.

However, if you are approaching (or in) retirement and need this money in the short term, or to buy an annuity, then you've had a lucky escape as this is not money that could have been invested over the long term.

123mat123 said:

Assuming you hold regular type investments and someone offered you the cash price equivalent from last Monday, or your current portfolio what would you chose now ?

If someone were willing to buy my entire portfolio for its valuation last Monday, then of course I would jump at the chance (setting aside the practical challenges of holdings within ISAs and pensions). I'd then immediately use 90% of that money to buy my portfolio back, and I'd probably also invest the 10% profit. I certainly wouldn't try to time my re-entry to the market to a point where I thought we were at the bottom, or after I thought I'd seen some green shoots of recovery.