Markets - Minor Correction? (Edit: Question Answered)

Amateurretiree

bowlhead99 said:

Amateurretiree said:
So I can liquidate the entire 300 000 into cash and leave it in the SIPP so it isn’t at the mercy of the stock market( 40 % in stocks 40% in bonds so would leave the bonds as they are?)

You can liquidate the stocks or bonds or both, but if you don't take the money out of the SIPP it will not be taxed as income, it's just value  sitting inside a pension that you haven't taken.

I you sell only the stocks you will no longer be at the mercy of the stock market but will still be at the mercy of the bond market - most people like some of both, by way of balance. There is also the commercial property market, the gold market, specialist investments in infrastructure projects or private equity, absolute return funds and various debt funds and alternative credit strategies etc etc.

We’ve got a few years of expenses in the bank but if we use it we would need to replace it- hard to do when already in drawdown. 

Might liquidate five years of drawdown (OH SP kicks in then) then that would still leave a good chunk invested.

Does that seem reasonable?

aroominyork

bowlhead99 said:

I you sell only the stocks you will no longer be at the mercy of the stock market but will still be at the mercy of the bond market - most people like some of both, by way of balance. There is also the commercial property market, the gold market, specialist investments in infrastructure projects or private equity, absolute return funds and various debt funds and alternative credit strategies etc etc.

I have a question about this kind of diversification. i have no understanding of the commercial property market, gold, specialist investments in infrastructure projects or private equity, alternative credit strategies, 9.25% preference shares etc. I guess property is a relatively easy diversifier to understand but beyond that it gets complicated and, it seems to me, goes into another level of sophistication - one which I currently have no great interest in studying. How important a gap does this leave in a portfolio (one aimed at retirement), compared to a set of active and passive equity funds alongside strategic or index bond funds?

Rollinghome

aroominyork said:

Sue58 said:

fun4everyone said:

I am of the hold forever type when it comes to equities.  This forum helped teach that to me. I don’t care about these falls.  

I can fully understand why some forum members have said they sold out last Monday. I'm down around 10% (so nearly £100K) so although time in the market is the usual comment on here, it is to be expected that some people have a responsibility to others and would prefer to cash in for now. This is not really about risk profile its more about making a decision that is right for you and your family at this time. As I mentioned, if I had cashed in last Monday morning I would be around £100K better off but like you I am holding for the long term but other view's are also understandable. 

I don't agree, Sue. If you are selling equities the moment there is a correction it means (standby for the second platitude after 'time in the market'...) that you have invested above your risk level. If there is one definition of 'risk level' it surely is that you are not putting yourself in a position where, barring extraordinary circumstances, you have to crystallise a loss.

You may have misunderstood what Sue was saying. 

To make the judgement to sell an investment, or to switch the proceeds to another investment, when an individual believes that the downside risk is greater than the upside most definitely does not necessarily mean that the individual has invested above their risk level.  It's what successful investors do all the time.

Nor must it mean crystallising a loss. Many market have recently been at all time highs so it is more likely to have crystallised a gain.

Good investment is about judgements. Only bad judgement and the complete avoidance of making decisions is bad investment.  Only with full details and the passage of time will it become clear whether the judgements made by some, though different to our own, were correct or not. 

We shouldn't rely on cliches and "rules" to avoid making decisions and should accept that some we'll get right and some we'll get wrong. (For the avoidance of doubt, I've made some adjustments in recent weeks but haven't parked any money under the mattress and still have well into seven figures invested.)

Thrugelmir

Rollinghome said:

aroominyork said:

Sue58 said:

fun4everyone said:

I am of the hold forever type when it comes to equities.  This forum helped teach that to me. I don’t care about these falls.  

I can fully understand why some forum members have said they sold out last Monday. I'm down around 10% (so nearly £100K) so although time in the market is the usual comment on here, it is to be expected that some people have a responsibility to others and would prefer to cash in for now. This is not really about risk profile its more about making a decision that is right for you and your family at this time. As I mentioned, if I had cashed in last Monday morning I would be around £100K better off but like you I am holding for the long term but other view's are also understandable. 

I don't agree, Sue. If you are selling equities the moment there is a correction it means (standby for the second platitude after 'time in the market'...) that you have invested above your risk level. If there is one definition of 'risk level' it surely is that you are not putting yourself in a position where, barring extraordinary circumstances, you have to crystallise a loss.

To make the judgement to sell an investment, or to switch the proceeds to another investment, when an individual believes that the downside risk is greater than the upside most definitely does not necessarily mean that the individual has invested above their risk level.  It's what successful investors do all the time.

The higher the risk level. The more extreme the volatility of the underlying investment will be. People should be comfortable with the risk level that they expose themselves too. After the past decade and depending on how events play out. Wouldn't be a surprise to see some dialling back in the risk level that some people are prepared to take. Wild swings in value can equally be exhilarating or depressing depending on how the pendulum swings. 

A_T

Username999 said:

chucknorris said:

Stargunner said:

If you had of waited until Friday you would of had the opportunity to buy them at an even lower cost. 

Only in the morning! The price improved on Friday to higher than I had invested! But I didn't have the luxury of hindsight that you had when you said that? Which is why what you are saying is ridiculous. I invested based on the yield, rather than guessing which way the market would go, it would not have really mattered that much if the price had not improved, because I was happy with the price that I invested, but I wouldn't expect you to understand that.

Sounds like you 'timed the market' to buy that £250K BLND?
6.33% is a great yield.
I have some RIET shares myself.

and even with that yield reinvested it's still down 25% in the last 5 years

aroominyork

Rollinghome said:

aroominyork said:

Sue58 said:

fun4everyone said:

I am of the hold forever type when it comes to equities.  This forum helped teach that to me. I don’t care about these falls.  

I can fully understand why some forum members have said they sold out last Monday. I'm down around 10% (so nearly £100K) so although time in the market is the usual comment on here, it is to be expected that some people have a responsibility to others and would prefer to cash in for now. This is not really about risk profile its more about making a decision that is right for you and your family at this time. As I mentioned, if I had cashed in last Monday morning I would be around £100K better off but like you I am holding for the long term but other view's are also understandable. 

I don't agree, Sue. If you are selling equities the moment there is a correction it means (standby for the second platitude after 'time in the market'...) that you have invested above your risk level. If there is one definition of 'risk level' it surely is that you are not putting yourself in a position where, barring extraordinary circumstances, you have to crystallise a loss.

You may have misunderstood what Sue was saying. 

To make the judgement to sell an investment, or to switch the proceeds to another investment, when an individual believes that the downside risk is greater than the upside most definitely does not necessarily mean that the individual has invested above their risk level.  It's what successful investors do all the time.

Nor must it mean crystallising a loss. Many market have recently been at all time highs so it is more likely to have crystallised a gain.

Good investment is about judgements. Only bad judgement and the complete avoidance of making decisions is bad investment.  Only with full details and the passage of time will it become clear whether the judgements made by some, though different to our own, were correct or not. 

We shouldn't rely on cliches and "rules" to avoid making decisions and should accept that some we'll get right and some we'll get wrong. (For the avoidance of doubt, I've made some adjustments in recent weeks but haven't parked any money under the mattress and still have well into seven figures invested.)

Sue was discussing "cash(ing) in for now". While that may be at a profit since originally buying the investment, it is crystallising a loss resulting from the current event (eg coronavirus). And selling "for now", implies intending to re-buy at a later date. Hence this person is unable to see through the dip and hopes they can time when to re-buy. That sounds to me like not having invested according to your risk level.

bowlhead99

aroominyork said:

Sue was discussing "cash(ing) in for now". While that may be at a profit since originally buying the investment, it is crystallising a loss resulting from the current event (eg coronavirus). And selling "for now", implies intending to re-buy at a later date. Hence this person is unable to see through the dip and hopes they can time when to re-buy. That sounds to me like not having invested according to your risk level.

People don't go broke taking a profit. Seems like having assessed the circumstances they consider they would be better off with other assets at this point in time. This is something that active investors and fund managers do. Likewise institutional investors such as pension schemes will change their asset allocations from time to time. This does not mean they have accidentally invested out of line with their risk tolerance. More that they are conducting ongoing risk analysis and looking for value where it presents itself.

Stargunner

aroominyork said:

Sue was discussing "cash(ing) in for now". While that may be at a profit since originally buying the investment, it is crystallising a loss resulting from the current event (eg coronavirus). And selling "for now", implies intending to re-buy at a later date. Hence this person is unable to see through the dip and hopes they can time when to re-buy. That sounds to me like not having invested according to your risk level.

I disagree with you. I also sold a lot of my equities last Monday. It was nothing to do with not investing according to my risk level. 

The reason is that I made the decision that there was going to be a big drop in the markets, so why just sit watching my pot dropping in value every day when I can keep it as cash and reinvest it at a later date. The markets dropped 10% last week and I think they will drop a lot more in the foreseeable future. I may be wrong and I won’t know when the market bottoms out but I will just buy back in when things settle down.

Audaxer

aroominyork said:

Rollinghome said:

aroominyork said:

Sue58 said:

fun4everyone said:

I am of the hold forever type when it comes to equities.  This forum helped teach that to me. I don’t care about these falls.  

I can fully understand why some forum members have said they sold out last Monday. I'm down around 10% (so nearly £100K) so although time in the market is the usual comment on here, it is to be expected that some people have a responsibility to others and would prefer to cash in for now. This is not really about risk profile its more about making a decision that is right for you and your family at this time. As I mentioned, if I had cashed in last Monday morning I would be around £100K better off but like you I am holding for the long term but other view's are also understandable. 

I don't agree, Sue. If you are selling equities the moment there is a correction it means (standby for the second platitude after 'time in the market'...) that you have invested above your risk level. If there is one definition of 'risk level' it surely is that you are not putting yourself in a position where, barring extraordinary circumstances, you have to crystallise a loss.

You may have misunderstood what Sue was saying. 

To make the judgement to sell an investment, or to switch the proceeds to another investment, when an individual believes that the downside risk is greater than the upside most definitely does not necessarily mean that the individual has invested above their risk level.  It's what successful investors do all the time.

Nor must it mean crystallising a loss. Many market have recently been at all time highs so it is more likely to have crystallised a gain.

Good investment is about judgements. Only bad judgement and the complete avoidance of making decisions is bad investment.  Only with full details and the passage of time will it become clear whether the judgements made by some, though different to our own, were correct or not. 

We shouldn't rely on cliches and "rules" to avoid making decisions and should accept that some we'll get right and some we'll get wrong. (For the avoidance of doubt, I've made some adjustments in recent weeks but haven't parked any money under the mattress and still have well into seven figures invested.)

Sue was discussing "cash(ing) in for now". While that may be at a profit since originally buying the investment, it is crystallising a loss resulting from the current event (eg coronavirus). And selling "for now", implies intending to re-buy at a later date. Hence this person is unable to see through the dip and hopes they can time when to re-buy. That sounds to me like not having invested according to your risk level.

I don't agree with selling at a loss either and it could signal that someone had invested above their risk level and then panicked at the first correction. However say in a scenario when someone had an investment that had doubled in value in the last 5 years even after the dip. They might decide to take that profit now rather than risk it falling any lower. In hindsight they would wish they had taken a bigger profit last month or even last week, but if they didn't want to risk losing more of gains they had made on that particular investment, could it not seem a reasonable decision for them to sell that investment now?

Thrugelmir

Audaxer said:

aroominyork said:

Rollinghome said:

aroominyork said:

Sue58 said:

fun4everyone said:

I am of the hold forever type when it comes to equities.  This forum helped teach that to me. I don’t care about these falls.  

I can fully understand why some forum members have said they sold out last Monday. I'm down around 10% (so nearly £100K) so although time in the market is the usual comment on here, it is to be expected that some people have a responsibility to others and would prefer to cash in for now. This is not really about risk profile its more about making a decision that is right for you and your family at this time. As I mentioned, if I had cashed in last Monday morning I would be around £100K better off but like you I am holding for the long term but other view's are also understandable. 

I don't agree, Sue. If you are selling equities the moment there is a correction it means (standby for the second platitude after 'time in the market'...) that you have invested above your risk level. If there is one definition of 'risk level' it surely is that you are not putting yourself in a position where, barring extraordinary circumstances, you have to crystallise a loss.

You may have misunderstood what Sue was saying. 

To make the judgement to sell an investment, or to switch the proceeds to another investment, when an individual believes that the downside risk is greater than the upside most definitely does not necessarily mean that the individual has invested above their risk level.  It's what successful investors do all the time.

Nor must it mean crystallising a loss. Many market have recently been at all time highs so it is more likely to have crystallised a gain.

Good investment is about judgements. Only bad judgement and the complete avoidance of making decisions is bad investment.  Only with full details and the passage of time will it become clear whether the judgements made by some, though different to our own, were correct or not. 

We shouldn't rely on cliches and "rules" to avoid making decisions and should accept that some we'll get right and some we'll get wrong. (For the avoidance of doubt, I've made some adjustments in recent weeks but haven't parked any money under the mattress and still have well into seven figures invested.)

Sue was discussing "cash(ing) in for now". While that may be at a profit since originally buying the investment, it is crystallising a loss resulting from the current event (eg coronavirus). And selling "for now", implies intending to re-buy at a later date. Hence this person is unable to see through the dip and hopes they can time when to re-buy. That sounds to me like not having invested according to your risk level.

I don't agree with selling at a loss either and it could signal that someone had invested above their risk level and then panicked at the first correction. However say in a scenario when someone had an investment that had doubled in value in the last 5 years even after the dip. They might decide to take that profit now rather than risk it falling any lower. In hindsight they would wish they had taken a bigger profit last month or even last week, but if they didn't want to risk losing more of gains they had made on that particular investment, could it not seem a reasonable decision for them to sell that investment now?

Then one returns to the discussion of timing the market rather than time in the market. Missing the best trading days of any one year has been shown to greatly reduce returns if it's passive investment in the form of an equity index tracker. Other investments need to be considered on their own merits. As often in corrections there's a mark down across the board. Those least or unaffected bounce back sooner.