Markets - Minor Correction? (Edit: Question Answered)

HolfolioBen

This is the time when others are getting nervous you need to stick to your guns.

Trust the old truisms (time in the market beats timing the market etc.), and just keep averaging into the market each month as you were going to before. Except now you can buy even more shares, so as long as you are still in accumulation phase, you should be happy with this price decline!

MarkCarnage

Market reaction so far has been broadly similar to previous global virus outbreaks. 
Stocks are down between 5-10% on average since the beginning of the coronavirus, a period over which discount rates have fallen meaningfully.  This suggests that getting on for 10% has been shaved off the present value of future earnings.  That’s a significant hit and would imply something like a 1-3% hit to global growth over this year, even if you assume a sizable chunk of the price move reflected rising risk premiums.
From this I draw three conclusions:
1) There is a lot now 'in the price', unless this virus moves to a different level and permanence of impact from what has been seen in the last three similar scares. 
2) The virus may have been a catalyst for triggering other investor concerns such as high leverage levels, asset price valuations generally
3) There is more limited wriggle room for central bank action to ease than in the past. Credit markets haven't really twitched much to date which is slightly concerning. 

Usually, such things are under discounted by markets initially, but then move at some point to an overdiscounted phase. The difficulty is knowing when ....particularly when there may be other investor concerns entangled in it. One consequence may be that vol levels stay higher than we have been used to seeing.
Some of the reactions on here suggest either fairly short memories, or younger folk who haven't been around a proper bear market. 

gary83

I know it’s never good to try & time the market, but I invested a work bonus lump sum in my pension this morning. I’m happy with my cash holdings & I’ll still be continuing the monthly direct debits, the markets likely will continue to go down, so it might be a poor decision with hindsight but I’ll be invested for the next 20+ years so I’m just taking it as a positive that my next purchases will be much cheaper than the last ones rather than trying to guess when it’ll hit the bottom.

I guess it’s much more worrying if your getting close to needing those funds & you see your bottom figure decreasing overnight.

MarkCarnage

I guess it’s much more worrying if your getting close to needing those funds & you see your bottom figure decreasing overnight.

You shouldn't be putting yourself in that position. Either have a liquidity reserve, some defensive assets, draw the natural yield or some combination of these. 

PParka

sparky0138 said:

My mum was waiting on cashback from Fidelity (should be on 5th March) then was going to transfer platforms to Vanguard SIPP. As they don't keep you invested in the same fund during the transfer and she'd be out of the market for a while, I take it this would be a bad time to do it? Would you advise sitting tight until things settle down a bit and just continue monthly deposits with Fidelity?

The Vanguard SIPP only accepts transfers in cash.  So whenever you make the transfer, you will be out of the market.
I have just started a transfer from AJ Bell to Vanguard, so everything is in cash and the drop is currently working in my favor.  However, things might have recovered by the time the money reaches Vanguard. There is nothing I can do about it, so I won't worry. 
I will just keep drip feeding the SIPP every month and hopefully it will pay off in 15 years time

Thrugelmir

Ceme3000 said:

But at what point do you decide it is a good time to buy?.......

When a share offers good value. Not every company is equally impacted. 

Username999

200 moving average on SPX is around 3030.
So another 120 points to go, but how much it will overshoot before the smart money buys back in?

Thrugelmir

Username999 said:

200 moving average on SPX is around 3030.
So another 120 points to go, but how much it will overshoot before the smart money buys back in?

The smart money may well already be offloading. Many US companies have been underpinning EPS with share buy backs for some considerable time. 

fun4everyone

Ireland v Italy (six nations) due for next weekend now postponed https://www.telegraph.co.uk/global-health/science-and-disease/coronavirus-news-latest-italy-uk-china-tenerife-death-toll/.  More volatility on the way imo.

Thrugelmir

fun4everyone said:

Ireland v Italy (six nations) due for next weekend now postponed https://www.telegraph.co.uk/global-health/science-and-disease/coronavirus-news-latest-italy-uk-china-tenerife-death-toll/.  More volatility on the way imo.

Not unsurprising given where the travelling support are coming from.