Squeaky bum time!

Liffy99

Yuk, at 63 I had just got the forms to start drawing down from my SIPP in the new tax year. I cant bear to look at my valuation but suspect it is over 10% down already and lost all of the gains in at least the last year. Trouble is we just dont expect this scale of shock do we - market fluctuations fine, but this bombshell ? Once in a generation which we just cannot plan for. I thought I was playing by the rules by starting to take income and capital out from April year on year and moving from funds to cash. Sure, for those with ten or more years of investing in front of them there is still hope, but unless we see a significant rebound in fairly short order it seems doubtful we retirees will see much joy. And I feel I am simply running out of years now ( sounds morbid I know) but I very much doubt my health in ten years time will allow me take full advantage of my pension funds then. My intention was always to make my sixties the good years, but health issues have already meant a delayed start and now this.
aaaaaaggghh

MK62

Liffy99 said:

Trouble is we just dont expect this scale of shock do we - market fluctuations fine, but this bombshell ? Once in a generation which we just cannot plan for. 

It is uncomfortable, but anyone investing in equities should expect these shocks.......if you look at the S&P 500 over the last 10 years, there have been 14 pullbacks of >5%, and 7 corrections >10%. They aren't that uncommon tbh.
The "once in a generation" bombshells are in the magnitude of a >40% drop, such as the dotcom bubble (2000-2003) and the global financial crisis (2007-2009)......
I think what has people more spooked this time is the speed of the drop.....

Shimrod

ProDave said:

These 2 pensions on their own are not enough but those plus state pension will be.  However I will have another 7 years to wait for my state pension (who know it might be longer if they pull the ladder up higher before I get there)

So this small DC pension will be drawn once I retire to fill the gap before the state pension.  I will also have other assets from the sale of a property.

This small DC pension has done it's growing as far as I am concerned, it did well (under the management of a fund) but now I would not forgive myself if in 3 years time I was looking at a smaller pot because I had invested it "wrong"

So some of this money is not required for nearly 10 years? That sounds like a long time to hold it as cash. A better strategy might be to hold some as cash for immediate needs (immediate in this case may be 2 years of drawdown), with the rest in a mix of gilts, bonds and equities - adjusting the profile as you replenish the cash. You will otherwise be losing significant value in your fund through inflation.

Thrugelmir

MK62 said:

Liffy99 said:

Trouble is we just dont expect this scale of shock do we - market fluctuations fine, but this bombshell ? Once in a generation which we just cannot plan for. 

It is uncomfortable, but anyone investing in equities should expect these shocks.......if you look at the S&P 500 over the last 10 years, there have been 14 pullbacks of >5%, and 7 corrections >10%. They aren't that uncommon tbh.
The "once in a generation" bombshells are in the magnitude of a >40% drop, such as the dotcom bubble (2000-2003) and the global financial crisis (2007-2009)......
I think what has people more spooked this time is the speed of the drop.....

More people have been encouraged to invest directly into equities etc due to the low interest rate environment in the past decade. As a consequence many companies share prices have been driven to very high levels. There's a long way to fall if the news is bad in the months ahead. 

MK62

Yep, and QE has driven bond prices up and yields down, causing income hunters to turn to equities, driving prices up further......when/if that starts to unwind we could see high correlation between bonds and equities - as bond prices fall, yields rise, making equities look less attractive, so pushing their prices down too.
TBH, we've all known about QE inflating asset prices, but it's been around that long many seem to have either forgotten or become complacent about it.
That said, imho it will take many years to unwind it all.......perhaps not in my lifetime!

Thrugelmir

MK62 said:

Yep, and QE has driven bond prices up and yields down, causing income hunters to turn to equities, driving prices up further......when/if that starts to unwind we could see high correlation between bonds and equities - as bond prices fall, yields rise, making equities look less attractive, so pushing their prices down too.
TBH, we've all known about QE inflating asset prices, but it's been around that long many seem to have either forgotten or become complacent about it.
That said, imho it will take many years to unwind it all.......perhaps not in my lifetime!

We've all been living through a monetary experiment. Perhaps this is the start of the end. A new beginning......

royalmike

MK62 said:

Liffy99 said:

Trouble is we just dont expect this scale of shock do we - market fluctuations fine, but this bombshell ? Once in a generation which we just cannot plan for. 

It is uncomfortable, but anyone investing in equities should expect these shocks.......if you look at the S&P 500 over the last 10 years, there have been 14 pullbacks of >5%, and 7 corrections >10%. They aren't that uncommon tbh.
The "once in a generation" bombshells are in the magnitude of a >40% drop, such as the dotcom bubble (2000-2003) and the global financial crisis (2007-2009)......
I think what has people more spooked this time is the speed of the drop.....

Well thats two in five years.

Have a look at the Wiki page there were lots

List of stock market crashes and bear markets

[Deleted User]

Anyone thinking that the world is ending after experiencing a mere correction needs to invest time and understand risks and asset allocation.  What we are likely to see next is interest rate drops, Central Banks providing additional liquidity, bargain hunters jumping in and recovery of the market within a few months. It is also possible that Coronavirus will devastate world economies, cause revolutions and create long term bear markets. In the latter case portfolio performance is the least of your problems. 

pensionpawn

Worth a read...
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">More on past epidemics. Looks like will all be fine. But remember importance of valuation starting points. <a href="https://twitter.com/hashtag/swineflu?src=hash&amp;amp;ref_src=twsrc^tfw">#swineflu</a> coincided with very low valuations. This <a href="https://twitter.com/hashtag/coronavirus?src=hash&amp;amp;ref_src=twsrc^tfw">#coronavirus</a> absolutely does not. <a href="https://t.co/MtavImVSt8">pic.twitter.com/MtavImVSt8</a></p>&mdash; Merryn Somerset Webb (@MerrynSW) <a href="

https://twitter.com/MerrynSW/status/1233341757527592960?ref_src=twsrc%5Etfw

">February 28, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

Thrugelmir

Deleted