Market Correction Strategy

pkpk

I have approx 15k in an ISA which I’m watching slowly disintegrate with the current effect of the virus issues. I don’t contribute regularly so it’s effectively a lump sum. The advice often seems to be to wait out corrections in the market but would it make sense to sell now and re-invest once the depth of the market and virus can be understood a little better? 

Thanks 
PK

tacpot12

No, studies have shown that the approach doesn’t work. You are very likely to be uninvested when the market recovers and you will miss out on the rise that will restore your losses. 

If you had sold a couple of days ago, you could have bought now, but generally retail investors don’t/can’t respond as quickly as the professionals, so we miss out on the opportunity to take advantage of market falls. The next best option is to stick it out.

dunstonh

 would it make sense to sell now and re-invest once the depth of the market and virus can be understood a little better? 
No.

You won't know when the bottom occurs.  You wont know when the real recovery starts.  You won't know if its a double dip or a triple dip.  You wont know if its the start of a long drawn out process or a short sharp drop.

The best result for most people is to sit tight and just punch through it and come out the other side.

fred246

I don't think my active funds will drop much because they have fund managers to react to this sort of situation. It's the passive ones you have to worry about. I guess the IFAs will be phoning up their clients to advise them.

pkpk

Yep, mine is passive Vanguard Life Stratergy 🤦‍♂️

Prism

fred246 said:

I don't think my active funds will drop much because they have fund managers to react to this sort of situation. It's the passive ones you have to worry about. I guess the IFAs will be phoning up their clients to advise them.

I doubt most of the fund managers will be doing much selling at all unless they see an opportunity to buy something else they have had their eye on. Certainly my active funds have dropped pretty much in line with the market. Since nobody has a clue how this will turn out best thing is to do nothing

city_of_london

Just stop watching it. You are not gaining any useful information by watching short-term market movements. And it may make you panic-sell. So direct your attention at something you enjoy, instead

Bravepants

Slow and steady...don't sell anything until the day comes when you need to!

scaredofdebt

The market will recover, it always does (so far).

eskbanker

fred246 said:

I don't think my active funds will drop much because they have fund managers to react to this sort of situation.

Do the facts validate your assumption?  Which ones are you invested in?

Thrugelmir

fred246 said:

I don't think my active funds will drop much because they have fund managers to react to this sort of situation. It's the passive ones you have to worry about. I guess the IFAs will be phoning up their clients to advise them.

What funds do you hold?