Liquidate entire portfolio until virus is over?

Thrugelmir

blue_max_3 said:

I was tempted to invest after the crash, but didn't think we'd bottomed out. Now it's just risen and risen. That makes it an easy decision for me to stay out for now. My view is there is a significant problem getting back to work and every area of business is being effected. The government is surely propping the market up and that will come to an end at some point. 

In what way is the Government propping the market up?

blue_max_3

Thrugelmir said:

blue_max_3 said:

I was tempted to invest after the crash, but didn't think we'd bottomed out. Now it's just risen and risen. That makes it an easy decision for me to stay out for now. My view is there is a significant problem getting back to work and every area of business is being effected. The government is surely propping the market up and that will come to an end at some point. 

In what way is the Government propping the market up?

If you see what is happening in the States - google 'is the government propping up the stock market'. And it's clear we are hugely influenced by the States. Much happens behind the scenes and I'm sure our government will do what it can. I don't know this is the case, just suspect.
But there is no way all this devastation is 'factored in' any more. Surely no-one believes that?

Linton

blue_max_3 said:

I was tempted to invest after the crash, but didn't think we'd bottomed out. Now it's just risen and risen. That makes it an easy decision for me to stay out for now. My view is there is a significant problem getting back to work and every area of business is being effected. The government is surely propping the market up and that will come to an end at some point. 

 - mmm  cognitive dissonance:

*I believe the markets are going to fall further.

*The markets rise.

*Obviously there must be a conspiracy by the government

If the government were propping up share prices wouldn't someone have noticed an unusal set of very large transactions going through?  It could hardly be done secretly. Perhaps the press and the financial industry is part of the conspiracy. There is of course a rather more rational explanation.

In any case if you were invested globally and broadly what happens to the UK markets would be of marginal interest. 

Thrugelmir

blue_max_3 said:

Thrugelmir said:

blue_max_3 said:

I was tempted to invest after the crash, but didn't think we'd bottomed out. Now it's just risen and risen. That makes it an easy decision for me to stay out for now. My view is there is a significant problem getting back to work and every area of business is being effected. The government is surely propping the market up and that will come to an end at some point. 

In what way is the Government propping the market up?

If you see what is happening in the States - google 'is the government propping up the stock market'. And it's clear we are hugely influenced by the States. Much happens behind the scenes and I'm sure our government will do what it can. I don't know this is the case, just suspect.
But there is no way all this devastation is 'factored in' any more. Surely no-one believes that?

Prefer facts to nonsense conspiracy theories. Facebook is the place to discuss those. 

blue_max_3

Is blind faith a better bedfellow?
Well, maybe so. I like to have at least an inkling why markets are behaving why they are. It's beyond my simple comprehension. They say you should never invest in something you don't understand, so I'm taking that advice for now. I could regret it, but that's the roll of the dice.

Linton

blue_max_3 said:

Is blind faith a better bedfellow?
Well, maybe so. I like to have at least an inkling why markets are behaving why they are. It's beyond my simple comprehension. They say you should never invest in something you don't understand, so I'm taking that advice for now. I could regret it, but that's the roll of the dice.

Enlightenment comes when you accept that markets are inherently unpredictable.  Say it was predictable that there would be a crash in 2 months time, what would happen?  People would sell and no-one would want to buy so the crash would happen now, invalidating the prediction.

So how does an investor handle this? 

1) Firstly you do need faith that over the long time prices will generally rise.  One reason for taking this as a given is that if it doesnt happen it would mean that globally industry was unprofitable with consequences so severe for the world population that the value of your investments would be the least of your worries. There is a strategy in card games whereby if you are dealt a bad hand you play as if the opponents cards have fallen right for you.  In that way you can win an apparently lost game.  If you lose, well you priobably would have lost anyway. Another reason for planning on prices rising in the long term is that it has happened for the past few hundred years over times far more troubled than the current one.

2) Invest for the long term.  If you invest for the short term there is a real possibility that you will end up with less than you started.  If you are investing for the long term the short term fluctuations can be ignored.  Note that long term means 5 years at the very least. 10 years would be better.

3) Invest broadly.  The fewer the number of different assets, industries countries etc you invest in the greater the chances that a short term localised problem could wipe you out.  Investing broadly also has the advantage that you catch the unexpected successes which have the potential of earning you a far larger return than the losses from the failures.

4) Invest at an appropriate risk.  You have a wide range of risk/returns available.  At one extreme you could invest in highly  speculative technology, mining for rare minerals and metals, new drug development etc etc.  You would either become rich or more likely end up with virtually nothing.  At the other extreme you can invest in government bonds at close to zero return but 100% guaranteed at least up to the point at which the world as we know it ceases to exist.  In order to strike an appropriate balance you need reasonable objectives and to know what return is required to meet them.  You then do not need to take unnecessary risk to achieve anything greater. 

The second aspect to setting the right risk/return balance is psychology.  Some people may know intellectually that short term fluctuations dont matter but when a major fall occurs they panic and sell out at a loss.  If you are such a person you need to tone down your risk level to one at which you feel comfortable.  Of course that also means toning down your objectives.

Sailtheworld

If the government was capable of holding up share prices they wouldn't have fallen in the first place.

Thrugelmir

blue_max_3 said:

Is blind faith a better bedfellow?
Well, maybe so. I like to have at least an inkling why markets are behaving why they are. It's beyond my simple comprehension. They say you should never invest in something you don't understand, so I'm taking that advice for now. I could regret it, but that's the roll of the dice.

Then use someone to manage your finances for you. Markets are complex places. It's not the real economy. Many vested interests operate at individual share levels. Keep an open mind to everything. There's plenty of excellent sources of material if you wish to expand your knowlege horizons. 

blue_max_3

Linton said:

Enlightenment comes when you accept that markets are inherently unpredictable.  Say it was predictable that there would be a crash in 2 months time, what would happen?  People would sell and no-one would want to buy so the crash would happen now, invalidating the prediction.

So how does an investor handle this? 

1) Firstly you do need faith that over the long time prices will generally rise.  One reason for taking this as a given is that if it doesnt happen it would mean that globally industry was unprofitable with consequences so severe for the world population that the value of your investments would be the least of your worries. There is a strategy in card games whereby if you are dealt a bad hand you play as if the opponents cards have fallen right for you.  In that way you can win an apparently lost game.  If you lose, well you priobably would have lost anyway. Another reason for planning on prices rising in the long term is that it has happened for the past few hundred years over times far more troubled than the current one.

2) Invest for the long term.  If you invest for the short term there is a real possibility that you will end up with less than you started.  If you are investing for the long term the short term fluctuations can be ignored.  Note that long term means 5 years at the very least. 10 years would be better.

3) Invest broadly.  The fewer the number of different assets, industries countries etc you invest in the greater the chances that a short term localised problem could wipe you out.  Investing broadly also has the advantage that you catch the unexpected successes which have the potential of earning you a far larger return than the losses from the failures.

4) Invest at an appropriate risk.  You have a wide range of risk/returns available.  At one extreme you could invest in highly  speculative technology, mining for rare minerals and metals, new drug development etc etc.  You would either become rich or more likely end up with virtually nothing.  At the other extreme you can invest in government bonds at close to zero return but 100% guaranteed at least up to the point at which the world as we know it ceases to exist.  In order to strike an appropriate balance you need reasonable objectives and to know what return is required to meet them.  You then do not need to take unnecessary risk to achieve anything greater. 

The second aspect to setting the right risk/return balance is psychology.  Some people may know intellectually that short term fluctuations dont matter but when a major fall occurs they panic and sell out at a loss.  If you are such a person you need to tone down your risk level to one at which you feel comfortable.  Of course that also means toning down your objectives.

I understand all of that. I am not financially illiterate. This is an unprecedented situation as it's a global issue. There is no real precedent. Just citing history and hoping things will just work out is nothing more than a gamble and wishful thinking. As is being out of the market.
April is always a good time for the markets as people look to place their S&S Isa allowances and SIP contributions before the end of the tax year. And demand adds confidence. 
I don't want to be the doomster, to use Boris's word But it's an opinion and equally valid as anyone else's.

Thrugelmir

blue_max_3 said:

Linton said:

Enlightenment comes when you accept that markets are inherently unpredictable.  Say it was predictable that there would be a crash in 2 months time, what would happen?  People would sell and no-one would want to buy so the crash would happen now, invalidating the prediction.

So how does an investor handle this? 

1) Firstly you do need faith that over the long time prices will generally rise.  One reason for taking this as a given is that if it doesnt happen it would mean that globally industry was unprofitable with consequences so severe for the world population that the value of your investments would be the least of your worries. There is a strategy in card games whereby if you are dealt a bad hand you play as if the opponents cards have fallen right for you.  In that way you can win an apparently lost game.  If you lose, well you priobably would have lost anyway. Another reason for planning on prices rising in the long term is that it has happened for the past few hundred years over times far more troubled than the current one.

2) Invest for the long term.  If you invest for the short term there is a real possibility that you will end up with less than you started.  If you are investing for the long term the short term fluctuations can be ignored.  Note that long term means 5 years at the very least. 10 years would be better.

3) Invest broadly.  The fewer the number of different assets, industries countries etc you invest in the greater the chances that a short term localised problem could wipe you out.  Investing broadly also has the advantage that you catch the unexpected successes which have the potential of earning you a far larger return than the losses from the failures.

4) Invest at an appropriate risk.  You have a wide range of risk/returns available.  At one extreme you could invest in highly  speculative technology, mining for rare minerals and metals, new drug development etc etc.  You would either become rich or more likely end up with virtually nothing.  At the other extreme you can invest in government bonds at close to zero return but 100% guaranteed at least up to the point at which the world as we know it ceases to exist.  In order to strike an appropriate balance you need reasonable objectives and to know what return is required to meet them.  You then do not need to take unnecessary risk to achieve anything greater. 

The second aspect to setting the right risk/return balance is psychology.  Some people may know intellectually that short term fluctuations dont matter but when a major fall occurs they panic and sell out at a loss.  If you are such a person you need to tone down your risk level to one at which you feel comfortable.  Of course that also means toning down your objectives.

April is always a good time for the markets as people look to place their S&S Isa allowances and SIP contributions before the end of the tax year. And demand adds confidence. 

The timing of demand could simply create confirmation bias.