Liquidate entire portfolio until virus is over?

EdGasketTheSecond

If you and everyone else thought the market would go to 5000, then we'd already be there now; nothing certain. The biggest rallies happen in bear markets.

coastline

tropic_of_Username004 said:

coastline said:

My favourite set up is in the link below with the slow stochastic and 10 day moving average. Its never perfect but if you play the extremes and think walking stick handles curling up or over then I simply buy and sell. The link isn't the best but many sites don't allow copy and paste but this one does. For the FTSE I use the ETF ISF.L . At the present moment I haven't got anything in the market and yes you can get caught just like anybody else.

OK, so you have a trend-following strategy, holding the market (e.g. ISF) when the trend is upwards, or otherwise cash. Do you follow this mechanically, or with some "judgement" about when to buy and sell? And is there judgement about how much to buy each time, or is it just always 100% of the capital assigned to this strategy? And are there fixed amounts of capital assigned to ISF and to other indexes, or is that also varied, on specific criteria or with judgement?

FTSE at the moment as it tends to show stochastic waves which is what I'm looking for. All you can do is buy at an extreme on a low stochastic curling up and wait for a sell curling down. A 10 day moving average is there for a guide on upward moves. I follow mechanically but as you say sometimes with some " judgement ". Considering the MSCI World Index has averaged 10% per year for decades then you don't need that many moves in a year. Some moves can be just 3% others more and there's usually say 4 moves at least in a year. Try paper trading for a year and see what you think . Set indices or shares to see if there's any relationships. Its not for everyone but I'm not in it for the long term now. If I was younger I'd probably drip feed monthly and forget for a few decades.

Novice_investor101

I've started paying cash into my stocks ISA this morning, & I'll add more tomorrow. Up until now I've been at break even point & wasn't tempted to buy cos I gambled it'd drop lower still. 
I'll be placing some buys in the morning if today's trend continues. 
I'm 38, have a healthy cash balance & bonuses are due to be paid this month. I'll be adding more cash if the downward trend carries on next week. 

2010

EdGasketTheSecond said:

If you and everyone else thought the market would go to 5000, then we'd already be there now; nothing certain. The biggest rallies happen in bear markets.

As i said before markets don`t go up in straight lines or down in straight lines but you can`t ignore the obvious.
Markets are going down big.
Hardly a bear market when the drop has only just started.

tropic_of_Username004

coastline said:

tropic_of_Username004 said:

coastline said:

My favourite set up is in the link below with the slow stochastic and 10 day moving average. Its never perfect but if you play the extremes and think walking stick handles curling up or over then I simply buy and sell. The link isn't the best but many sites don't allow copy and paste but this one does. For the FTSE I use the ETF ISF.L . At the present moment I haven't got anything in the market and yes you can get caught just like anybody else.

OK, so you have a trend-following strategy, holding the market (e.g. ISF) when the trend is upwards, or otherwise cash. Do you follow this mechanically, or with some "judgement" about when to buy and sell? And is there judgement about how much to buy each time, or is it just always 100% of the capital assigned to this strategy? And are there fixed amounts of capital assigned to ISF and to other indexes, or is that also varied, on specific criteria or with judgement?

FTSE at the moment as it tends to show stochastic waves which is what I'm looking for. All you can do is buy at an extreme on a low stochastic curling up and wait for a sell curling down. A 10 day moving average is there for a guide on upward moves. I follow mechanically but as you say sometimes with some " judgement ". Considering the MSCI World Index has averaged 10% per year for decades then you don't need that many moves in a year. Some moves can be just 3% others more and there's usually say 4 moves at least in a year. Try paper trading for a year and see what you think . Set indices or shares to see if there's any relationships. Its not for everyone but I'm not in it for the long term now. If I was younger I'd probably drip feed monthly and forget for a few decades.

I've seen some studies which suggest that this kind of approach might give similar returns to buy-and-hold but with less volatility. Which is not to be sniffed at. Of course there is no guarantee that it will turn out like that in future.

I'm also not as young as I used to be, but this approach is definitely not for me. I'm too lazy. And I feel much more comfortable with the concept of owning a piece of global capitalism (i.e. buy-and-hold) than with a trading strategy that might or might not give similar returns. So I am instead going with dialing equities down to around 75% of investible assets, with the other 25% being bonds and cash.

I'm also not a fan of the FTSE 100 specifically (as I mentioned earlier today), which would also tend to put me off trading the FTSE 100, despite that not being the same as buying and holding it.

A_Flock_Of_Sheep

Buy high sell low it sounds like a case of.

tropic_of_Username004

2010 said:

You don`t need to time the market.
You sell now at 6000 and buy back at say 5000, you`ll still be better off than now.
I`m just using the ftse as an example but it applies to all indices which will be down in line.

OK, you've defined a strategy very clearly here: sell the FTSE 100 now, and buy it back the next time the price reaches 5000. Clarity is good.

I would call this strategy market timing, but that's just semantics. What matter more is: is it a winning strategy? (Leaving aside the question of whether you should be holding the FTSE 100 in the first place.)

The answer is: we don't know. It could go either of 2 ways. Either at some time (which could be very soon, or after a year or 2) the FTSE reaches 5000 and you buy back, and you win. Or it never does, and after 50 years, you are still in cash and the FTSE is now at 50,000 (for instance — most of that rise might just be due to inflation). So either you win a bit (a 20% gain) or you lose a much larger amount (decades of returns from equities). It's what's sometimes called "picking up pennies in front of a steamroller".

There is also an intermediate case, when it takes perhaps 3 or 4 years for the FTSE to fall to 5000. In this case the dividends you didn't get by being out of the market for those 3 or 4 years could be about the same amount you gained by buying back at a lower price. So it's about break-even.

The conclusion is that, no, it's not an obvious winning strategy. It might well win you a decent amount. But it might lose you even more.

If you're saying: but if the FTSE doesn't hit 5000 soon, I wouldn't be dumb enough to stay in cash for decades, I'd buy back in sooner ... OK, so restate your strategy to cover this, if you want to. But it still won't be a sure winner. For instance, you might give up and buy back if the FTSE rises to 8000. OK, that limits the size of your losses. But it also increases the probability that you will lose at all (because after hitting 8000, the FTSE might fall again, and only then go below 5000).

Username999

I think we're in the 'Fear' stage of the bubble deflating.
Next stage is 'Capitulation'.
Then 'Despair', then 'Return to Mean'.  
I wouldn't buy until the volatility calms down and we're below the long term mean.
"The stock market is a device for transferring money from the impatient to the patient."
Good luck all!

Sue58

Reaper said:

DairyQueen said:

So, are the market timers ready to pounce yet?

Very close. I don't think we have quite hit bottom but it's best not to wait until then as as it's too easy to miss. Cases in China have apparently peaked and are now in decline. I'll give it another couple days then I think I will start buying. My view is the market has swung from over optimistic to over pessimistic. There is no long term or even medium term reason why the crash will persist after the virus has swept through a population so I expect an eventual bounce back rather than a long period of recovery as in many past recessions. But hey, everyone has there own opinion, pick yours and invest accordingly. Only time will tell who is right.

I agree the markets have not quite hit bottom as yet, however I have bought some equities today that I consider a reasonable price because as you said its easy to miss out. I will also add some other purchases over this week/month.

bostonerimus

My asset allocation of 75/25 is now more than 5% off target so it's probably time to rebalance. I'll check at the end of the month.