Liquidate entire portfolio until virus is over?

Fatbritabroad

I have a part of my portfolio in vanguard 40 . Basically there in case of absolute carnage and my emergency fund which is in cash being used up and also for slightly shorter term needs where I need a bit more stability  . Am I right that ASSUMING I think it’s fallen as far as it’s Going to I could sell this and put it into a higher equity type fund instead and that wouldn’t be an illogical thought. I guess in a simpler form is changing your asset allocation so it’s more heavily equities if you think the market has bottomed a well reasoned thing to do ? Assuming you understand and accept the volatility that brings (which I do as I say it’s there for a different time period than the rest which is for retirement 

JustAnotherSaver

bostonerimus said:

JustAnotherSaver said:

JustAnotherSaver said:

I should look at my Cavendish and Vanguard accounts to see what has happened to them since December. 

On the one hand i could've paid attention to the news, withdrawn the S&S ISA, switched to an alternative fund in the Cavendish account but isn't withdrawing under a panic what you're forever advised against with investing? As things are dropping i may take a look at increasing my monthly contributions.

When it comes to investing it's best not to use conditional sentences with modal verbs like "would, could, should, might". It only matters what you actually do. But don't dwell on what you did (or didn't do) in the past, that way lies madness. A solid plan can help you in this. For example I know that I will rebalance my asset allocation back to 75/25 if my equity and bond allocations are off by more than 5% and that I won't use any cash that I have set aside in my emergency fund to buy into the market at what might be a low....

Oh I’m not sitting here wishing I did this, that or the other. Sure it’d have been nice to have had that crystal ball but as it doesn’t exist...
if I did that game then after every EuroMillions i’d Ben kicking myself I didn’t just pick the right ones instead of the wrong ones. 

VLS80 is one of my holdings & the largest one at that. It’s my understanding it’s diversified well enough. I’m in my mid 30s so this drop off actually makes me consider putting more in (as i’d been thinking of doing anyway as I really should - I just don’t know how much I can afford yet) as I’ve likely another 30 years to go at. 
If i’d been invested in something like P&O or whoever then I may be a bit worried, just like if I was 55-60, but I’m not. 

worldtraveller

Sheriff_Fatmen said:

worldtraveller said:

For what it's worth, as planned, and posted earlier, I started to buy back in yesterday, with some of my accumulated cash over the past 6 months, at 27% from peak, into a Fidelity FTSE All Share Index fund. 

did you place the order yesterday and hence perhaps lost ~5% on today's valuations or did you time it to suit yesterdays valuations?

I bought online in the morning, before the Fidelity 12 noon pricing point, so got the midday price, showing on my account that same afternoon (the Fidelity Index UK Fund prices at midday). That's one of the main reasons I use that particualr fund, as part of my portfolio, in these volatile times, as you have more control and can time a buy right up to the 'last minute'.

masonic

Fatbritabroad said:

I have a part of my portfolio in vanguard 40 . Basically there in case of absolute carnage and my emergency fund which is in cash being used up and also for slightly shorter term needs where I need a bit more stability  . Am I right that ASSUMING I think it’s fallen as far as it’s Going to I could sell this and put it into a higher equity type fund instead and that wouldn’t be an illogical thought. I guess in a simpler form is changing your asset allocation so it’s more heavily equities if you think the market has bottomed a well reasoned thing to do ? Assuming you understand and accept the volatility that brings (which I do as I say it’s there for a different time period than the rest which is for retirement 

It's been called 'over-rebalancing', or 'tactical asset allocation'. Increasing your risk exposure after a significant fall is not illogical as the loss potential of those risky assets has changed. Some do this in a mechanical fashion using valuation metrics such as CAPE. It goes without saying that your new asset allocation should still be appropriate to your attitude to risk. Did you reduce your risk exposure at all in the years prior to this crash?

Thrugelmir

bostonerimus said:

....maybe people will now understand why withdrawal rates are around 3.5% even thought the markets have been going up by double digits in many recent years.

Is 3.5% (index linked) safe? VLS 60 (as an example) was only up 24% over 5 years as of yesterday.  That's with a 10% higher equity weighting than the original (US market only) studies. What goes up comes down..........

Bravepants

DairyQueen said:

bostonerimus said:

It's amazing how popular market timing becomes in a crash. If you have an appropriate asset allocation to your circumstances you should be just fine. Even those people retiring on DC pots should be ok as long as they have followed the rules of drawdown portfolio construction as the models include such volatility....maybe people will now understand why withdrawal rates are around 3.5% even thought the markets have been going up by double digits in many recent years.

If you have a robust plan then stick to it, don't be tempted to market time. You don't want to risk decimating your pot on the chance that you can make a killing. Just realize that if your plan was good the possibility of this downturn was baked into it and the survival of your pot is more important than seeking to maximize its size with the associated extra risk.

^^ This.

I've just bought the book "Harriman's New Book of Investing Rules", it was mentioned in a related thread recently. On page 2 of the book is this by Jonathan Davis:

"What makes a good investment rule? For me it needs to be clearly articulated, straightforward to understand and yet capture a certain fundamental truth about investment, one that has stood the test of time. One favorite of mine was coined by the wise and well-read American investment consultant, Charles D. Ellis. His classic book, Winning the Loser's Game, contains the definitive rule on market timing: "Don't do it. It is a sin".  "

Fatbritabroad

masonic said:

Fatbritabroad said:

I have a part of my portfolio in vanguard 40 . Basically there in case of absolute carnage and my emergency fund which is in cash being used up and also for slightly shorter term needs where I need a bit more stability  . Am I right that ASSUMING I think it’s fallen as far as it’s Going to I could sell this and put it into a higher equity type fund instead and that wouldn’t be an illogical thought. I guess in a simpler form is changing your asset allocation so it’s more heavily equities if you think the market has bottomed a well reasoned thing to do ? Assuming you understand and accept the volatility that brings (which I do as I say it’s there for a different time period than the rest which is for retirement 

It's been called 'over-rebalancing', or 'tactical asset allocation'. Increasing your risk exposure after a significant fall is not illogical as the loss potential of those risky assets has changed. Some do this in a mechanical fashion using valuation metrics such as CAPE. It goes without saying that your new asset allocation should still be appropriate to your attitude to risk. Did you reduce your risk exposure at all in the years prior to this crash?

Not really. I took about 10k of my 100k isa and out it in 40/60 bond equity portfolio as I was 100% equities everywhere else and figured it'd be good to have a part of. My s and s in less volatile assets as I say for more short term spending. I'd have other ways of funding this spending if I had to. I'm 39 so will probably reduce my asset allocation in about 5 years or so as I'm aiming for 50 to 55 to be financially independent though not necessarily retired 

Prism

Thrugelmir said:

bostonerimus said:

....maybe people will now understand why withdrawal rates are around 3.5% even thought the markets have been going up by double digits in many recent years.

Is 3.5% (index linked) safe? VLS 60 (as an example) was only up 24% over 5 years as of yesterday.  That's with a 10% higher equity weighting than the original (US market only) studies. What goes up comes down..........

3.5% probably has worked over the last 5 years but its also worth pointing out that those 'safe' withdrawal rates also assume you spend capital to over an extended period until you effectively end with nothing.

Thrugelmir

Bravepants said:

DairyQueen said:

bostonerimus said:

It's amazing how popular market timing becomes in a crash. If you have an appropriate asset allocation to your circumstances you should be just fine. Even those people retiring on DC pots should be ok as long as they have followed the rules of drawdown portfolio construction as the models include such volatility....maybe people will now understand why withdrawal rates are around 3.5% even thought the markets have been going up by double digits in many recent years.

If you have a robust plan then stick to it, don't be tempted to market time. You don't want to risk decimating your pot on the chance that you can make a killing. Just realize that if your plan was good the possibility of this downturn was baked into it and the survival of your pot is more important than seeking to maximize its size with the associated extra risk.

^^ This.

I've just bought the book "Harriman's New Book of Investing Rules", it was mentioned in a related thread recently. On page 2 of the book is this by Jonathan Davis:

"What makes a good investment rule? For me it needs to be clearly articulated, straightforward to understand and yet capture a certain fundamental truth about investment, one that has stood the test of time. One favorite of mine was coined by the wise and well-read American investment consultant, Charles D. Ellis. His classic book, Winning the Loser's Game, contains the definitive rule on market timing: "Don't do it. It is a sin".  "

Excellent book. One of my bibles. Easy to dip in and out of. Never become fixatated on one individual fad. As no one strategy lasts forever. As an investor admitting oneself is wrong is a major step to getting things right in my view. 

bostonerimus

Thrugelmir said:

bostonerimus said:

....maybe people will now understand why withdrawal rates are around 3.5% even thought the markets have been going up by double digits in many recent years.

Is 3.5% (index linked) safe? VLS 60 (as an example) was only up 24% over 5 years as of yesterday.  That's with a 10% higher equity weighting than the original (US market only) studies. What goes up comes down..........

Safe in this context is often defined as the 95% success level for a chosen lifespan, so it's a bit nebulous. Sensible is probably a better word to use. When planning my retirement I went through the probabilities and then decided to set my withdrawal level at 0% and go with an aggressive equity allocation because I didn't want to have to worry about income in bad times and I could afford to take the risk. It worked well for 6 years, now it's exposed me to loses, but I have another 30 years to go and to be honest my heirs are the ones that will be most interested in what happens to the pot.