Liquidate entire portfolio until virus is over?

Thrugelmir

Prism said:

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.

A subject to return to in the future. After the monetary experiment since the GFC and now the full on impact of the virus. I suspect there's going to be rewriting of the rules. Much as the hedge funds managers in the late 90's early 2000's employed rocket scientists to write highly successfull complex trading algorithms. The one factor that omitted was if the roulette wheel stopped on the green zero. When it did. The totally unforeseen occurred. It crashed them. 

Companies are extremely fragile . As IAG has shown. You can hit the ground in a matter of days. 

DocProc

Slightly off topic, I know, but we all of us want to live to enjoy our pot, no matter how big it is or what ever are our 'life hiccups' along the way.
I am reminded of a man my wife used to work with who had never ever caught either a cold or the flu'.
Why not?
Well, he used to eat raw garlic. He was proud of the fact, that the main benefit of him doing this, was that nobody ever went anywhere near him. That was why he never caught their bugs.
Anyhow.....just a thought.

JustAnotherSaver

I think I’ll take my chances thanks. 

Alexland

Fatbritabroad said:

Am I right that ASSUMING I think it’s fallen as far as it’s Going to

Well I hope not as I still haven't had the chance to reinvest my kids JISAs which have been transferring back to S&S over the past couple of weeks. I can see the money is now gone from the old Cash accounts and am checking daily for it to reappear on in the S&S accounts..

I would have happily invested it when the 10% dive happened a few days ago but now it seems a shame to invest it at the higher prices at the start of next week. Hopefully others will feel similar and some more bad news will be released which might give a second chance to get those prices.

It doesn't bother me if it falls further below that level as you can only do your best no point being too greedy if you can't influence the situation anyway. The kids will have done well being out the market and will have also earned some 3%+ interest along the way.

I like tilting into a bad situation as it gives me something positive to focus on rather than wasting time worrying about the reductions on the existing risk assets.

worldtraveller

Thrugelmir said:

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. 

Quite frankly, I have no interest, whatsoever, in taking any advice, whatsoever, from anyone. I'll continue to do what I've always done, and do my own research, added to which my job is, and has always been, in international commerce.

I've posted this piece many times before, over the years, but I'll post it again....

A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?

GLA & DYOR!

Thrugelmir

worldtraveller said:

Thrugelmir said:

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. 

Quite frankly, I have no interest, whatsoever, in taking any advice, whatsoever, from anyone. I'll continue to do what I've always done, and do my own research, added to which my job is, and has always been, in international commerce.

I've posted this piece many times before, over the years, but I'll post it again....

Presumably your research uncovers written works that cause you stop and think about all facets. Rather than looking for those that simply reinforce your own beliefs. 

worldtraveller

Thrugelmir said:

worldtraveller said:

Thrugelmir said:

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. 

Quite frankly, I have no interest, whatsoever, in taking any advice, whatsoever, from anyone. I'll continue to do what I've always done, and do my own research, added to which my job is, and has always been, in international commerce.

I've posted this piece many times before, over the years, but I'll post it again....

Presumably your research uncovers written works that cause you stop and think about all facets. Rather than looking for those that simply reinforce your own beliefs. 

I'm basically not interested in reading any 'works' much at all, as my experience of any economists, or fund managers, leaves me cold, as they're all pretty pointless, largely living in some city ivory tower, with little or no experience of what's actually going on in the real world. My investment strategies are largely based on my own life experience, both in, most significantly, my job, and, in a minor way, life in general. Why on earth would you imply that I'm looking for research that just reinforces my own beliefs? I'd frankly rather do my own research, rather than rely on others, and act accordingly!

Bravepants

Thrugelmir said:

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. 

Yes, it was one of your posts that listed this book as your bible. A good 500-page book to read while in lock-down! :-)

NorthernJoe

To anyone thinking this is temporary, hard hit to the economy - think again. Approximately 95% of the population in Wuhan is still susceptible to the virus & any relaxing in controls will simply see an outbreak to surpass the first peak. This is despite the most onerous and extreme social & economic restrictions in our life time. CPC have no idea where to go now. Maintain the curbs for 12 more months in the hope of a vaccine? 

UK government taking a radically different approach to most other major economies - allow the infection to spread, to accept the loss the the most vulnerable in the hope that "the herd" will build longterm immunity. The plan presumably is introduce gradual & timed "breaks" on the spread but they are trying to tame the unknown. 

A major gamble of course, the mortality rate of 1-2% is dependent upon adequate health care resources for those that would benefit. As Italy has shown, when you exceed that capacity, the mortality rate rises rapidly. 

At best we are looking at school closures of 6 months, mass unemployment, defaults on mortgages & other debts. A recession would be a blessing. A depression is surely much more likely now. 

Alexland

I guess it will get to the point when the other governments start to question the value of containment (given the economic damage and risk of delaying the peak into the next cold season) and start to consider adopting the UK approach of working through the pain steadily this year trying to control the rate while getting the job done and building some herd immunity.

It might seem harsh but it seems the people who are dying are generally in the later stage of their life anyway with other accumulated conditions and is it really worth damaging the economy into a depression for the next generations?