Liquidate entire portfolio until virus is over?

Thrugelmir

Bravepants said:

Interesting article on Monevator:

https://monevator.com/what-has-changed-and-what-has-not/

Opinions are what drive markets. Being flexible in ones views is another. Vast majority of people don't have sufficient funds available to divest sufficiently. nor the time, the inclination or expertise to even to start to manage their own portfolios completely. They tend to invest in what's popular at the time. Good recent perfornance being a major draw.  Passives in certain markets are ideal investments.  Over the years I fallen in love, out of love and back in love with individual stocks. Now it's possible to buy the majority of listed global stocks with minimal purchase costs. There's a world of opportunity out there for small retail investors.  

Bravepants

Thrugelmir said:

Bravepants said:

Interesting article on Monevator:

https://monevator.com/what-has-changed-and-what-has-not/

Opinions are what drive markets. Being flexible in ones views is another. Vast majority of people don't have sufficient funds available to divest sufficiently. nor the time, the inclination or expertise to even to start to manage their own portfolios completely. They tend to invest in what's popular at the time. Good recent perfornance being a major draw.  Passives in certain markets are ideal investments.  Over the years I fallen in love, out of love and back in love with individual stocks. Now it's possible to buy the majority of listed global stocks with minimal purchase costs. There's a world of opportunity out there for small retail investors.  

Thanks Thrugelmir.

Just to clarify...by "Passives in certain markets are ideal investments", do you mean "particular types" of markets, or markets that are driven by a group of investors who are certain about its direction or other characteristic? Sorry a bit of ambiguity you see!

When you say "small retail investors" do you also mean passive fund-of-fund investors like me? OR are you suggesting I would be better acutally looking for individual shares, which I am disinclined to do.

Thrugelmir

Markets as in a concentrated index such as the S&P 500.  Targeted and specific. Highly researched and price efficient. 

I'm merely expressing an opinion that individuals can themselves be (partly) active investors . As they don't have the constraints that active fund managers operate under. In that there's constant monitoring of performance against the "market" for example. Despite the constant caveats that investing is a long term pastime. For many years I only held 4 funds which I considered adequate to provide diversification across a whole spectrum of investment classes. Letting the fund managers do the leg work. 
If you wish broaden your horizons read, listen to, subscribe to and watch as much quality research as you can. All the differing opinions out there will help you form your own over time. 

EdGasketTheSecond

In brief answer to previous questions i'd say another 30% drop is likely generally. Hence best not to throw money at a wide market fund.

Now I would only invest in supermarkets, telcos, and energy suppliers but they could drop some more too but not as much as the rest. I favour gold and silver best.

EdGasketTheSecond

Of course the FED could start buying stocks as well to prop up the market; that would change the game. You can even inflate dormant companies shares if you create money and buy up the market. It could happen in an election year.

Thrugelmir

EdGasketTheSecond said:

Of course the FED could start buying stocks as well to prop up the market; that would change the game. You can even inflate dormant companies shares if you create money and buy up the market. It could happen in an election year.

Wouldn't be considered a good use of public money. Nationalisation as to buying of new stock will simply dilute existing shareholders. Akin to RBS and LLoyds 
Companies need to cut their own cloth too. Cutting excessive corporate remuneration packages and share option schemes. 

worldtraveller

EdGasketTheSecond said:

In brief answer to previous questions i'd say another 30% drop is likely generally. Hence best not to throw money at a wide market fund.

Now I would only invest in supermarkets, telcos, and energy suppliers but they could drop some more too but not as much as the rest. I favour gold and silver best.

OK, I have no issue with that personal view, but I'd like to know why and when you believe that that will happen.

Do you believe that your FURTHER 30% drop is likely in the next few days, or weeks, or months?

Do you believe that your FURTHER 30% drop is going to happen AFTER the global COVID-19 'peaks' are hit, and we're, maybe, hopefully, heading down for infections & death rates?

Maybe you believe that your FURTHER 30% drop is going to happen AFTER the above, when the global economy starts to report it's company earnings results, and maybe we have another major financial crisis, again, but AFTER the worst is over, in terms of global infections and loss of life?

Just asking. :-)

Thrugelmir

Why a further fall?  Investor psychology.  As much as missing out on a "profitable " investment  drives people to follow other peoples ideas rather than making an informed decision for themselves. The "herd" will stampede for the exits if there's a further offloading of stock causing prices to drop further. Many shares still sit above their 52 week price lows. Liquidity if you remember was an issue for Woodford's funds offloading stock. The danger now may well be magnified. Indigestion will cause stock overhang. 

EdGasketTheSecond

I think FTSE might drop 30% from here over the coming months BUT depends if there is another huge stimulus as that keeps prices up. Why, well the financial hit to companies will be huge; most are no longer paying dividends, some won't survive. Spending will take a while to pick up, supply chains will be hampered for months. I expect the financial upheaval that is coming to be as big a hit to people as the virus has been; well anyone with any savings and/or property that is.

Bravepants

Hmmmm, one thing I'm learning about investing is that reading various peoples' opinions and perspectives can be quite anxiety making, certainly in terms of a potential to be constantly wondering 'Am I doing the right thing?' from one day/week/month[insert investment periodicity here] to the next.

I benefited quite well from the Global Financial Crisis since about the same time I started buying AVCs in my company pension (Civil Service!). However, I didn't consciously think, "Oh look shares are cheap I'd better invest!". I just did it without considering the global economic situation; I simply had it in my mind that I wanted to buy extra pension when I'd hit 40. But I did benefit from the ensuing growth period until I realised that I had enough in there, with my DB pension, to retire early (at 55) if I want to. I subsequently transferred my AVC funds to a SIPP, which is now held as cash until next February. My ISA holdings are not required for me to retire, therefore I consider myself to have quite a high tolerance to risk...unless of course I want to go out and buy a sports car on the day I retire...but it will add an extra level of comfort by drawing my ISA down at 3% per year remaining invested for as long as there is breath in my body, which could be 20 or so years (hopefully more), apart from 3 years' worth of drawdown in cash.

SO with my ISA I could:

1. Sell all now and hold as cash until markets fall further, crystalising my paper losses so far incurred - but something in me tells me not to do this - why would I want to crystalise my losses? What happens if the market improves because of some unforeseen breakthrough?

2. Hold what I have, but stop contributing, saving my powder until "the market" falls further/hits bottom - but no-one knows when that will be, and why should I anyway, I'm a passive investor! And also, since I am holding anyway, why would I not buy cheaper units while they are on sale?

3. Hold what I have, but stop contributing and wait until there is a consistent rise in value over a couple of months but start buying in before "the market" hits the previous high level. But what happens if the market only rises for those two months then flattens, or falls again after I start buying, due to some unforeseen event? 

4. Sell all and buy a sports car, enjoy life for a couple of weeks until hedonic adaptation kicks in and I'm cursed with buyer's remorse! :-)

So many what ifs...so....

I have a plan, I have thought it through carefully, I have a hedge against investment risk (a cash SIPP and a DB pension), my investment horizon is still 20 years, and I think I will stick to drip feeding my ISA with monthly contributions.