Liquidate entire portfolio until virus is over?

Malthusian

bowlhead99 said:

Eggs in one basket is fine if it turns out to be the correct basket for the scenario faced. The best long-term returns will clearly come not from holding a bit of everything and periodically rebalancing, but from investing in particular types of equities when they are going to go up better (or fall less) than anything else, and then exiting to invest all the proceeds instead in other types of equities when *they* are going to go up better (or fall less) than anything else, and moving it all into certain types of bonds when *they* are going to be the best thing to invest in, ditto gold, leveraged property, etc etc.  Goes without saying that this would be extremely difficult to do correctly and therefore could produce a much more volatile or unsuccessful result than an alternative approach where one had hedged their bets.

Actually the best long-term returns would come from putting all your money on the correct number at roulette, and then repeating. It works in exactly the same way as what you describe, but much quicker.

You could say they are 'gambling' rather than 'investing', but they are still 'investing' in the traditional sense as distinct from, say, 'saving', because they are taking a non-zero market risk in pursuit of a return. As you get into the detail of what to hold, it becomes opinion rather than right and wrong.

The difference between investing and gambling is that investing has a positive expectation of return (in the statistical sense) and gambling has a negative expectation of return.

Buying and holding a diversified portfolio of equities is investing because it has a positive expectation. Buying and selling the exact same diversified portfolio of equities on a daily basis in an attempt to time the market, by contrast, is gambling. The average return of holding diversified equities for a single day is indistinguishable from zero and the expected return is near-zero minus dealing costs, which is negative. Even though the exact same investments are being held. (The expected return would be positive if costs were zero - the expected long term return of the stockmarket multiplied by the fraction of time the day-trader was invested for - but they aren't so it's not.)

Buying a short ETF which aims to provide the inverse of a developed stockmarket index is gambling, because stockmarket indices go up more often than they go down so the expected return is negative.

The expected real return of holding commodities is, at best, inflation minus costs. So holding gold just about counts as investing, but not very good investing.

Username999

All Stock Markets will eventually go to ZERO.
The Gamble is that it will not happen in your lifetime!

Sailtheworld

Thrugelmir said:

Prism said:

It seems to me that over the course of these last few months you have moved from long term investing to short term gambling. I recognise that I don't know the direction or markets over the coming months (I could never have predicted I would be up 16% in the last month) but you seem so certain.

Gambling, or repositioning your portfolio?  I've made huge changes to holdings. Though with a longer term emphasis in mind. Some individual holdings purchased have risen over 30% within a matter of weeks. There does seem to be a lot of misguided optimism still out there. As the company fundamentals haven't changed one iota in that timeframe. The tracker buying of the FTSE 100 does suggest that there's many people that view current prices as being cheap. 

My personal view is you're gambling. It's a huge gamble too. You're betting, as usual, everyone else is more optimistic than they should be and your level of pessimism is correct. You're betting that even if your pessimism proves founded you've found the correct mechanism to profit. You're betting that although your portfolio of 6 weeks ago didn't survive turbulent times this one will.

My presumption is you have a secure income and this is just a bit of fun money.

bostonerimus

I'm sure some people have lost money doing short term trades, but as usual we only hear about the successful ones, so bear that in mind. I rebalanced when the DOW has around 22k selling bonds and buying equities that looked like a bad move as the DOW hit 18k, but today it doesn't look so bad, but I'm still way down from the Jan highs. I will continue to monitor my AA and only trade to keep it within sensible bounds. No shorting, no leverage, no crystal balls.

Thrugelmir

Sailtheworld said:

Thrugelmir said:

Prism said:

It seems to me that over the course of these last few months you have moved from long term investing to short term gambling. I recognise that I don't know the direction or markets over the coming months (I could never have predicted I would be up 16% in the last month) but you seem so certain.

Gambling, or repositioning your portfolio?  I've made huge changes to holdings. Though with a longer term emphasis in mind. Some individual holdings purchased have risen over 30% within a matter of weeks. There does seem to be a lot of misguided optimism still out there. As the company fundamentals haven't changed one iota in that timeframe. The tracker buying of the FTSE 100 does suggest that there's many people that view current prices as being cheap. 

My personal view is you're gambling.

Horses, dogs etc have never held any appeal. I'm a 50p each way on the tote person. Nor BTL for that matter, as profitable as it has proved to be. No art, fine wine or ceramic collection either. You can hold whatever you wish. Without contrarian views there'd be no market. 

Username999

Interesting 10% rise in House Builders share price today.
Mention of them going back to work in early May.
A sector to watch IMHO.

Thrugelmir

Username999 said:

Interesting 10% rise in House Builders share price today.
Mention of them going back to work in early May.
A sector to watch IMHO.

MBH announced on Tuesday that their plants were going to recommence production. No comment as to how much output would be impacted by revised working practices though. 

Username999

Thrugelmir said:

MBH announced on Tuesday that their plants were going to recommence production. No comment as to how much output would be impacted by revised working practices though. 

Surprising MBH hasn't reacted like IBSTOCK has.

Thrugelmir

Username999 said:

Thrugelmir said:

MBH announced on Tuesday that their plants were going to recommence production. No comment as to how much output would be impacted by revised working practices though. 

Surprising MBH hasn't reacted like IBSTOCK has.

Much smaller outfit. Being less than a £100m capitilisation, not easy for institutional investors to build a meaningfull stake. 

Malthusian

Without contrarian views there'd be no market. 

Not actually true. There's no bread pessimists borrowing bread and selling it immediately because they think bread sucks and will be cheaper to buy later when everyone else realises this. Yet there's still a market for bread.
Not everyone who sells shares is panicking or gambling they can buy them cheaper later - some just want the money.