The market times you even when you don’t try to time it

aroominyork

This is just getting something off my chest.

Since I starting DIYing in 2017 I’ve made many changes as I gradually created a portfolio I’m happy with. Each time this means being out of the market for a day between the sell and the buy. Almost every time I’ve been out of the market it has risen in that day and has cost me, sometimes significantly. Only once have I gained a few pips (although gaining is not the intention - just not taking a material hit).

Today I was going to sell my Fundsmith to move into Fundsmith Sustainable. The markets were down this morning so I figured I’d probably be hit once again and decided to wait until things level out. Not only did the markets keep falling after my 11am instruction deadline, especially after Wall Street opened, but global index OEICs were down 1.25%-1.5% while Fundsmith rose 0.82%. It would have been a perfect day (assuming no overnight resurrection) to be out of the market.

If someone wants to post when a similar situation has cost them huge amounts it may make me feel a little better. Until then I’ll post this to get it off my chest, have a(nother) couple of drinks and watch Homeland.

Mistermeaner

Don't chop and change
Build your portfolio with purchases 
Rebalance infrequently (annualy) and if big adjustments required spread them out over a long period (months)

Stargunner

If you want to chop and change your funds regularly you should just buy investment trusts or etf’s as then you don’t need to be out of the market for a day or 2.

aroominyork

Not planning on chopping and/or changing. Just learning. You don't get it right in Year 1, let alone on Day 1.

bowlhead99

Are you not using a platform that offers both Fundsmith Equity and Fundsmith Sustainable? Why not just give them an instruction to sell (say) £5000 of FE and buy £5000 of FS? The transactions will both settle on the same day and the £5000 proceeds of one will meet the payment obligation for the other. You don't need to be out of the market at all?

aroominyork

bowlhead99 said:

Are you not using a platform that offers both Fundsmith Equity and Fundsmith Sustainable? Why not just give them an instruction to sell (say) £5000 of FE and buy £5000 of FS? The transactions will both settle on the same day and the £5000 proceeds of one will meet the payment obligation for the other. You don't need to be out of the market at all?

Because they are in SIPPs/ISAs with no cash balance.

Edit PS. I guess I could buy FS in a Trading account and sell the wrapped FE the same day, then the next day buy FS in the wrapper, and sell and withdraw the Trading account FS. But it never rains when you take an umbrella...

TBC15

I must admit when I go for the annual churn to use the CGT allowance it feels like I’ve just exposed a chink in the armor when the investment gods can wreak there revenge.

Thrugelmir

One needs thick skin to be an investor. As is oft said the only two prices that matter is the one you buy at and the one you sell at. Funds aren't correlated to sync with the market. As the "market" reflects the aggregate of all movement. 

bowlhead99

aroominyork said:

bowlhead99 said:

Are you not using a platform that offers both Fundsmith Equity and Fundsmith Sustainable? Why not just give them an instruction to sell (say) £5000 of FE and buy £5000 of FS? The transactions will both settle on the same day and the £5000 proceeds of one will meet the payment obligation for the other. You don't need to be out of the market at all?

Because they are in SIPPs/ISAs with no cash balance.

Edit PS. I guess I could buy FS in a Trading account and sell the wrapped FE the same day, then the next day buy FS in the wrapper, and sell and withdraw the Trading account FS. But it never rains when you take an umbrella...

Both funds have the same settlement period. You don't need a cash balance because the proceeds of redemption will arrive on the day that the same amount of cash will need to be paid to settle the subscription. You should simply be able to put an order in on your platform to switch £x from fund A to fund B. The platform knows they will both be due to settle on the same day.

aroominyork

HL lets you place a switch order for 90% of the value of the fund you are selling, but I am with Interactive Investor which does not offer switches. 

Sailtheworld

Not buying and selling many times in 3 years would help. Save some trading fees too.

If you do; sod's law dictates the outcome you describe.