Covid crash #2 started

Prism

EdGasketTheSecond said:

Sailtheworld said:

123mat123 said:

How can "already priced in" possibly work - for example, the market can't price in both a Trump and Biden victory, yet either could win.
It could possibly price in a 70% Biden victory and a 30% Trump victory and the direct impact either could have (complex) , but in that case it would be wrong whoever won!
An arguement can be made for "staying in" the market - or "getting out" temporarily, but unless someone has one of these mystical crystal balls future events cannot be factored in...

The markets are a pricing mechanism rather than a crystal ball.

I wouldn't worry about it because the markets are pricing future returns many years ahead without knowing who will be president, PM or Chairman.

The markets don't price in much more than about a week, if that. It's pure fear and greed. If they did as you say then prices would not change much day to day.

I think its fair to say that the markets don't change much day to day. If I saw something in a shop on a 5% discount then its hardly worth the notice and its the same with equities. Even if the markets fall 10% over a week or two we could also say that 90% of the value of the stock is the same. The bulk of a companies value is what is predicted to happen to it over the next 10+ years and a small bit of it is related to the current year or two.

Sailtheworld

EdGasketTheSecond said:

Sailtheworld said:

123mat123 said:

How can "already priced in" possibly work - for example, the market can't price in both a Trump and Biden victory, yet either could win.
It could possibly price in a 70% Biden victory and a 30% Trump victory and the direct impact either could have (complex) , but in that case it would be wrong whoever won!
An arguement can be made for "staying in" the market - or "getting out" temporarily, but unless someone has one of these mystical crystal balls future events cannot be factored in...

The markets are a pricing mechanism rather than a crystal ball.

I wouldn't worry about it because the markets are pricing future returns many years ahead without knowing who will be president, PM or Chairman.

The markets don't price in much more than about a week, if that. It's pure fear and greed. If they did as you say then prices would not change much day to day.

I'm sure there are plenty of papers which discuss efficient market theory and the fly in the ointment that is volatility. None will conclude prices are based only on a few days of news.

Your argument is patently wrong. Nobody would ever invest for the future if the pricing mechanism required they buy at a price today but, when they sold in 30 years, have no idea what the price might be until they watched the previous night's News at Ten.

It's an argument used by people who are probably in a permanent state of bewilderment that markets don't do what they 'should'. For most people, most of the time it's better to assume markets are an efficient pricing mechanism, invest for the long term, and write off volatility as noise.

csgohan4

Another national lockdown may reduce UK stocks/Overseas  further, the small gains back may go down again potentially.
The hospitality/tourism sector will be hit again

ProDave

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Prism

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

ProDave

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

Sailtheworld

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

Even if you retired today you could expect any money invested yesterday to be exposed to the markets for 25 - 30 years which is ample time to ride out covid and a few other events as well. May as well see the positive in being able to buy at lower prices.

The only thing to be nervous of is nearing retirement with short term spending over exposed to markets but that's easy to avoid and under your control. 

csgohan4

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

Albermarle

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

I do not think business will shut down to the same extent as earlier in the year . Most offices and factories/workshops etc are better prepared for safer working and no need to stay at home to look after the kids. It will be more economic pain, especially for certain sectors , but not anywhere near as dramatic as first time round , hopefully...

Sailtheworld

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.