Stock Market Down - Is now the time to dump a lump sum into my S&S ISA?

jaypers

If you’re investing into good quality companies, invest now. They may drop but in the medium to long term they are likely to go up. Also a bit of tweaking involved depending whether you are looking for accumulation or income etc. There are some really good blue chips paying great dividends, for example some of the insurance companies. If you don’t need to liquidate the assets in the short term (never a good plan anyway) then you are likely onto a good thing. The issue is the psychological effect of a bear market which can make people do silly things like selling low. 

eskbanker

adindas said:
That simulation you show does not include adapting / switching strategy from lump sum and DCA or vice versa during the bear market. The Bear market in average took 10 to 61 months. 

In the bear market there is already statistics about this have been posted that DCA beat Lumpsum. Also it does not need a genius to see that people will be better off DCA in the bear market even better with enhanced DCA where you only do it during the red days, a larger chunk during the new low (but not lump sum). In the bear market the stock price drops more than it rises.

After the bear market is over, people could switch strategy back to lump sum.

True, in the long run e.g 95 years (in your example) it does not really mater whether you DCA or lump-sum as it will always go up. But if you could improve the result during the bear market, why not ?

Because the start and end of bear markets are only visible with hindsight.

The simulation posted earlier was effectively illustrating the difficulty of trying to pick the beginning of a bear market, by spotting drops significant enough to warrant changing investing tactics, and it'll be exactly the same principle for trying to identify its end, i.e. timing the market isn't anything like as simple as you like to suggest - the trivially obvious fact that it's mathematically beneficial for anyone succeeding in doing so it is irrelevant, in much the same way as positing that the path to riches is to become a Premier League footballer.

In other words, 'buy low and sell high', while clearly a desirable outcome, is more of an aspiration than an actionable strategy....

At what specific date did you actually identify that we were entering the current bear market and adjust your investing profile accordingly?  At the peak, or after -5/10/15%, or what, and is there any evidence of this from your previous posts?  Likewise, what tangible measures do you plan to use to determine a change in tack when you ascertain that it'll be finishing?

adindas

eskbanker said:

adindas said:
That simulation you show does not include adapting / switching strategy from lump sum and DCA or vice versa during the bear market. The Bear market in average took 10 to 61 months. 

In the bear market there is already statistics about this have been posted that DCA beat Lumpsum. Also it does not need a genius to see that people will be better off DCA in the bear market even better with enhanced DCA where you only do it during the red days, a larger chunk during the new low (but not lump sum). In the bear market the stock price drops more than it rises.

After the bear market is over, people could switch strategy back to lump sum.

True, in the long run e.g 95 years (in your example) it does not really mater whether you DCA or lump-sum as it will always go up. But if you could improve the result during the bear market, why not ?

Because the start and end of bear markets are only visible with hindsight.

The simulation posted earlier was effectively illustrating the difficulty of trying to pick the beginning of a bear market, by spotting drops significant enough to warrant changing investing tactics, and it'll be exactly the same principle for trying to identify its end, i.e. timing the market isn't anything like as simple as you like to suggest - the trivially obvious fact that it's mathematically beneficial for anyone succeeding in doing so it is irrelevant, in much the same way as positing that the path to riches is to become a Premier League footballer.

In other words, 'buy low and sell high', while clearly a desirable outcome, is more of an aspiration than an actionable strategy....

At what specific date did you actually identify that we were entering the current bear market and adjust your investing profile accordingly?  At the peak, or after -5/10/15%, or what, and is there any evidence of this from your previous posts?  Likewise, what tangible measures do you plan to use to determine a change in tack when you ascertain that it'll be finishing?

I show research previously that DCA beat Lumpsum in the bear market.

True in long run 95 years (like that research mentioned above) it does not really matter. But who would want to wait 95 years ?

The downtrend of a market, bear market is period, so it does not need a specific date.

In the SMT Just imagine those those lump sum in November/December they  might have seen their money down 50%+ by now. Compare it the result with those unlucky who throw money  with enhance DCA. Only buy during the red day or new low.

eskbanker

adindas said:

eskbanker said:

adindas said:
That simulation you show does not include adapting / switching strategy from lump sum and DCA or vice versa during the bear market. The Bear market in average took 10 to 61 months. 

In the bear market there is already statistics about this have been posted that DCA beat Lumpsum. Also it does not need a genius to see that people will be better off DCA in the bear market even better with enhanced DCA where you only do it during the red days, a larger chunk during the new low (but not lump sum). In the bear market the stock price drops more than it rises.

After the bear market is over, people could switch strategy back to lump sum.

True, in the long run e.g 95 years (in your example) it does not really mater whether you DCA or lump-sum as it will always go up. But if you could improve the result during the bear market, why not ?

Because the start and end of bear markets are only visible with hindsight.

The simulation posted earlier was effectively illustrating the difficulty of trying to pick the beginning of a bear market, by spotting drops significant enough to warrant changing investing tactics, and it'll be exactly the same principle for trying to identify its end, i.e. timing the market isn't anything like as simple as you like to suggest - the trivially obvious fact that it's mathematically beneficial for anyone succeeding in doing so it is irrelevant, in much the same way as positing that the path to riches is to become a Premier League footballer.

In other words, 'buy low and sell high', while clearly a desirable outcome, is more of an aspiration than an actionable strategy....

At what specific date did you actually identify that we were entering the current bear market and adjust your investing profile accordingly?  At the peak, or after -5/10/15%, or what, and is there any evidence of this from your previous posts?  Likewise, what tangible measures do you plan to use to determine a change in tack when you ascertain that it'll be finishing?

I show research previously that DCA beat Lumpsum in the bear market.

True in long run 95 years (like that research mentioned above) it does not really matter. But who would want to wait 95 years ?

The downtrend of a market, bear market is period, so it does not need a specific date.

In the SMT Just imagine those those lump sum in November/December they  might have seen their money down 50%+ by now. Compare it the result with those unlucky who throw money  with enhance DCA. Only buy during the red day or new low.

Perhaps you felt that you addressed my points but you clearly didn't understand them or chose to ignore them....

DCA obviously beats lump sum when prices are dropping, so it's not exactly dazzling insight to state that self-evident truth!  However, the point is being able to know at the time that prices will be dropping - for example, they've clearly been on a downward trajectory for over six months now, but nobody knows what Monday, or the rest of next week, or the rest of the month, etc, will bring, so knowing that we have been in a bear market for a few months doesn't actually help those wishing to make investment decisions now.

So, I repeat, when did you recognise (other than with hindsight) the start of the bear market and what did you do about it?  What measurable indicators (not 'expert' predictions, etc) will lead you to believe that it's over?

Are you suggesting that "Only buy during the red day or new low" is a viable investment strategy?

masonic

adindas said:

I show research previously that DCA beat Lumpsum in the bear market.

How did the researchers you cited define a bear market? Using the traditional definition of a 20% fall from the market high, the S&P500 is not yet in a bear market. It may enter bear market territory as early as next week, but the last time we came this close (a few weeks ago) there was a market rally. You mentioned in your previous post that according to the research the previous bear markets lasted from 10-61 months, but there have been prior 20% crashes that recovered in less than 10 months, so is part of their definition of a bear market that prices must stay depressed for a minimum amount of time? Have the authors just used selection bias to confirm their hypothesis by excluding "bear markets" where there was just a brief dip into bear market territory? If so, how do you know this predicted bear market will be one that fits the author's criteria?

eskbanker

masonic said:
there have been prior 20% crashes that recovered in less than 10 months

Such as the last one!

Yorkshire_Pud

I ‘dumped’ a couple of grand to buy Halifax, now Lloyds shares when they dropped from about £11 to £9 per share looking forward to the future uplift. Now worth about 33p? Can’t bear to look! Emotional lazy investing is unlikely to work plus when do you cash in, I sold some shares in 2012 because I became convinced they were about to drop in value. Now worth three times as much so what do I know?

I know I approach shares using a gut feeling and emotional not rational therefore I now stay away from shares. Tomorrows another day, your carefully curated I’m a master of the universe share portfolio could be decimated tomorrow or in ten years or any time. It’s a gamble. I could drip feed invest for 95 years to ensure a good return but I think I might be dead before that happy day 😆 

masonic

Yorkshire_Pud said:

I ‘dumped’ a couple of grand to buy Halifax, now Lloyds shares when they dropped from about £11 to £9 per share looking forward to the future uplift. Now worth about 33p? Can’t bear to look! Emotional lazy investing is unlikely to work plus when do you cash in, I sold some shares in 2012 because I became convinced they were about to drop in value. Now worth three times as much so what do I know?

I know I approach shares using a gut feeling and emotional not rational therefore I now stay away from shares. Tomorrows another day, your carefully curated I’m a master of the universe share portfolio could be decimated tomorrow or in ten years or any time. It’s a gamble. I could drip feed invest for 95 years to ensure a good return but I think I might be dead before that happy day 😆 

The OP has already shared with us the nature of their investment portfolio, and it is nothing like the one you have described. Investing in broadly diversified investment funds protects you from seeing the value decimated. What you were doing absolutely was a gamble, but sensible investing is not, and it doesn't take 95 years to ensure a good return.

[Deleted User]

DCA or lump sum: you are still green over the long term.