Stocks & Shares ISA - Time to Cut my Losses or Sit Tight?

InvesterJones

MarcoM said:

InvesterJones said:

MarcoM said:

Hi, is anyone else's portfolio down around 15% after last week?

Depends in what terms of reference! In GBP, nope, but I think we all know why that might be the case...

Just meant in terms of overall value of portfolio.

Value in what currency was my point. Value in GBP I haven't got that fall, for obvious reasons, but in terms other than pounds, like how many turnips it's worth, I probably have some fall.

adindas

adam06_2 said:

Sit on your hands and don't look at it. Investing in stocks should be a minimum of 5 years as you will see many ups and downs... It doesn't matter what you invested in, most things are considerably down since this time last year.

The classic mistake is to sell low and buy back high...

Personally I drip feed monthly into a vanguard fund... But I know studies have shown that lump sum investments normally do better as Warren buffet famously said "time in the market is better than timing the market"

It depends on what type of the market we are talking about. Generally speaking, in the bear market, declining market DCA works better than lump sum. I have been saying this for many months ago as early as the beginning of the year. I have posted a few links “expert opinions" regarding this, early this year. That opinion are not from random people on the internet interpreting what Warren Buffet is saying but from investment expert opinions. By the end of the day in the long run, especially when the bear market duration is short the difference is not significant. Also, DCA is psychological better as otherwise people might get panic when they see their investment down 30% in just a few months which might prompt them to do panic selling.

There are a few threads in this MSEs early this year regarding DCA Vs Lumpsum. If this guys really threw lump sum say £100k, £300k at that time, early this year ask them how they are feeling now??

There is no evidence those people suggesting other people to throw lump sum say £100k, £300k, are doing that themselves. Also, many people are doing DCA instead of Lump sum without reaslising it as they will need to wait until the following months before having cash to throw into the market.

Also just be aware of, even with sound investment such as S&P500 index; If you are very unlucky you might be waiting for more than 25 years before you see a single penny profit. I have posted this graphics before showing this evidence in this forum. I am not saying it will hapen this time, but it has happened in the past.

jimjames

MarcoM said:

InvesterJones said:

MarcoM said:

Hi, is anyone else's portfolio down around 15% after last week?

Depends in what terms of reference! In GBP, nope, but I think we all know why that might be the case...

Just meant in terms of overall value of portfolio.

Most people here will have a portfolio in GBP so that's the overall value. If you have overseas investments then you might have done better.

NannaH

I’ve stopped looking at my S&S ISA,  it ( 2 Royal London funds) lost 15% almost immediately after I’d stuck in a lump sum last November,   recovered somewhat to -6% and now is losing daily again it seems. 

First and only time I have ever done lump sum investing, bloody typical.
Hopefully we won’t need the money any time soon,  it’s meant to be for a camper van when we retire. 

eskbanker

adindas said:
Generally speaking, in the bear market, declining market DCA works better than lump sum.

As pointed out every time you post that as if it was insightful, it's blindingly obvious simple mathematical fact that DCA will be a better option than lump sum when prices are declining, but if you're advocating a different investing style depending on whether it's a bear market or not, then you have to define how you recognise the beginning and the end of a bear market in advance, rather than retrospectively!

InvesterJones

eskbanker said:

adindas said:
Generally speaking, in the bear market, declining market DCA works better than lump sum.

As pointed out every time you post that as if it was insightful, it's blindingly obvious simple mathematical fact that DCA will be a better option than lump sum when prices are declining, but if you're advocating a different investing style depending on whether it's a bear market or not, then you have to define how you recognise the beginning and the end of a bear market in advance, rather than retrospectively!

Agreed - if retrospective is allowed then lump sum always wins - simply invest at the start of bull markets and at the end of bears - easy!

But if you're not sure, DCA is hedging your bets. It always loses to lump sum at the start of bull/end of bear, but takes timing the market out of the equation.

Otherwise if the market rises more than it falls (which it historically has in the long run) then lump sum as soon as possible is better on average than DCA.

NannaH

Has there ever been a period where, after initial losses on a lump sum, mixed asset funds have failed to recover in a 10 year period?  

It’s looking like I should have held on and stuck my £20k in a fixed term saver at 4%. 

I have RL Sustainable diversifed and RL sustainable managed growth.   They are currently down 21% 😨

masonic

NannaH said:

Has there ever been a period where, after initial losses on a lump sum, mixed asset funds have failed to recover in a 10 year period?  

It’s looking like I should have held on and stuck my £20k in a fixed term saver at 4%. 

I have RL Sustainable diversifed and RL sustainable managed growth.   They are currently down 21% 😨

Yes, if measured in real terms. The crash of 1973 took a couple of years to bottom out, and for a 60:40 portfolio, the recovery would have taken another 8 years. This was also a period of high inflation, so in nominal terms, the recovery would have come much sooner. Anything less than 60% equities would have recovered sooner in real terms.

Your potential saver at 4% is only going to look good if inflation can be brought under control, and the pound doesn't continue to plummet. There's still everything to play for.

adindas

eskbanker said:

adindas said:
Generally speaking, in the bear market, declining market DCA works better than lump sum.

As pointed out every time you post that as if it was insightful, it's blindingly obvious simple mathematical fact that DCA will be a better option than lump sum when prices are declining, but if you're advocating a different investing style depending on whether it's a bear market or not, then you have to define how you recognise the beginning and the end of a bear market in advance, rather than retrospectively!

And I just keep repeating my answer. Bear market is a period of few months or even a few years, why does it matter to know the exact flipping point/date of the beginning and the end where people could do DCA in a smaller chunks since, nine,  eight months ago, seven months ago, etc  while the rest of the money stay in high interest saving account, RSAs waiting allocation in a small chunk using DCA to equity??

Keep in mind unless you are using Platform such as HL, which charge you share dealing fees. It cost you  almost nothing to do DCA as low as $100 even as low as $1 if you think it is appropriate.

And about the current market, you just need to listen to authoritative sources, such as CNBC, Yahoo finance, Bloomberg, CNN finance, Forbes, WSJ. Is there any of analysts/ Strategists ever claim we are now in the bull market ? any Link will be very much appreciated.

Just look at this frequently used indicators to see where the stock market are now.

The fear an Greed Index

The vix to measure volatility in the market

Regarding retrospective, I wish we had time machine. Certainly could just pick the bottom invest with multiple leverage and become an instant billionaire.

I recognised some people who have been suggesting people to throw their hard earning cash lump sum a few hundreds thousands pounds since the beginning of the years, while they themselves have never done that. It is very easy to tell other people to throw £100k if you are not using your own money.

As I mentioned before, there are a few threads in this MSEs early this year regarding DCA Vs Lump sum. I feel sorry those who threw lump sum say £100k, £300k at that time, listening opinion of random people on the internet just because they are very vocal with their opinion supported by the same group of random people rather than listening to professionals, expert opinions like this.

https://www.barrons.com/articles/stocks bear market 51645814386 More than 75% of stocks in the Nasdaq Composite Index and 51% of S&P 500 stocks are already in a bear market—down more than 20% from peak prices, Hartnett notes. The outlook is worsening with geopolitical risks exacerbating potential for inflation, higher commodity prices, and “shocks” to growth.

https://www.investopedia.com/8-ways-to-survive-a-market-downturn-4773417 Smart Strategies for a Bear Market By The Investopedia Team May 30, 2022 Reviewed by Robert C. Kelly Fact checked by Diane Costagliola

https://www.capitalgroup.com/pcs/insights/articles/benefits of dollar cost averaging spring 2020.html A simple approach can help limit the downside during a bear market

https://www.fool.com/investing/stock market/basics/dollar cost averaging/

Generally speaking, dollar cost averaging works best in bear markets and with securities that have dramatic price swings up and down. It is those times, and those types of investments, where reducing investor anxiety and fear of missing out tend to be the most important.

https://www.investors.com/etfs and funds/mutual funds/dollar cost averaging is good for a falling market/ Dollar Cost Averaging Good In A Falling Market JULIE MAK 

Anyway, it is your own money you are investing. I wish you guys all the best with your strategies.

adindas

NannaH said:

Has there ever been a period where, after initial losses on a lump sum, mixed asset funds have failed to recover in a 10 year period?  

It’s looking like I should have held on and stuck my £20k in a fixed term saver at 4%. 

I have RL Sustainable diversified and RL sustainable managed growth.   They are currently down 21% 😨

In the past it has happened. Even with a relative good investment such as S&P500, a person could be waiting for over 25+ years before they could see a single penny profit. But they recover thereafter. I have posted this graphics before. This is fact, not opinion.

But that occasion is extremely rare. You must be among the most unfortunate people in investing to ever experience that.

Selling a good investment that has a good potential to return to green when it already fall 21% is not a good idea.  I never read any expert opinion regarding this. People might be selling at a considered loss when there is fundamental change in the investment thesis which might lead to a much higher probability to incur a significantly much heavy losses.

Also just look at the recent COVID-19 March 2020 market crash. There must be a lot of people was down for more than 21%+. But the stock market then recover with a V-Shape recovery in less than a year.