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

Notepad_Phil

adindas said:

Notepad_Phil said:

adindas said:

Notepad_Phil said:

adindas said:

Notepad_Phil said:

adindas said:

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.

adindas, re your statement "Selling a good investment that has a good potential to return to green when it already fall 21% is not a good idea. ". From your previous belief that DCA is best during a bear market, surely you should be checking whether they would have any CGT issues in selling and provided there were none suggesting that they do sell now and then DCA back in.

I personally would not agree with that, but it is the logical conclusion from your belief.

Tax is not in the discussion. I fully agree with you where there is a tax implication of doing that but this is subject to another discussion as every person will have different tax profile.

You've missed my point. You say that DCA is best during a bear market, so why did you not tell them to sell the investment now and rebuy using DCA? It's the logical conclusion of your belief as we're in a bear market.

reread what I am writing. Selling at 21% loss ?? I am not following your logic, sorry.

In that case I'm afraid it's your logic that you are not following.

You have previously said that we are in a bear market so DCA is best and will beat a lump sum investment. So suppose someone had a fund that is currently  worth £1,000 and had fallen amongst everything else. Surely you would suggest that they should sell that investment to get the £1,000 and then invest the £1,000 using DCA. According to you this would beat just putting the £1,000 back into the investment as a lump sum investment. Selling and immediately buying back into the same fund as a lump sum is essentially the same as just holding the fund, so you are not following your belief that DCA is best in a bear market.

Note, I realise that not everybody who sells a £1,000 investment will get £1,000 because of market moves, but there'll be just about the same number who'll get more than will get less and on average you would get the £1,000 (assuming zero selling costs and equal buy/sell pricing).

I will also reiterate that I personally would not agree with doing this, but it is the logical conclusion from your belief.

Say you have £100k, and selling it with 21% loss, That is £21k loss representing 21%

If you have the option:

1. You lose your £21k by selling it now and you crystallise your loss. £21k has already gone and never come back.

2. Stay investing, You might still lose a little bit part of your £21k, but the odd / probability is on your favour. You have a very good chance to make profit by stay investing. When the catalyst come, the root cause of the bear market start to disappear the movement is very steep, you miss the best days in the stock market.

I fully believe many people know what to choose.

The one you mention about is just talking about the £79k does not take into consideration the £21k you have lost on the equation and never come back. Is it not clear !!!

It is entirely a different thing when it is a new money or you have made a break-even.

Okay, one last try, You reckon that in the current bear market with a sum of e.g. £79k it would be better to invest it using DCA than investing it as a lump sum I.e. the £79k would rise to a higher sum at the end with DCA. You do agree with that statement, do you not?

If you do agree with that, then how does it matter how you got that £79k? Why does it matter if it was built up from cash or whether you had sold a fund and made a loss or maybe even made a profit because you've been invested so long. All that matters is that you have £79k and you want to invest in the stock market and you want to use the best strategy you can find - which according to you in a bear market is to DCA.

Or are the margins so small that the one day between selling a fund to get the £79k and either starting to reinvest using DCA or starting a new lump sum investment are so small that it negates your supposed advantage of how to invest in a bear market?

P.s. You seem to think that a crystallised loss is always bad, but it's not. It's only bad if someone should have remained invested but instead sold and just put the money into bank savings. If I found out a strategy that would make more money than just leaving it where it was then I'd be only too happy to crystallise a loss. E.g. if someone found out that penny stocks were not the route to riches and instead were all loss makers, then I wouldn't argue that they should wait till those penny stocks rose back to their buying price before selling them and putting their money into a global index tracker. The same should go for your supposed best strategy of DCA in bear market.

adindas

Notepad_Phil said:

adindas said:

Notepad_Phil said:

adindas said:

Notepad_Phil said:

adindas said:

Notepad_Phil said:

adindas said:

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.

adindas, re your statement "Selling a good investment that has a good potential to return to green when it already fall 21% is not a good idea. ". From your previous belief that DCA is best during a bear market, surely you should be checking whether they would have any CGT issues in selling and provided there were none suggesting that they do sell now and then DCA back in.

I personally would not agree with that, but it is the logical conclusion from your belief.

Tax is not in the discussion. I fully agree with you where there is a tax implication of doing that but this is subject to another discussion as every person will have different tax profile.

You've missed my point. You say that DCA is best during a bear market, so why did you not tell them to sell the investment now and rebuy using DCA? It's the logical conclusion of your belief as we're in a bear market.

reread what I am writing. Selling at 21% loss ?? I am not following your logic, sorry.

In that case I'm afraid it's your logic that you are not following.

You have previously said that we are in a bear market so DCA is best and will beat a lump sum investment. So suppose someone had a fund that is currently  worth £1,000 and had fallen amongst everything else. Surely you would suggest that they should sell that investment to get the £1,000 and then invest the £1,000 using DCA. According to you this would beat just putting the £1,000 back into the investment as a lump sum investment. Selling and immediately buying back into the same fund as a lump sum is essentially the same as just holding the fund, so you are not following your belief that DCA is best in a bear market.

Note, I realise that not everybody who sells a £1,000 investment will get £1,000 because of market moves, but there'll be just about the same number who'll get more than will get less and on average you would get the £1,000 (assuming zero selling costs and equal buy/sell pricing).

I will also reiterate that I personally would not agree with doing this, but it is the logical conclusion from your belief.

Say you have £100k, and selling it with 21% loss, That is £21k loss representing 21%

If you have the option:

1. You lose your £21k by selling it now and you crystallise your loss. £21k has already gone and never come back.

2. Stay investing, You might still lose a little bit part of your £21k, but the odd / probability is on your favour. You have a very good chance to make profit by stay investing. When the catalyst come, the root cause of the bear market start to disappear the movement is very steep, you miss the best days in the stock market.

I fully believe many people know what to choose.

The one you mention about is just talking about the £79k does not take into consideration the £21k you have lost on the equation and never come back. Is it not clear !!!

It is entirely a different thing when it is a new money or you have made a break-even.

Okay, one last try, You reckon that in the current bear market with a sum of e.g. £79k it would be better to invest it using DCA than investing it as a lump sum. You do agree with that statement, do you not?

If you do agree with that, then how does it matter how you got that £79k? Why does it matter if it was built up from cash or whether you had sold a fund and made a loss or maybe even made a profit because you've been invested so long. All that matters is that you have £79k and you want to invest in the stock market and you want to use the best strategy you can find - which according to you in a bear market is to DCA.

Or are the margins so small that the one day between selling a fund to get the £79k and either starting to reinvest using DCA or starting a new lump sum investment are so small that it negates your supposed advantage of how to invest in a bear market?

P.s. You seem to think that a crystallised loss is always bad, but it's not. It's only bad if someone should have remained invested but instead sold and just put the money into bank savings. If I found out a strategy that would make more money than just leaving it where it was then I'd be only too happy to crystallise a loss. E.g. if someone found out that penny stocks were not the route to riches and instead were all loss makers, then I wouldn't argue that they should wait till those penny stocks rose back to their buying price before selling them and putting their money into a global index tracker. The same should go for your supposed best strategy of DCA in bear market.

I have explained it to you the logic of selling at loss. Let alone that loss is significant. I am not going to explain it anymore. If you want to do that fine it is your money ....

I never say crystallising loss is ALWAYS bad. Reread what I wrote previously. Also people might do that to offset the tax, but tax is not in the   discussion.

The day traders, high frequency traders know the rule very well that cutting the losses is sometimes the best alternative. In fact "cutting losses is the traders daily tools to make money". But this is subject to another discussion.

Cutting losses is not just applicable to trading but also in investing. Even the multi billionaires proven investors have done that in many occasions.

Cutting your loss in trading and selling a good sound investment that historically will make a come back at significant loss are two different things.

Notepad_Phil

adindas said:

Cutting your loss in trading and selling a good sound investment that historically will make a come back at significant loss are two different things.

It's here that you just can't seem to see it. Selling an investment at whatever loss is fine if you have a subsequent strategy that will mean that it will be worth more than if you had just left it where it was - the subsequent strategy would be to use your supposedly better strategy of DCA in a bear market. But I just don't think you can see this, maybe you would if you saw a very simple example of a fund rising by 5% over a year:

Option 1. Keep fund.
Day 1 - keep fund with 79,000 units invested when units are £1 each.
Day 360 - units are now worth £1.05, so fund is worth £82950

Option 2. Lump sum investment.
Day 1 - sell fund when units are £1 and realise £79k
Day 2 - rebuy fund in one go, on average the unit price will still be very close to £1 and you'll have 79000 units
Day 360 - units are now worth £1.05, so fund as above in option 1 is worth £82950.

Option 3. DCA (and here I'll be generous and let your DCA beat a lump sum investment, with an average buy price of £0.95).
Day 1 - sell fund when units are £1 and realise £79k
Day 2 and then every month, week or whatever period of time afterward you purchase units of the fund.
Day 360 - at an average buy price of £0.95 you now have 83157.89 units, each unit is now worth £1.05 so your fund is now worth in the region of £87k.

So by selling the fund and then rebuying via DCA it would mean a final value of £87k rather than the £83k if you had just left it. It really does not matter that along the way you suffered a loss, you would still have a fund worth more than if you had left it alone.

And once again I have to reiterate that I do not believe that DCA is better in a bear market than lump sum so I would not do the above, as the problem is that nobody knows when a bear market will end.

adindas

Notepad_Phil said:

adindas said:

Cutting your loss in trading and selling a good sound investment that historically will make a come back at significant loss are two different things.

It's here that you just can't seem to see it. Selling an investment at whatever loss is fine if you have a subsequent strategy that will mean that it will be worth more than if you had just left it where it was - the subsequent strategy would be to use your supposedly better strategy of DCA in a bear market. But I just don't think you can see this, maybe you would if you saw a very simple example of a fund rising by 5% over a year:

Option 1. Keep fund.
Day 1 - keep fund with 79,000 units invested when units are £1 each.
Day 360 - units are now worth £1.05, so fund is worth £82950

Option 2. Lump sum investment.
Day 1 - sell fund when units are £1 and realise £79k
Day 2 - rebuy fund in one go, on average the unit price will still be very close to £1 and you'll have 79000 units
Day 360 - units are now worth £1.05, so fund as above in option 1 is worth £82950.

Option 3. DCA (and here I'll be generous and let your DCA beat a lump sum investment, with an average buy price of £0.95).
Day 1 - sell fund when units are £1 and realise £79k
Day 2 and then every month, week or whatever period of time afterward you purchase units of the fund.
Day 360 - at an average buy price of £0.95 you now have 83157.89 units, each unit is now worth £1.05 so your fund is now worth in the region of £87k.

So by selling the fund and then rebuying via DCA it would mean a final value of £87k rather than the £83k if you had just left it. It really does not matter that along the way you suffered a loss, you would still have a fund worth more than if you had left it alone.

And once again I have to reiterate that I do not believe that DCA is better in a bear market than lump sum so I would not do the above, as the problem is that nobody knows when a bear market will end.

To tell you the truth I have put my case and I have highlighted the obvious flaw in your logic. Therefore I do not even bother to read your last post just to continue. It is such a waste of time.

Some random guys here on the internet think they are better than professionals: analysts, strategists. I fully believe those who listen to these random guys on internet previously have learned their hard lessons when they threw lump sump £100k, £300K in the market early this year. While there are already a barrage of warning as early as the beginnig of this year. 

Do what you want, and believe what you want. end of ...

Notepad_Phil

adindas said:

Notepad_Phil said:

adindas said:

Cutting your loss in trading and selling a good sound investment that historically will make a come back at significant loss are two different things.

It's here that you just can't seem to see it. Selling an investment at whatever loss is fine if you have a subsequent strategy that will mean that it will be worth more than if you had just left it where it was - the subsequent strategy would be to use your supposedly better strategy of DCA in a bear market. But I just don't think you can see this, maybe you would if you saw a very simple example of a fund rising by 5% over a year:

Option 1. Keep fund.
Day 1 - keep fund with 79,000 units invested when units are £1 each.
Day 360 - units are now worth £1.05, so fund is worth £82950

Option 2. Lump sum investment.
Day 1 - sell fund when units are £1 and realise £79k
Day 2 - rebuy fund in one go, on average the unit price will still be very close to £1 and you'll have 79000 units
Day 360 - units are now worth £1.05, so fund as above in option 1 is worth £82950.

Option 3. DCA (and here I'll be generous and let your DCA beat a lump sum investment, with an average buy price of £0.95).
Day 1 - sell fund when units are £1 and realise £79k
Day 2 and then every month, week or whatever period of time afterward you purchase units of the fund.
Day 360 - at an average buy price of £0.95 you now have 83157.89 units, each unit is now worth £1.05 so your fund is now worth in the region of £87k.

So by selling the fund and then rebuying via DCA it would mean a final value of £87k rather than the £83k if you had just left it. It really does not matter that along the way you suffered a loss, you would still have a fund worth more than if you had left it alone.

And once again I have to reiterate that I do not believe that DCA is better in a bear market than lump sum so I would not do the above, as the problem is that nobody knows when a bear market will end.

Do what you want,  and believe what you want. end of ...

Unfortunately, that was the answer I was expecting.

justwantedtosay

RolandFlagg said:

Buy when people are selling, or you are doomed to fail with the herd.

NO, buy the instant people STOP selling. But of course that's virtually impossible.
I was still drip feeding an ISA but have just lost my nerve and cancelled the payments. Keeping the money in just in case it recovers but I have had such bad experiences over decades that I don't think I will ever put more money into stocks and shares and will sleep easier for it.