Increased Markets Volatility

mebu60

chiang_mai said:

Markets will almost certainly open down on Monday, on the back of the latest trade and tariff spat between the US and China. 

How did that work out? 

Hattie627

Linton said:

chiang_mai said:

Markets will almost certainly open down on Monday, on the back of the latest trade and tariff spat between the US and China. Meanwhile, Dimon has expressed concern at the increased ptential for market falls and the likes of Jeremy Warner have recently dedicated long columns to the subject. For the average retail investor this will mean anything from mild concern to abject fear, based on your age and financial circumstances. 

Following April’s markets correction, I took steps to behave more sensibly and show more restraint, which in an exciting and action packed up market, isn’t always that easy to do. Last month I went one step further and took on board Buffets advice to be fearful when others are being greedy.  I set aside five years income in cash, money markets and bonds and capped my equities investment at 50%, today I’m feeling very comfortable with whatever the markets may throw at us and no longer feel the need to peek at the indices each day to see the extent of the action.

My question is, where are each of you with these things, are you taking a potential correction or crash in your stride or have you taken special steps to reign in your enthusiasm. Under 50’s behavior will no doubt be different from the older set hence it may help if you say which group you are in.....I'm very very much in the over 50's group! It’s interesting to note that one of the bestselling funds by the high street brokers in recent months has been RL Short Term Money Markets. If that is true, quite a few investors are shoring up the defenses.

Well over 50 and retired…

Market volatility does not worry me at all. It interests me, and I follow the data daily,  but it won’t lead to sleepless nights nor to my making major changes to my portfolio. The strategy is easy: Firstly, ensure meeting essential liabilities in the next 10 years is not dependent on equity prices.  Secondly ensure that your investments are well diversified across all factors. 

If circumstances occur which are not mitigated by this strategy, it would seem likely that no other strategy would have done better. Furthermore  you and every one else would probably have far more to worry about than the state of their investments.

A good way of looking at investment management in my view is to always work on the assumption that a market crash could happen tomorrow. Any panic reaction when one really does happen is evidence that you got it wrong in the first place.

68 and now retired.

Very reassuring advice. I am following the strategy outlined.

Yorkie1

DRS1 said:

Vitor said:

My BTC exposure is house money after taking 300% gains
Sold my exposure to India and 'green'/ecology sectors
Lightened my exposure to Europe and Technology
Holding gold sovereigns for now
Thinking of selling M&S

Taking practical 'prepping' steps, have petrol generator to ride out power cuts etc. Good luck everone

You left out the nuclear bunker at the bottom of the garden and your stock of guns and ammo.

BTW I hope you're not leaving any fingerprints on those gold sovereigns.

Here you are   York Cold War Bunker | English Heritage

chiang_mai

mebu60 said:

chiang_mai said:

Markets will almost certainly open down on Monday, on the back of the latest trade and tariff spat between the US and China. 

How did that work out? 

Looking at some of my holdings just now I'd say it worked out pretty much as expected, EM, Japan and small caps fell by between 1.5% and 2%, nothing too dramatic and seemingly not a repeat of April, fortunately. 

thunderroad88

chiang_mai said:

mebu60 said:

chiang_mai said:

Markets will almost certainly open down on Monday, on the back of the latest trade and tariff spat between the US and China. 

How did that work out? 

Looking at some of my holdings just now I'd say it worked out pretty much as expected, EM, Japan and small caps fell by between 1.5% and 2%, nothing too dramatic and seemingly not a repeat of April, fortunately. 

Asia reacted today how Europe and US reacted on Friday…I’d expect an Asian bounce back tonight. Trump is already rowing back on his China threats…

michael1234

thunderroad88 said:

chiang_mai said:

mebu60 said:

chiang_mai said:

Markets will almost certainly open down on Monday, on the back of the latest trade and tariff spat between the US and China. 

How did that work out? 

Looking at some of my holdings just now I'd say it worked out pretty much as expected, EM, Japan and small caps fell by between 1.5% and 2%, nothing too dramatic and seemingly not a repeat of April, fortunately. 

Asia reacted today how Europe and US reacted on Friday…I’d expect an Asian bounce back tonight. Trump is already rowing back on his China threats…

Agreed. Given how frequently Trump likes to update the media (often several times per day) I find it quite useful to listen to what he says and even how he says it rather than read 3rd hand via a media source. I've been doing that for some months and you really do get a feel for his personality which IMO isn't as simple as often portrayed. And don't read that as me liking or disliking him.

When he lashed out at China on TS the markets almost took his words literally. Then later he updated a small handful of journos on AF1 on his way to the middle east (as usual plenty of video of that available) and it was absolutely clear he did not want a big ding dong with China.

chiang_mai

thunderroad88 said:

Asia reacted today how Europe and US reacted on Friday…I’d expect an Asian bounce back tonight. Trump is already rowing back on his China threats…

I've come to realise his strategy of making these anouncements just before the weekend. Maximum effect on Friday, rowed back at the start of the week, by mid week it's business as usual again.

PixelPound

The first rule of investing is work out your risk factor, and the second is understand what you are buying.

Markets go up and down, a bull market followed by a bear. With a sustained Bull market like we've had (since the 2008 crash there was the pandemic and April's short Trump Tariff dip but otherwise it;s been up) then you get people deciding they need to get in on the gains (FOMO). All is well whilst it's a bull market (you get people posting their gains all over the place) and everyone is happy, but the problem is when there are downs.

Friday's dip was nothing, just normal market fluctuations, in fact it probably wasn't enough to be called a dip. If the sight of stock prices going red scared you and made you panic, then you need to reassess your risk. Consider what stage of life you are in and when you need the money. If you are approaching retirement (the de-accumulation stage) or aiming to need a large chunk in say the next 5 years (e.g. house buying) then you really need to consider whether (or how much) you should be investing in risky stock. If stock prices fall in the near future, which they possibly will at some point whether it be next year or at some point before 2030 and stay down for 2-3 years but by 2035 or 2040 they are back at new all time highs, could you cope? Would you be able to carry on investing through it or would it cause you sleepless nights and at some point think you've had enough and need to get out before it falls further.

Next is understand what you are buying. If you are buying index funds for passive investing, understand the cycles and where it's likely to go and what investing in an index fund means. If you are buying individual stocks, then ask yourself what do you understand about it. Are you buying because some finfluencer said so or you saw a post on social media, or do you understand what the company does. If the price falls, is it because something has changed with the company or the environment it operates in (you can then assess whether it's just the market readjusting the value or whether it's time to also get out), or is it just market cycles and market changes to be ridden out (and opportunities to buy the dip).

Finally pertinent points about the stock market and investors

- the stock market outperforms regular savings over any 10 year period in it's history

- most investors perform worse than the market (because they buy/sell at wrong times due to emotional decisions)

- Time in the market beats timing the market (long term investing by automated regular payments beats trying to buy high and sell low)

- Emotional resilience is an underestimated foundation of investing. Understanding your risk tolerance and how to mitigate it (such as setting up a DD to fund a global index fund for the next 20-30 years and hoping to ignore the news)

Bostonerimus1

You're only financially independent when you stop worrying about money. Of course then you really start worrying about taxes, especially inheritance tax if you have relatives that you like.

masonic

Bostonerimus1 said:

You're only financially independent when you stop worrying about money. Of course then you really start worrying about taxes, especially inheritance tax if you have relatives that you like.

Though the habit of worrying about money is hard to break.