Bad time to buy stock?

seacaitch

You guys are all wasting your time on Uriziel - they've "seen the light", have the zeal of the newly converted, and you disbelievers can never cut through that. Only painful losses will do that job, delivered good and hard...

For Uriziel's sake, let's hope those losses occur sooner rather than later, so they waste less of their time & money playing short term games with negative expected returns and turn instead to "get richer slowly" long term wealth compounding strategies. But some lessons have to be learned personally by some people.

Eyeful

seacaitch said:

You guys are all wasting your time on Uriziel - they've "seen the light", have the zeal of the newly converted, and you disbelievers can never cut through that. Only painful losses will do that job, delivered good and hard...

For Uriziel's sake, let's hope those losses occur sooner rather than later, so they waste less of their time & money playing short term games with negative expected returns and turn instead to "get richer slowly" long term wealth compounding strategies. But some lessons have to be learned personally by some people.

For some persons that is sad but true.

But look on the bright side, it's Christmas,
 Scrooge finally, "saw the truth", so who knows?

kempiejon

seacaitch said:

You guys are all wasting your time on Uriziel - they've "seen the light", have the zeal of the newly converted, and you disbelievers can never cut through that. Only painful losses will do that job, delivered good and hard...

For Uriziel's sake, let's hope those losses occur sooner rather than later, so they waste less of their time & money playing short term games with negative expected returns and turn instead to "get richer slowly" long term wealth compounding strategies. But some lessons have to be learned personally by some people.

Getting started with investing small amounts and seeing just how much volatility there is in assets taught me to stomach some losses, wild swings in price and a few calamities. Getting it wrong was valuable and luckily early on I got a few now obvious failures with small comparatively amounts. I spent hours analysing accounts and got my head round what being a stock picker entailed and over time saw my worth grow faster than inflation; a very worthwhile education and losing a bit on the path to financial independence was money well spent.

agent69

Alexland said:

The market is great at teaching the wrong lessons.

The biggest risk with investment is ourselves.

Studies of investment accounts show the best performing investors were dead because they never trade and are at no risk of making all the classic behavioural errors. On average investors only capture around 50% of the market long term returns because they do too much messing around.

Guilty as charged

Alexland

agent69 said:

Guilty as charged

In which case you are probably human.

The problem is you are unlikely to have the best investment strategy at the start so various improvements will be beneficial (particularly in the first few years), your investing needs will evolve over time as your circumstances change and markets evolve so to maintain a desired risk glide path and get increasing certainty of outcome some change will be necessary but the judgement is only acting when it's genuinely beneficial not just messing around reacting to emotions or buying whatever nonsense you see in the press or even sometimes read about here.

[Deleted User]

agent69 said:

Alexland said:

The market is great at teaching the wrong lessons.

The biggest risk with investment is ourselves.

Studies of investment accounts show the best performing investors were dead because they never trade and are at no risk of making all the classic behavioural errors. On average investors only capture around 50% of the market long term returns because they do too much messing around.

Guilty as charged

I'm not convinced that some messing around isn't helpful, and I don't refer only to rebalancing. When bubbles appear, intervention can help; when politics changes the investing landscape, intervention can help; when new data demonstrates that a previously stalwart market is now in decline, intervention can help, ditto the obverse. Markets are fluid, which is why I think investing strategies need to be fluid also. If you have 30 years investing in front of you, I agree, simply buy an index tracker and forget about it. But if you do not, being an active participant is the camp I want to be in.      

Linton

chiang_mai said:

agent69 said:

Alexland said:

The market is great at teaching the wrong lessons.

The biggest risk with investment is ourselves.

Studies of investment accounts show the best performing investors were dead because they never trade and are at no risk of making all the classic behavioural errors. On average investors only capture around 50% of the market long term returns because they do too much messing around.

Guilty as charged

I'm not convinced that some messing around isn't helpful, and I don't refer only to rebalancing. When bubbles appear, intervention can help; when politics changes the investing landscape, intervention can help; when new data demonstrates that a previously stalwart market is now in decline, intervention can help, ditto the obverse. Markets are fluid, which is why I think investing strategies need to be fluid also. If you have 30 years investing in front of you, I agree, simply buy an index tracker and forget about it. But if you do not, being an active participant is the camp I want to be in.      

Feeling the need to intervene after temporary market events is in my view evidence that your asset allocation is inappropriate for your psychology or your investment time frame.  Better to accept that the future is unknown and invest on the assumption that a crash could occur at any time. Reacting after a market event is different to being a full active participant.

However that does not preclude making significant strategic changes based on long term global considerations or one’s own circumstances independently of what the markets happen to be doing at any particular time. 

In particular the split between developed and emerging markets fossilised in the structure of global indexes is in my view becoming decreasingly representative of reality. 

[Deleted User]

Linton said:

Feeling the need to intervene after temporary market events is in my view evidence that your asset allocation is inappropriate for your psychology or your investment time frame.  Better to accept that the future is unknown and invest on the assumption that a crash could occur at any time. Reacting after a market event is different to being a full active participant.

However that does not preclude making significant strategic changes based on long term global considerations or one’s own circumstances independently of what the markets happen to be doing at any particular time. 

In particular the split between developed and emerging markets fossilised in the structure of global indexes is in my view becoming decreasingly representative of reality. 

I recently watched Fidelity Global Dividends reliniquish a 45% allocation to Europe and switch into the US by a similar amount. They did that in the nick of time because I was on the verge of switching out of that fund, because of its over allocation to Europe. Fortunately, the FM did his job for me, but if he hadn't, I would have had no problem intervening. 

Earlier in the year I reduced my US allocation by half and increased my allocations elsewhere. I also reduced my holdings recently in higher risk UK and European funds, because of them being overweight in Financial Services...the objective was to reduce the value of funds at risk. 

In light of the Mag 7 concentrations, I substantially altered my asset allocation by reducing equities and increasing other holdings. I judged that the risk in US markets was higher than I was prepared to accept at the level I was invested. 

I sold of my Vanguard Global Small Caps because I was already holding small caps in other funds, at a level I am comfortable with, that put me at 70/20/10 and balanced. In a different market I might go more towards 60/25/15 but that's too risky for me right now.  

Those are the sorts of interventions I had in mind when I wrote what I did.

Cus

Feeling the need to intervene after temporary market events is in my view evidence that your asset allocation is inappropriate for your psychology or your investment time frame.  Better to accept that the future is unknown and invest on the assumption that a crash could occur at any time. Reacting after a market event is different to being a full active participant.

Fair, but in the case of @chiang_mai who has shown enthusiasm for being an active participant, then reacting and adjusting to market events is part of that philosophy. It's not for all but it's not imo a pointless endeavour.

[Deleted User]

Cus said:

Feeling the need to intervene after temporary market events is in my view evidence that your asset allocation is inappropriate for your psychology or your investment time frame.  Better to accept that the future is unknown and invest on the assumption that a crash could occur at any time. Reacting after a market event is different to being a full active participant.

Fair, but in the case of @chiang_mai who has shown enthusiasm for being an active participant, then reacting and adjusting to market events is part of that philosophy. It's not for all but it's not imo a pointless endeavour.

It's impossible to make a single rule that is appropriate for everyone, regardless of age, circumstances, experience, wealth et al, there is a large number of variables. As a basic premis, I agree, amateur investors probably shouldn't keep tinkering because it's costly in the long run. For those that are slightly better equipped and have the time and desire to be involved, there is then the question of, what does temporary (as in market events) mean, after all, human life is temporary but it often lasts over 85 years! I suggest that temporary also means different things to different people, based on the number of investing years remaining for each of us. Some of us buy funds that are managed by well regarded Fund Managers, in the hope they will intervene, appropriately, as and when necessary. I don't think a 45 year old FM and a 75 year old investor are always going to agree the same definition of, "as and when necessary". Lastly, FM's and Fund Analysts are not expert economists and most will not have the same degree of international experience that many investors have. I don't think you can say that the retail investor must not "tinker" at all, just because they don't have the same degree of FM experience when many of them will perhaps have complementary, if not superior skills in related areas and practical experience instead. Perhaps a part of the correct answer is for amateur investors to ensure they truly understand their capabilities and know their boundaries. Investing is complex but it's not to the same skill and knowledge level as open heart surgery, many of the skills can be learned and knowledge easily acquired.