Spooked by ongoing sharp decline in value of investments - should I cut my losses?

Time2Go_25

If a 3% fall is causing you to be anxious, then investing is not for you, convert it to a cash ISA and sit back.

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81929820#Comment_81929820

More bang for your buck!

Unit price is lower so you can buy more units than you could a few days/weeks ago.

daveyjp

Three months into a 10-20 year investment journey isn't a time to think it is all going pear shaped and throw in the towel.

kempiejon

At least the investor has the self awareness to know now it might not be for them and could cash out with 95% of the fund intact, this could be another 10/20/30% drops to come and then if they lose their nerve then they'd only have 70% of the fund.

Cus

https://forums.moneysavingexpert.com/discussion/comment/81929832#Comment_81929832

If a unit price has gone down from 2x to x, then are you saying that buying units at a price of x is better than buying units at a price of 2x in that over time you will be better off? Are the chances that the unit price rises by 10% in a specific timeframe from x now more likely than an increase of 10% from 2x in the same timeframe?

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81929820#Comment_81929820

You'll get more for your money....if you're going to invest in a fund, you are better buying it on the day it is £90 per unit than on the day it is £100 per unit.

Cus

https://forums.moneysavingexpert.com/discussion/comment/81929881#Comment_81929881

Thanks for replying. Same question as I asked above to another poster if you please, with your numbers. If a unit price has gone down from 100 to 90, then are you saying that buying units at a price of 90 is better than buying units at a price of 100 in that over time you will be better off? Are the chances that the unit price of 90 rises by 10% in a specific timeframe from now more likely than an increase of 10% from 100 in the same timeframe?

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81929890#Comment_81929890

I don't think anyone can be that specific. What I'm saying is two things really:

1. as with anything, once you've done your research and decided what to buy, buying it at a lower price is better for you.
2. Price drops driven by political or macro-economic events don't necessarily reflect a downturn in the value of the underlying asset, and so you are taking advantage of that uncertainty to buy at a discount because youre in a position to invest for the long term.

So in my terms, if you think an asset will go up over the next 10 years, if you have £1000 to spend youll be better off buying 11 (@90) rather than 10 (@100).

masonic

https://forums.moneysavingexpert.com/discussion/comment/81929890#Comment_81929890

At risk of stating the bleeding obvious, if "past you" bought an investment fund at a price of 100 a few weeks ago, compared with "present you" buying the same investment fund at a price of 90 today, come what may, if you sell the investment as some arbitrary date in the future for X, present you would have a better overall return. This is because (X-100) < (X-90) for all values of X. Ergo, you are better off buying today than you would have been a few days/weeks ago. If the 10% drop causes you to buy more units using an equal amount of money, then that can significantly reduce the extent to which you are better off in a market that continues to slide and doesn't recover, but only if the investment goes to zero will the edge completely disappear.

Cus

https://forums.moneysavingexpert.com/discussion/comment/81929904#Comment_81929904

Thanks. Maybe it's my mathematical mind but I find the above reasoning unconvincing.

For point 1, if you decide to invest in something, you are hoping/expecting it to rise in value over time. Just because it might now be at a lower price doesn't mean that it becomes a better idea to me. Surely there is an element of 'well it was higher before so it must get back to that level'. Does that statistically actually happen?

Point 2 is similar, in that assuming price drops driven by political or macro economic events are somehow different to assuming price rises are due to similar events, so that it must revert to before is again unconvincing to me.

If the market thought something was a certain value and then thinks it's a lower value, does that mean it's more likely to rise by a defined percentage than if it was at the previous value?