JPMorgan Natural Resources -48% down but still hanging on

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Comments

  • TakeCareOfThePennies_2
    TakeCareOfThePennies_2 Posts: 111 Forumite
    racing_blue wrote: »
    Computer says no
    If the fund is down 57%, to get your money back you need a rise of 133%

    More haste less speed next time I post !

    In which case his scolding by my good self was even more deserved ! :)
  • TakeCareOfThePennies_2
    TakeCareOfThePennies_2 Posts: 111 Forumite
    edited 10 April 2015 at 3:57PM
    bowlhead99 wrote: »
    Wow, you sure schooled him. Well done!

    I had to bite my tongue quite hard .... as there are other words that could be used for someone that watches something go down to 48% and then continues watching it go down to 57% :)

    bowlhead99 wrote: »
    That doesn't sound very objective to me. That sounds dogmatic rather than pragmatic. Some would say "blinkered".

    I don't really care what you call it.

    Remember, by the time it reaches the "hard" level, it has already been through the "soft" and "mid" levels ... its had more than its fair chance to redeem itself. Hence the "hard" level is a very strict cut-losses level ... you have to take emotion out of investing sometimes !!!!

    bowlhead99 wrote: »
    Do you reset the hard level as a result of those reviews and potential changed circumstances that you observe?

    The hard level is never changed at the hard level itself, but its open for tweaking elsewhere (including at soft/mid levels). But I mean tweaking, as in single digit percentage buffer increases, I don't mean chucking an extra 20% on, or whatever !

    As for reaching the hard level and being tempted to shift the barrier because of the potential story going forward, that's only happened a couple of times. In the end I stuck with the hard level in both instances, and with hindsight I didn't regret it because either the item continued to drop, or it just stagnated, made minor gains and never really went anywhere.

    bowlhead99 wrote: »
    There is not usually any reason to exit an investment without considering the merits of the investment right there and then.

    The intermediate levels are the levels for considering the merits. By the time its reached the hard level, its either going to require a miracle or its going to take a very long time for it to recover !

    Bear in mind that the hard level is generally 2x the soft level, and the soft level is already reasonably generous (minimum 10%, never single digits) ... hence my reason for being quite strict about things if it manages to get down to the hard level, I'm already far enough from break-even for my liking at the hard level !
  • noggin1980
    noggin1980 Posts: 419 Forumite
    TakeCareOfThePennies wrote: »
    "
    Hard is an objective level, it is my loss-cutting limit, any thought process is removed, stuff will, immediately, get sold if it hits that level.

    Sounds like a great plan, after a massive crash sell everything, what could possibly go wrong?:A
  • TakeCareOfThePennies_2
    TakeCareOfThePennies_2 Posts: 111 Forumite
    edited 10 April 2015 at 4:04PM
    noggin1980 wrote: »
    Sounds like a great plan, after a massive crash sell everything, what could possibly go wrong?:A

    I knew some smart alec would bring that one up. :mad:

    I would have thought people would be smart enough to figure out that my description was for something suitable for "NORMAL" market conditions !

    Of course, in the event of another 2008 type black-swan event then I have different options I would consider that I'm not going to go into here.

    Also noggin1980, remember the number one rule of investing.... never put in what you can't afford to loose, and always keep a healthy cash position !!

    What happened to jabbahut40 and his JPM Natural resources was not a crash. It was pure mis-management of his portfolio. He should have cut his losses a long time ago....
  • noggin1980
    noggin1980 Posts: 419 Forumite
    TakeCareOfThePennies wrote: »
    I knew some smart alec would bring that one up. :mad:

    I would have thought people would be smart enough to figure out that my description was for something suitable for "NORMAL" market conditions !

    Of course, in the event of another 2008 type black-swan event then I have different options I would consider that I'm not going to go into here.

    Your post was pretty clear, objective limit, all thought process removed, of course it was obvious this isn't what you would do but your post deserved a smart alec response.
  • noggin1980
    noggin1980 Posts: 419 Forumite
    TakeCareOfThePennies wrote: »
    What happened to jabbahut40 and his JPM Natural resources was not a crash. It was pure mis-management of his portfolio. He should have cut his losses a long time ago....

    Not if he continued to believe it would go up from it's current position.

    Do you think everyone who invests now in this fund are wrong? if not why is someone staying in after big losses wrong?
  • Linton
    Linton Posts: 17,135 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    TakeCareOfThePennies wrote: »
    I had to bite my tongue quite hard .... as there are other words that could be used for someone that watches something go down to 48% and then continues watching it go down to 57% :)

    ......

    A sensible long term investor? Selling low is a good way to lose your money. In your example you would presumably use the proceeds from selling to buy something else. Why do you think that a fund that has dropped 48% is less likely to increase massively than a fund which has already risen 48%?

    If you are a long term fund investor working with broadly invested funds you see a drop as a buying opportunity. Stop losses may make some sort of sense with individual shares as you face the possibility of losing everything but a fund invested in possibly 100's of companies world wide isnt going to go away. By buying the fund you arent putting your money in something that may or may not "redeem itself" with idiosyncratic price movements. You are buying a % of a vital part of the world economy at a price that moves in line with overwhelming economic forces.

    The time to buy such things is when prices are unusually low as they are now. And if it's time for people who dont own the fund to buy its hardly time for those who do to sell.
  • TakeCareOfThePennies_2
    TakeCareOfThePennies_2 Posts: 111 Forumite
    edited 10 April 2015 at 4:23PM
    noggin1980 wrote: »
    but your post deserved a smart alec response.

    Thanks, but not entirely necessary. I can count on one hand the number of times I've seen the hard level in action over the years. I've seen things reach the soft level a few more times before they turn around and go back in the right direction. But from experience you really would have to have a very special reason and really know the company and its sector inside out to even be tempted to keep things at the hard level !
    noggin1980 wrote: »
    Not if he continued to believe it would go up from it's current position.

    And thereby you quote the classic reason for failure to cut losses.... the belief it will go back up !
    noggin1980 wrote: »
    Do you think everyone who invests now in this fund are wrong? if not why is someone staying in after big losses wrong?

    There is a difference between buying cheap (i.e. with limited downside risk because you think you're at or near the bottom) and taking a great big loss and hoping things will change direction, hopefully eventually break-even, and then hopefully give you some profit over that.

    jabbahut40 is between a rock and a hard place. Neither option is particularly attractive down at this level of losses. The only positive thing that's going to come out of this he'll have learnt a valuable lesson for the future !
  • TakeCareOfThePennies_2
    TakeCareOfThePennies_2 Posts: 111 Forumite
    edited 10 April 2015 at 4:45PM
    Linton wrote: »
    A sensible long term investor?

    Oh for heavens sake !

    Look at the chart of this fund, look at the story surrounding resources.... a "sensible investor" would have seen this one coming and cut their losses a long time ago.

    I don't care what you say, running a portfolio where you let holdings run losses of 40,50,60 percent is not running a portfolio, its gambling and praying or maybe "speculating" if we're being generous with terminology.

    The evidence is here before us, if jabbahut40 has to come here, to a forum full of random strangers, to ask "what should I do, I'm now down 57% ?", then he should not be running losses at that level in the first place. He needs a much stricter risk policy.

    If he knew what he was doing and knew the resources industry inside out, then either he would be confident enough to run losses without asking, otherwise he would have cut the losses a lot earlier.
  • noggin1980
    noggin1980 Posts: 419 Forumite
    TakeCareOfThePennies wrote: »
    Thanks, but not entirely necessary. I can count on one hand the number of times I've seen the hard level in action over the years. I've seen things reach the soft level a few more times before they turn around and go back in the right direction. But from experience you really would have to have a very special reason and really know the company and its sector inside out to even be tempted to keep things at the hard level !


    It wasn't the hard level comment that made you deserve a smart alec remark, it was the way you treated a poster that for all you know has acted completely rationally and for your I know better attitude.
    TakeCareOfThePennies wrote: »
    And thereby you quote the classic reason for failure to cut losses.... the belief it will go back up !

    I said go up, not go back up.
    TakeCareOfThePennies wrote: »
    There is a difference between buying cheap (i.e. with limited downside risk because you think you're at or near the bottom) and taking a great big loss and hoping things will change direction, hopefully eventually break-even, and then hopefully give you some profit over that.

    If you are being emotional and keeping something you don't believe in then there is a difference otherwise there isn't one. if you believe the fund will go up then it's perfectly rational (and quite probably even sensible to stay in) buying low and staying in after big losses because you believe something is well priced are the same. In fact staying in is even slightly better because you are avoiding charges.
    TakeCareOfThePennies wrote: »
    jabbahut40 is between a rock and a hard place. Neither option is particularly attractive down at this level of losses. The only positive thing that's going to come out of this he'll have learnt a valuable lesson for the future !

    There is no lesson to be learnt and he's not stuck between a rock and a hard place, he's made a loss, it sucks, obviously the money would have been better elsewhere with hindsight. But that doesn't mean you are wrong to stay (or even buy more) when you've taken a massive loss on a fund. If he belives it will go up and it still fits his risk profile he should stay or even buy more.
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