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  • FIRST POST
    • BrockStoker
    • By BrockStoker 5th Feb 18, 8:32 PM
    • 200Posts
    • 87Thanks
    BrockStoker
    Correction in progress!
    • #1
    • 5th Feb 18, 8:32 PM
    Correction in progress! 5th Feb 18 at 8:32 PM
    I've just seen the largest (single day) spike in volatility I've ever experienced (currently @ 106%). Certainly it's looking like this is going to be the largest correction since 2015!

    https://uk.investing.com/indices/volatility-s-p-500-chart

    Time to look at what to buy with the cash I've been holding!

    More inclined to look at overseas assets/equities, but I have been thinking about buying some UK micro-cap for a while, and possibly some Chinese equities. Any one else shopping right now?
Page 16
    • economic
    • By economic 12th Feb 18, 12:06 AM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    Has Britain ever had deflation?
    For deflation you need a strong currency.
    But debt is still growing and imports exceeding exports.
    All that leads to a weak currency.
    When the pound fell following the Brexit vote, making imports more expensive Britain just borrowed more to pay for them - because we don't make most of the stuff we need.
    Originally posted by Glen Clark
    There are different forms of inflation.

    Asset price inflation - asset prices rising which we have seen in the uk with property and stocks. usually a good type of inflation as it makes us richer, but of course depends who you are!

    Currency-driven inflation - which we have seen recently withe deval of pound and is normally temporary as currency devals normally reaches a lower equilibrium level and settles down. This is a bad type of inflation.

    Demand-driven inflation - which is based on the demand from people and companies for goods and services in the economy. Usually in a strong economy this type of inflation occurs. This is the type central banks are striving to achieve. But we have not had a huge amount of this due to spare capacity in the economy.

    Thus from the above i don't see inflationary pressure, more deflationary. Recent inflation pressures seem to be coming from demand led inflation, however its way too early to tell if its sustainable.
    • economic
    • By economic 12th Feb 18, 12:20 AM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    Of course, my first foray into investing was transferring a £40k cash ISA into a Vanguard S&S ISA, and putting it into VSL80. The transfer purchased on the eve of this current dip FFS.

    Rather than gleefully enjoying my returns, within the first fortnight I've seen a 5% loss. Seeing such minor volatility has been beneficial, as it slightly tests my risk, and I haven't been phased at all. At 32, and not wanting the money for 18-25 years to help my son out at uni/house deposits etc, I'm in for the long game. I've gone out to the library and read Tim Hale's 'Smarter Investing' which has been a great read.

    I still have £110k sat in cash, which I plan to invest in a general account before moving it into the ISA with each financial year. I've really had to sit on my hand this weekend to stop myself going all in or even with smaller lump sums in stages. I have a quid pro quo arrangement with a friend, his IFA owes him a good turn and is meeting with me free of charge to give advice. He knows I'm a passive investor (especially after reading that Hale book ), so I expect as much impartial advice as possible.

    It'd be interesting to read other investors opinions, especially against those of a professional fund manager. So what would you guys do? Go in now adopting the "time in the market" approach, or observe further and attempt the "time the market" angle and take advantage of further downward trends? Or other?
    Originally posted by GT85
    What i do is this:

    My stock portfolio consists of roughly:
    50% in index trackers
    30% in active managed funds/trusts
    20% in single stocks

    i dont own any bonds whatsoever (i am 34). I have a fairly large cash pile looking to be deployed into stocks in the near future.

    Plan is to hold active managed funds long term but keep an eye on the performance. Rarely would i exit the fund but if i do see performance issues or manager changes then i would consider exiting.

    Single stocks i mainly hold long term but i have short term positions i "trade". Usually these are positions where i want to be more overweight in certain names to get exposure to them e.g. I own amazon stock. Also dividend paying stocks too in order to diversify and build up cash.

    Index funds is where the fun really starts - this is my core position which i plan to use to either be "heavy" in stocks or "light" in stocks. Any smell of a bear market and i would reduce this position and keep reducing as the probability of a bear market rises. and vice versa as we enter into a bull market. I also sometimes chose to trade when things get a bit overheated (i cut some last year and got back in profiting from it and i also did the same before the recent correction).

    My positions are across my ISA, pension and normal trading accounts.
    • eskbanker
    • By eskbanker 12th Feb 18, 12:50 AM
    • 7,112 Posts
    • 7,530 Thanks
    eskbanker
    Of course, my first foray into investing was transferring a £40k cash ISA into a Vanguard S&S ISA, and putting it into VSL80. The transfer purchased on the eve of this current dip FFS.

    Rather than gleefully enjoying my returns, within the first fortnight I've seen a 5% loss. Seeing such minor volatility has been beneficial, as it slightly tests my risk, and I haven't been phased at all.
    Originally posted by GT85
    Time to dig out the lump sum v drip-feeding debate again perhaps?
    • Alexland
    • By Alexland 12th Feb 18, 6:49 AM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    I have a quid pro quo arrangement with a friend, his IFA owes him a good turn and is meeting with me free of charge to give advice. He knows I'm a passive investor (especially after reading that Hale book ), so I expect as much impartial advice as possible.

    It'd be interesting to read other investors opinions, especially against those of a professional fund manager.
    Originally posted by GT85
    I would imagine the advisor sees this as a perfectly normal presales meeting for which they do not normally charge. This is highly unlikely to be a favor other than the friend referring a potential customer. There are differences between a FA, IFA and Fund Manager. Also if you are considering using an advisor then check they are truly Independent to offer you whole market choice.

    Alex.
    Last edited by Alexland; 12-02-2018 at 8:33 AM.
    • planteria
    • By planteria 12th Feb 18, 8:45 AM
    • 4,987 Posts
    • 1,107 Thanks
    planteria
    So what would you guys do? Go in now adopting the "time in the market" approach, or observe further and attempt the "time the market" angle and take advantage of further downward trends? Or other?
    Originally posted by GT85
    your desire to use your ISA allowance guides you to 'regular contributions over time', and i think that is a good idea. you can always keep an eye on things and decide that it makes sense to put additional money into equities too, perhaps if the market drops significantly.
    • Glen Clark
    • By Glen Clark 12th Feb 18, 9:41 AM
    • 4,137 Posts
    • 3,156 Thanks
    Glen Clark
    Long winded article in the FT attempts to explain the current volatility.
    It basically suggests the fall was exacerbated by automatic stop losses kicking in - principally from Insurers guaranteed return pension funds.
    Doesn't say what caused the initial fall that kicked it all off.
    I guess someone got the wind up again about QE being withdrawn?
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • ValiantSon
    • By ValiantSon 12th Feb 18, 9:54 AM
    • 1,844 Posts
    • 1,708 Thanks
    ValiantSon
    your desire to use your ISA allowance guides you to 'regular contributions over time', and i think that is a good idea. you can always keep an eye on things and decide that it makes sense to put additional money into equities too, perhaps if the market drops significantly.
    Originally posted by planteria
    How does investing inside an ISA "guide you to 'regular contributions over time'"?

    I'd invest the money I intended to invest.

    As I type, FTSE All Share up 1.18%, S&P 500 closed 1.49% up and Dow Jones Industrial Average closed 1.38% up.
    Last edited by ValiantSon; 12-02-2018 at 12:06 PM.
    • bowlhead99
    • By bowlhead99 12th Feb 18, 11:52 AM
    • 7,827 Posts
    • 14,294 Thanks
    bowlhead99
    Deutsche bank share price below it's lows during the GFC. Please go bust.
    Originally posted by fun4everyone
    Why
    Originally posted by bowlhead99
    Don't like them.
    Originally posted by fun4everyone
    Why on earth would you want Deutsche Bank to go bust? The ensuing fallout would have a vast and massive negative impact on the economy. Was 2008 not enough impending economic chaos for you?
    Originally posted by ValiantSon
    Fun4 mentioned in another post that they weren't planning on either buying or selling stocks if prices fell further, so it wouldn't affect them, they just thought it would be fun to watch. Not sure if that makes them naive.

    The DBK share price only came back a couple of percent so far this morning so I did as promised upthread and added a few hundred shares to my pension holding. Not because I have any particular love or loyalty for the shares (though I did make money from them when they last took a dive to this price range a couple of years back).

    (Text removed by MSE Forum Team)
    Last edited by MSE ForumTeam5; 13-02-2018 at 10:06 AM.
    • Eco Miser
    • By Eco Miser 12th Feb 18, 12:35 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    Of course a problem for those in retirement is that they are likely to be wanting to live on the dividend income, hence they won't benefit from being able to reinvest them. Hence why 100% equity may not be the best option in retirement unless you can cut down / stop taking the dividend income during the worst of a major crash.
    Originally posted by LHW99
    While 100% equities leads to high volatility, this won't bother anyone who is taking an income purely from the dividends, although those relying on natural yield are unlikely to be 100% in equities anyway.
    It does mean that we won't be able to take advantage of lower prices, but we weren't planning on buying any more anyway, nor were we planning on selling any.
    Eco Miser
    Saving money for well over half a century
    • Alexland
    • By Alexland 12th Feb 18, 7:46 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    As I type, FTSE All Share up 1.18%, S&P 500 closed 1.49% up and Dow Jones Industrial Average closed 1.38% up.
    Originally posted by ValiantSon
    ...and more significantly this thread seems to be running out of steam!

    So well done to the OP for judging the correction let's hope the markets are starting to stabilise and I hope to get back to my previous more conservative asset allocation sooner than expected.

    Alex
    Last edited by Alexland; 12-02-2018 at 7:49 PM.
    • Audaxer
    • By Audaxer 12th Feb 18, 8:12 PM
    • 1,042 Posts
    • 602 Thanks
    Audaxer
    So well done to the OP for judging the correction let's hope the markets are starting to stabilise and I hope to get back to my previous more conservative asset allocation sooner than expected.
    Originally posted by Alexland
    Alex, as you are young and still in the accumulation stage, I would have thought you would be happy for a bigger correction so you are buying at cheaper prices?
    • A_T
    • By A_T 12th Feb 18, 8:25 PM
    • 418 Posts
    • 273 Thanks
    A_T
    Alex, as you are young and still in the accumulation stage, I would have thought you would be happy for a bigger correction so you are buying at cheaper prices?
    Originally posted by Audaxer

    All these people "hoping" for a crash. Cognitive dissonance at it's finest
    • bowlhead99
    • By bowlhead99 12th Feb 18, 8:34 PM
    • 7,827 Posts
    • 14,294 Thanks
    bowlhead99
    Alex, as you are young and still in the accumulation stage, I would have thought you would be happy for a bigger correction so you are buying at cheaper prices?
    Originally posted by Audaxer
    A short sharp drop sounds a great time to top up. But in practice, most investors young or old do not have a couple of years salary on hand waiting to pile in during a couple of years of crash.

    Those in the accumulation phase will likely have substantial new money becoming available to them over the next decade or two (in the context of their current total wealth) but do not necessarily have all that money available to them right now if there were to be a two year sale starting next week. I would be just as happy with a flat and mostly stable rise from here over the next decade allowing me to deploy my earnings at ok-ish prices, instead of a bust then boom which benefits only those who are cash-rich now and don't find themselves out of a job in the ensuing recession.
    • Alexland
    • By Alexland 12th Feb 18, 8:40 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    Alex, as you are young and still in the accumulation stage, I would have thought you would be happy for a bigger correction so you are buying at cheaper prices?
    Originally posted by Audaxer
    Not really I am a funny one and my mindset doesn't match my age. I have been working with people winding down to retirement for too many years and the way of thinking has rubbed off.

    Alex
    • chockydavid1983
    • By chockydavid1983 12th Feb 18, 9:46 PM
    • 579 Posts
    • 351 Thanks
    chockydavid1983
    If there could be a correction just after my March bonus that would be great :-P
    • talexuser
    • By talexuser 13th Feb 18, 11:09 AM
    • 2,397 Posts
    • 1,896 Thanks
    talexuser
    April 6th would be a good drop for me
    • coastline
    • By coastline 14th Feb 18, 10:09 PM
    • 940 Posts
    • 1,083 Thanks
    coastline
    Another roller coaster day especially with the inflation figures at 1.30pm in the US. Dow has had a 900 point round trip and still finished higher.

    Anyway have a look at my bottom..

    https://fat-pitch.blogspot.co.uk/2018/02/after-10-drop-will-equities-v-bounce-or.html

    A look at stocks and bonds..

    https://pensionpartners.com/when-stocks-and-bonds-go-down-together/
    • BrockStoker
    • By BrockStoker 21st Feb 18, 10:28 PM
    • 200 Posts
    • 87 Thanks
    BrockStoker
    Could be going back into correction mode. Worries over rates and bonds.

    https://www.cnbc.com/2018/02/21/pimco-on-higher-us-treasury-supply-bond-yields-stock-markets.html
    https://www.marketwatch.com/story/dow-futures-inch-lower-as-investors-brace-for-fed-minutes-2018-02-21
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