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  • FIRST POST
    • BrockStoker
    • By BrockStoker 5th Feb 18, 8:32 PM
    • 201Posts
    • 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 6
    • firestone
    • By firestone 6th Feb 18, 1:56 PM
    • 246 Posts
    • 106 Thanks
    firestone
    Its the same on the way down as on the way up....your Dow tracker will have lost 4.5% yesterday. Some active funds will do better and some worse and your multi asset funds will be rebalancing.
    Originally posted by bostonerimus
    was not so much of an active v passive thing but hopefully some of my active managers will do better.But its more the point that its said people have bought into Bitcoin at a high point and will now lose if it never gets back there but its not really pointed out that trackers may not get back to their high.Yes its pointed out that investments can rise & fall but it could be the first point is glossed over with trackers
    • username12345678
    • By username12345678 6th Feb 18, 2:00 PM
    • 215 Posts
    • 111 Thanks
    username12345678
    If this turns in to a sustained bear market it will be interesting to see how the active fund managers get on.

    Their argument that passives do very well in rising markets whilst their skill comes in to its own in a falling one will be tested.
    • bostonerimus
    • By bostonerimus 6th Feb 18, 2:05 PM
    • 1,942 Posts
    • 1,281 Thanks
    bostonerimus
    If this turns in to a sustained bear market it will be interesting to see how the active fund managers get on.

    Their argument that passives do very well in rising markets whilst their skill comes in to its own in a falling one will be tested.
    Originally posted by username12345678
    It's already been tested multiple times. My allocation is currently 75/25 is 3 trackers and I'll do nothing until it hits something like 65/35 when I'll probably rebalance back to my starting target allocation of 70/30.
    Last edited by bostonerimus; 06-02-2018 at 2:08 PM.
    Misanthrope in search of similar for mutual loathing
    • chockydavid1983
    • By chockydavid1983 6th Feb 18, 2:10 PM
    • 586 Posts
    • 355 Thanks
    chockydavid1983
    was not so much of an active v passive thing but hopefully some of my active managers will do better.But its more the point that its said people have bought into Bitcoin at a high point and will now lose if it never gets back there but its not really pointed out that trackers may not get back to their high.Yes its pointed out that investments can rise & fall but it could be the first point is glossed over with trackers
    Originally posted by firestone
    It's true that Bitcoin and any other single company, industry, country may fall and take a long time or never reach that high again. It's another argument for being well diversified across sectors, countries, company size etc.
    • TBC15
    • By TBC15 6th Feb 18, 2:18 PM
    • 495 Posts
    • 251 Thanks
    TBC15
    If this turns in to a sustained bear market it will be interesting to see how the active fund managers get on.

    Their argument that passives do very well in rising markets whilst their skill comes in to its own in a falling one will be tested.
    Originally posted by username12345678

    What’s to test the passives have to sell. A manager can manage.
    • enthusiasticsaver
    • By enthusiasticsaver 6th Feb 18, 2:19 PM
    • 6,607 Posts
    • 13,897 Thanks
    enthusiasticsaver
    What a load of fuss the media makes over a slight dip. If you are well diversified and investing according to your risk profile there is no need for the panic they seem to be inducing. Certainly not a crash.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • firestone
    • By firestone 6th Feb 18, 2:25 PM
    • 246 Posts
    • 106 Thanks
    firestone
    What’s to test the passives have to sell. A manager can manage.
    Originally posted by TBC15
    hopefully but unlike say a dip 30 or more years ago good as well as bad stocks are being sold due to passive funds following the index but that may give them long term bargains
    • Eco Miser
    • By Eco Miser 6th Feb 18, 2:31 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    What’s to test the passives have to sell. A manager can manage.
    Originally posted by TBC15
    Why do passives have to sell? They follow the market down, but keep exactly the same number of shares in each company on the index.
    Eco Miser
    Saving money for well over half a century
    • firestone
    • By firestone 6th Feb 18, 2:32 PM
    • 246 Posts
    • 106 Thanks
    firestone
    It's true that Bitcoin and any other single company, industry, country may fall and take a long time or never reach that high again. It's another argument for being well diversified across sectors, countries, company size etc.
    Originally posted by chockydavid1983
    i have no axe to grind as i am in passive & MA funds in my pension/ISA as well as active.But there is a trend for people to say with active funds that past performance is not a guarantee of the future but with trackers they say they will go up and down but assume that this will lead to a new high at some point as if it is a given(but not so much on here where people will talk of matching the market)
    • JohnRo
    • By JohnRo 6th Feb 18, 2:36 PM
    • 2,608 Posts
    • 2,421 Thanks
    JohnRo
    What a load of fuss the media makes over a slight dip. If you are well diversified and investing according to your risk profile there is no need for the panic they seem to be inducing. Certainly not a crash.
    Originally posted by enthusiasticsaver
    All part of the game imo, big money moves out, media love sensational headlines, sow the seeds of panic, big money waits for the carnage to unfold, then moves back in and profits.

    Bankers have been warning and increasingly positioning for the last couple of months or so. If you're a long term investor just shrug and let them get on with it. Average down if you can.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • TBC15
    • By TBC15 6th Feb 18, 2:37 PM
    • 495 Posts
    • 251 Thanks
    TBC15
    Why do passives have to sell? They follow the market down, but keep exactly the same number of shares in each company on the index.
    Originally posted by Eco Miser

    Are you sure about that one?
    • username12345678
    • By username12345678 6th Feb 18, 2:39 PM
    • 215 Posts
    • 111 Thanks
    username12345678
    But there is a trend for people to say with active funds that past performance is not a guarantee of the future but with trackers they say they will go up and down but assume that this will lead to a new high at some point as if it is a given(but not so much on here where people will talk of matching the market)
    Originally posted by firestone
    For an index tracker not to reach a new high at some point in the future it would mean that the index in question will never reach a new high.

    I find that a difficult concept to grasp (assuming I have interpreted your post correctly).

    I have a mix of actives and passives so i'm not dogmatic about the investment vehicles I use.
    • firestone
    • By firestone 6th Feb 18, 2:40 PM
    • 246 Posts
    • 106 Thanks
    firestone
    Why do passives have to sell? They follow the market down, but keep exactly the same number of shares in each company on the index.
    Originally posted by Eco Miser
    think its more of case that the money going into trackers over the last few years has pushed up the index they are following so money coming out may have the reverse.
    Either way i'm off to do a top up so its bound to go the other way now
    • firestone
    • By firestone 6th Feb 18, 2:47 PM
    • 246 Posts
    • 106 Thanks
    firestone
    For an index tracker not to reach a new high at some point in the future it would mean that the index in question will never reach a new high.

    I find that a difficult concept to grasp (assuming I have interpreted your post correctly).

    I have a mix of actives and passives so i'm not dogmatic about the investment vehicles I use.
    Originally posted by username12345678
    yes that was my point & the fact that its a hard concept to grasp.I could see it happening for a period of time but maybe not forever as you say but only this morning the Japanese index was used as an example so who knows.But i still prefer to use passives for monthly plans as it fills better that way(but i know thats only my feeling)
    • Eco Miser
    • By Eco Miser 6th Feb 18, 3:12 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    Are you sure about that one?
    Originally posted by TBC15
    So long as there is no net outflow from the tracker.
    If there is, then all the shares get sold in proportion, so not distorting the market.
    In a managed fund, they still have to sell, but the managers could choose to just dump one share.
    Eco Miser
    Saving money for well over half a century
    • Bravepants
    • By Bravepants 6th Feb 18, 3:15 PM
    • 402 Posts
    • 436 Thanks
    Bravepants
    All part of the game imo, big money moves out, media love sensational headlines, sow the seeds of panic, big money waits for the carnage to unfold, then moves back in and profits.

    Bankers have been warning and increasingly positioning for the last couple of months or so. If you're a long term investor just shrug and let them get on with it. Average down if you can.
    Originally posted by JohnRo

    It's all based on human evolution and our innate "negativity bias". Even before humans evolved our ancestors would forever be on the look out for threats (predators etc.) and that is how we survived out in the wild. Modern humans still have that built-in instinct for threat detection (for example have you ever woken up with a start in bed thinking you were falling?). This is why negative headlines grab our attention and the media know this, and so that's how they sell newspapers and amass the viewing figures. The trick is to override your negativity bias in such situations as this.
    • firestone
    • By firestone 6th Feb 18, 3:18 PM
    • 246 Posts
    • 106 Thanks
    firestone
    it may even knock the weather off the front page of the Express!
    • BananaRepublic
    • By BananaRepublic 6th Feb 18, 3:32 PM
    • 1,192 Posts
    • 874 Thanks
    BananaRepublic
    If this turns in to a sustained bear market it will be interesting to see how the active fund managers get on.

    Their argument that passives do very well in rising markets whilst their skill comes in to its own in a falling one will be tested.
    Originally posted by username12345678
    Historical data will tell you what you need to know. When there is an index, most active funds underperform the index and any trackers. However, there are plenty of active funds that consistently outperform the index in a manner that is statistically significant and not explained by chance.
    • username12345678
    • By username12345678 6th Feb 18, 3:35 PM
    • 215 Posts
    • 111 Thanks
    username12345678
    Historical data will tell you what you need to know. When there is an index, most active funds underperform the index and any trackers. However, there are plenty of active funds that consistently outperform the index in a manner that is statistically significant and not explained by chance.
    Originally posted by BananaRepublic
    And, of course, the corollary to this being identifying the out-performers prior to the event.
    • JohnRo
    • By JohnRo 6th Feb 18, 3:56 PM
    • 2,608 Posts
    • 2,421 Thanks
    JohnRo
    And, of course, the corollary to this being identifying the out-performers prior to the event.
    Originally posted by username12345678
    ..and them remaining out-performers in perpetuaity.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
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