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  • FIRST POST
    • k6chris
    • By k6chris 12th Oct 18, 7:20 PM
    • 277Posts
    • 500Thanks
    k6chris
    Your correction strategy?
    • #1
    • 12th Oct 18, 7:20 PM
    Your correction strategy? 12th Oct 18 at 7:20 PM
    Let's assume, for the sake of this thread, that the current market wobble becomes a larger correction and let's assume you have some 'cash' waiting to be invested in the market. What is your strategy for investing and why? All in now (time in the markets)? Drip feed it in (cost averaging)?? Wait until an xx% pullback and then all in (buy low, sell high)??? Curious as to people's investment strategies at such a time!
    "For every complicated problem, there is always a simple, wrong answer"
Page 1
    • londoninvestor
    • By londoninvestor 12th Oct 18, 7:24 PM
    • 326 Posts
    • 249 Thanks
    londoninvestor
    • #2
    • 12th Oct 18, 7:24 PM
    • #2
    • 12th Oct 18, 7:24 PM
    If it does become a larger correction, then my next scheduled rebalance will see me buying equities to restore my target asset allocation.

    Now, I might miss an opportunity if the dip proves to be short-term, but I don't really trust myself to know that. So as far as possible I want to follow the rules that I've set for myself in advance.

    Odysseus tying himself to the mast, or something
    • k6chris
    • By k6chris 12th Oct 18, 7:30 PM
    • 277 Posts
    • 500 Thanks
    k6chris
    • #3
    • 12th Oct 18, 7:30 PM
    • #3
    • 12th Oct 18, 7:30 PM
    If it does become a larger correction, then my next scheduled rebalance will see me buying equities to restore my target asset allocation.
    Originally posted by londoninvestor

    So are your rules based on a fixed time thing (rebalance every Jan 1st) or a price thing (rebalance every xx% of a pullback)??
    "For every complicated problem, there is always a simple, wrong answer"
    • londoninvestor
    • By londoninvestor 12th Oct 18, 7:35 PM
    • 326 Posts
    • 249 Thanks
    londoninvestor
    • #4
    • 12th Oct 18, 7:35 PM
    • #4
    • 12th Oct 18, 7:35 PM
    Fixed timing. I rebalance the overall equity vs non-equity allocation quarterly, but not necessarily each individual fund. I do that fund-level rebalance only annually, to save some trading costs.

    I don't have a price trigger per se. But that said I wouldn't bother doing a small rebalancing trade, so in a sense, prices must have moved by X on my quarterly date for me to take action.
    • ariarnia
    • By ariarnia 12th Oct 18, 8:12 PM
    • 1,754 Posts
    • 5,072 Thanks
    ariarnia
    • #5
    • 12th Oct 18, 8:12 PM
    • #5
    • 12th Oct 18, 8:12 PM
    We've just invested around 10% of the value of our portfolio which has temporarily reduced our cash fund so the next step will be to build that back up over the next quarter.

    I don't consider it timing the markets so much as investing in areas we want to invest in which are now better value than they were before the recent dip.

    Our strategy is to identify what we would like to invest in, consider it's worth vs it's potential and, when it's good value, buy in according to our longer term preferred asset allocation (all sounds very professional but only achieved as a result of excellent independent advice annually and a little attention to detail during the year).

    If what we've purchased continues to drop, well I'm happy that we've got a good price at todays price. If it's still low next month we might drop in another 5% but I'm not expecting it as that would make our cash uncomfortably low and emergencies do happen...
    Almost everything will work again if you unplug it for a few minutes, including you. Anne Lamott

    It's amazing how those with a can-do attitude and willingness to 'pitch in and work' get all the luck, isn't it?
    • cjv
    • By cjv 12th Oct 18, 8:20 PM
    • 289 Posts
    • 143 Thanks
    cjv
    • #6
    • 12th Oct 18, 8:20 PM
    • #6
    • 12th Oct 18, 8:20 PM
    Is it an ok strategy for an inexperienced investor with long term outlook to just ignore everything the market does? I have a SIPP in which i hold 50/50 VLS 80 and HSBC 80.

    My current plan is to just set and forget for 20'ish years, then reduce some risk.

    Also now have a NEST pension for employer contributions (zero balance currently) which I have set to the Higher Risk Fund. with the same plan to just set and forget.
    • ColdIron
    • By ColdIron 12th Oct 18, 8:30 PM
    • 4,746 Posts
    • 6,215 Thanks
    ColdIron
    • #7
    • 12th Oct 18, 8:30 PM
    • #7
    • 12th Oct 18, 8:30 PM
    Is it an ok strategy for an inexperienced investor with long term outlook to just ignore everything the market does? I have a SIPP in which i hold 50/50 VLS 80 and HSBC 80.
    Originally posted by cjv
    Yes, it's an OK strategy. Let Vanguard and HSBC look after it
    • cjv
    • By cjv 12th Oct 18, 8:41 PM
    • 289 Posts
    • 143 Thanks
    cjv
    • #8
    • 12th Oct 18, 8:41 PM
    • #8
    • 12th Oct 18, 8:41 PM
    Yes, it's an OK strategy. Let Vanguard and HSBC look after it
    Originally posted by ColdIron
    Thanks. One day if I decide to educate myself more I may pluck up the courage to get a bit more hands on, but for now as you say I will let them look after it! saves worrying about the ups and downs along the way.
    • Alexland
    • By Alexland 12th Oct 18, 8:48 PM
    • 3,402 Posts
    • 2,736 Thanks
    Alexland
    • #9
    • 12th Oct 18, 8:48 PM
    • #9
    • 12th Oct 18, 8:48 PM
    You don't want to be too hands on as the research suggests most people get it wrong. You are doing fine.
    • Audaxer
    • By Audaxer 12th Oct 18, 8:48 PM
    • 1,353 Posts
    • 812 Thanks
    Audaxer
    Is it an ok strategy for an inexperienced investor with long term outlook to just ignore everything the market does? I have a SIPP in which i hold 50/50 VLS 80 and HSBC 80.
    Originally posted by cjv
    If you are still accumulating, the best strategy would be to still keep adding to the funds as you will be buying more units at cheaper prices.
    • cjv
    • By cjv 12th Oct 18, 8:54 PM
    • 289 Posts
    • 143 Thanks
    cjv
    If you are still accumulating, the best strategy would be to still keep adding to the funds as you will be buying more units at cheaper prices.
    Originally posted by Audaxer
    I plan my monthly contributions to continue, no matter what happens in the markets. I did top up with some extra units in Feb, just some spare change I had lying around nothing significant.
    • bostonerimus
    • By bostonerimus 12th Oct 18, 11:24 PM
    • 2,371 Posts
    • 1,674 Thanks
    bostonerimus
    I'm retired and have a 75/25 asset allocation because I don't really need my portfolio for retirement income. I've stopped rebalancing to implement a "rising glide path" as I get older. So my strategy is to change absolutely nothing and continue to put any cash over my two year's worth of spending buffer into equities.
    Misanthrope in search of similar for mutual loathing
    • ossie48
    • By ossie48 12th Oct 18, 11:27 PM
    • 111 Posts
    • 50 Thanks
    ossie48
    I've just chucked a further 1K into my VLS60/40...on top of my 700 monthly payments. The price is lower than Jan /Feb when I started this journey. I'm 600 down on my 35K portfolio ..a few weeks back I was 1500 up....in it for the long term, well at least the next 10 years.
    • BrockStoker
    • By BrockStoker 12th Oct 18, 11:35 PM
    • 208 Posts
    • 97 Thanks
    BrockStoker
    Overall strategy here is to buy funds in sectors (and geographies) which have the potential for large gains, while at the same time staying reasonably diversified. This includes holding a significant amount of cash, which is also a great way to add some diversity as well as fulfilling multiple other functions. Without cash, the portfolio gets "gunked up". Cash lubricates!

    Buying volatile funds is not a problem. The more volatile the better (within reason) since the gains are potentially larger when coming out of a dip.

    When a correction comes along, my strategy is to buy whatever looks attractive to me at the lowest possible price, obviously. I try to hold enough cash so I can make at least 2 or 3 significant buys, each around 4-8% of my portfolio's total value. That gives me a few attempts to get a good price.

    That's not how it worked out this time. I bought too soon (PCT on Tuesday), and only had enough for one buy. I had been close to selling one of the other funds (which has done well) prior to the dip, but the dip beat me to it.

    So I missed out a little this time, but not bothered since I have a long investing horizon, and the main component of my strategy is to remain invested/let gains compound over time. Rebalancing my portfolio via timed buys rather than by random has worked well for me so far. I've been doing it for nearly 3 years now so by no means is my strategy fully tested, but I think it looks like it could cope with a serious downrun, and still come out ahead (given a long enough "run up").


    Here's my portfolio's performance over a year.

    The dip might look a bit scary, but put it into context, with a 3 year chart...


    Caveats: Not sure how accurately TN tracks my portfolio in terms of charting, but it should give a rough idea, and of course, the portfolio is a few months under 3y.
    Last edited by BrockStoker; 12-10-2018 at 11:38 PM.
    • Alexland
    • By Alexland 12th Oct 18, 11:35 PM
    • 3,402 Posts
    • 2,736 Thanks
    Alexland
    I've just chucked a further 1K into my VLS60/40...on top of my 700 monthly payments. The price is lower than Jan /Feb when I started this journey. I'm 600 down on my 35K portfolio ..a few weeks back I was 1500 up....in it for the long term, well at least the next 10 years.
    Originally posted by ossie48
    Sounds like you are in it for the medium term then in which case VLS60 is a good choice for that. Not sure what you are hoping VLS40 will do for you over 10 years. This might be a good chance to simplify to just VLS60?

    Alex
    Last edited by Alexland; 13-10-2018 at 6:28 AM.
    • Thrugelmir
    • By Thrugelmir 12th Oct 18, 11:49 PM
    • 60,299 Posts
    • 53,632 Thanks
    Thrugelmir
    Let's assume, for the sake of this thread, that the current market wobble becomes a larger correction and let's assume you have some 'cash' waiting to be invested in the market. What is your strategy for investing and why? All in now (time in the markets)? Drip feed it in (cost averaging)?? Wait until an xx% pullback and then all in (buy low, sell high)??? Curious as to people's investment strategies at such a time!
    Originally posted by k6chris
    What's your objective and what's your time frame?

    There's many variables to the questions you are asking. One size may not fit all.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • bhavikbuzz
    • By bhavikbuzz 13th Oct 18, 12:05 AM
    • 13 Posts
    • 1 Thanks
    bhavikbuzz
    Your portfolio graph looks solid.
    Do you mind sharing your portfolio allocation details?
    I am trying to create a diversified portfolio for my sipp.
    I understand everyones goal and risk appetite is different.



    Overall strategy here is to buy funds in sectors (and geographies) which have the potential for large gains, while at the same time staying reasonably diversified. This includes holding a significant amount of cash, which is also a great way to add some diversity as well as fulfilling multiple other functions. Without cash, the portfolio gets "gunked up". Cash lubricates!

    Buying volatile funds is not a problem. The more volatile the better (within reason) since the gains are potentially larger when coming out of a dip.

    When a correction comes along, my strategy is to buy whatever looks attractive to me at the lowest possible price, obviously. I try to hold enough cash so I can make at least 2 or 3 significant buys, each around 4-8% of my portfolio's total value. That gives me a few attempts to get a good price.

    That's not how it worked out this time. I bought too soon (PCT on Tuesday), and only had enough for one buy. I had been close to selling one of the other funds (which has done well) prior to the dip, but the dip beat me to it.

    So I missed out a little this time, but not bothered since I have a long investing horizon, and the main component of my strategy is to remain invested/let gains compound over time. Rebalancing my portfolio via timed buys rather than by random has worked well for me so far. I've been doing it for nearly 3 years now so by no means is my strategy fully tested, but I think it looks like it could cope with a serious downrun, and still come out ahead (given a long enough "run up").


    Here's my portfolio's performance
    Caveats: Not sure how accurately TN tracks my portfolio in terms of charting, but it should give a rough idea, and of course, the portfolio is a few months under 3y.
    Originally posted by BrockStoker
    • BrockStoker
    • By BrockStoker 13th Oct 18, 1:55 AM
    • 208 Posts
    • 97 Thanks
    BrockStoker
    Your portfolio graph looks solid.
    Do you mind sharing your portfolio allocation details?
    I am trying to create a diversified portfolio for my sipp.
    I understand everyones goal and risk appetite is different.
    Originally posted by bhavikbuzz

    Currently:

    19.5% Polar Capital Biotechnology R Inc
    15.7% Polar Capital Technology Trust
    15.5% Baillie Gifford Japanese Smaller Companies B Acc
    11.5% Artemis Global Energy R Acc
    7.9% Worldwide Healthcare
    7.4% Schroder Recovery Fund Z Inc
    6.5% Stewart Investors Indian Subcontinent A Acc
    5.2% Guinness Asian Equity Income Fund X D
    5.0% The Biotech Growth Trust PLC
    4.2% A certain ETF which has done well for me but not included in my TN portfolio/the charts I posted in my previous posts
    2.0% Cash


    For comparison, TN tells me that the combined FE risk score for that portfolio (not including the ETF) is 119, which is comparable to the FTSE 100 index, but my portfolio leaves the FTSE 100 in the dust in terms of performance, at least in the short time I've had this strategy implemented.

    I should also note that I take about 3% of my portfolio as income every year, which is another reason I always hold at least some cash, and usually around 10-15%.

    Regarding "risk appetite", I don't see holding a portfolio like this over a long time horizon as risky, although the individual funds, if held in a different combination or alone might be. I don't think my strategy would work as well with significantly less risky funds.

    What would be the point in trying to time the market for only a 3-4% gain? I'm usually looking for at least around a 10% boost initially, with hopefully plenty more gains to follow (if I picked right).

    I should also say that the aim of this portfolio is to double my initial investment over the course of 5-10 years (then repeat), as well as provide me with some income, so it (and the constituent funds) need to be super-aggressive. My over all philosophy is that the best defense is a good offense, at least initially. At some point after a decade or two I will de-risk. In the mean time, I'm building a cash moat while the sun is shinning.
    Last edited by BrockStoker; 13-10-2018 at 2:06 AM.
    • ossie48
    • By ossie48 13th Oct 18, 9:45 AM
    • 111 Posts
    • 50 Thanks
    ossie48
    Sounds like you are in it for the medium term then in which case VLS60 is a good choice for that. Not sure what you are hoping VLS40 will do for you over 10 years. This might be a good chance to simplify to just VLS60?

    Alex
    Originally posted by Alexland
    My current weighting is 73% VLS60 and 24% VLS40 and the rest in cash.I guess I'm cautious. I'm retired, early 50's with a decent pension, another one to come in seven years. The 10 year time frame is really just guide in my head not to touch any of it or lose sleep when there is a correction / crash. I accept I'm new at this but simply wanted my savings to work harder than a Santander 123 account etc over the next decade or so. .
    • TBC15
    • By TBC15 13th Oct 18, 11:03 AM
    • 598 Posts
    • 300 Thanks
    TBC15
    Currently:

    19.5% Polar Capital Biotechnology R Inc
    15.7% Polar Capital Technology Trust
    15.5% Baillie Gifford Japanese Smaller Companies B Acc
    11.5% Artemis Global Energy R Acc
    7.9% Worldwide Healthcare
    7.4% Schroder Recovery Fund Z Inc
    6.5% Stewart Investors Indian Subcontinent A Acc
    5.2% Guinness Asian Equity Income Fund X D
    5.0% The Biotech Growth Trust PLC
    4.2% A certain ETF which has done well for me but not included in my TN portfolio/the charts I posted in my previous posts
    2.0% Cash


    For comparison, TN tells me that the combined FE risk score for that portfolio (not including the ETF) is 119, which is comparable to the FTSE 100 index, but my portfolio leaves the FTSE 100 in the dust in terms of performance, at least in the short time I've had this strategy implemented.

    I should also note that I take about 3% of my portfolio as income every year, which is another reason I always hold at least some cash, and usually around 10-15%.

    Regarding "risk appetite", I don't see holding a portfolio like this over a long time horizon as risky, although the individual funds, if held in a different combination or alone might be. I don't think my strategy would work as well with significantly less risky funds.

    What would be the point in trying to time the market for only a 3-4% gain? I'm usually looking for at least around a 10% boost initially, with hopefully plenty more gains to follow (if I picked right).

    I should also say that the aim of this portfolio is to double my initial investment over the course of 5-10 years (then repeat), as well as provide me with some income, so it (and the constituent funds) need to be super-aggressive. My over all philosophy is that the best defense is a good offense, at least initially. At some point after a decade or two I will de-risk. In the mean time, I'm building a cash moat while the sun is shinning.
    Originally posted by BrockStoker
    Do you fancy joining the GBIO https://forums.moneysavingexpert.com/showthread.php?t=5719517 normally it would be a bit late to join but recent events have moved the goal posts a bit.
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