Sell Tesla?

RandallFlagg

If anyone fears that the current investing climate of high inflation and Russian invasion of Ukraine means the end of the stock market and feels compelled to sell stocks or stock funds to cash as the world appears to be caving in, have a look at the New York Times front page from March 10th 1942:



On this day, as Japan rampaged across the Pacific with county after country collapsing to surrender, and inflation fears rock the US as they struggle to get topside of a war with a country 6,000 miles across the Pacific, and Europe is occupied by the Nazis, 2 years before D-Day...

$10,000 invested in the S&P500 on that day would turn into $51,000,000 in 2018. All you had to do is...nothing.

Majorscale

Not sure I’ve got 76 years to wait though!

RandallFlagg

Majorscale said:

Not sure I’ve got 76 years to wait though!

...and you don't need $51M, you get the point, stay invested in a broad cross section of companies through thick and thin and don't sell when the prices are notably down from recent highs. 

Some of us have longer than we realise, investing doesn’t stop when you retire. You have the accumulation years while working, hopefully a 30 year retirement where your money needs to work, and then your legacy picked up by your beneficiaries, who I will be recommending keep invested in exactly the same way as it is now. 

ArchtopDave

As Warren Buffett commented years ago... Volatility is actually your friend; it allows to to buy shares in good companies more cheaply than would otherwise be possible. I have to say I've been watching and waiting to see when the market looks like it might be stabilising, as I want to increase some of my holdings. 

RandallFlagg

ArchtopDave said:

As Warren Buffett commented years ago... Volatility is actually your friend; it allows to to buy shares in good companies more cheaply than would otherwise be possible. I have to say I've been watching and waiting to see when the market looks like it might be stabilising, as I want to increase some of my holdings. 

As is often quoted “if you want the same results, keep doing the same thing”

ToneControl

RandallFlagg said:

ArchtopDave said:

As Warren Buffett commented years ago... Volatility is actually your friend; it allows to to buy shares in good companies more cheaply than would otherwise be possible. I have to say I've been watching and waiting to see when the market looks like it might be stabilising, as I want to increase some of my holdings. 

As is often quoted “if you want the same results, keep doing the same thing”

not sure what you mean, Buffett is a value investor, most funds that most people have been keen on recently are based on growth stocks and "momentum stocks"

He looks for specific companies that are undervalued, which is what me and my mate do.
Often the bargains are to be had months before or months after one on the index dips

Buying index-trackers and typical managed funds during dips in the indices is not very similar to Buffett's approach
https://www.investopedia.com/articles/01/071801.asp

ToneControl

An interesting narrative here:

The view in late 2020:
https://www.fool.com/investing/2020/12/30/move-over-warren-buffett-theres-a-new-must-follow/

whereas all the news now says the tables are turned:



https://www.thestreet.com/memestocks/reddit-trends/cathie-wood-vs-warren-buffett-who-will-win-in-2022

So the benefit with value investing is that you have a logical reason to expect your investments to weather economic storms, whereas when pursuing growth stocks, your life savings are exposed to much more short to medium term risk. If retirement is 25 years away, this is less important.

CavemanGrogg

ToneControl said:

An interesting narrative here:

The view in late 2020:
https://www.fool.com/investing/2020/12/30/move-over-warren-buffett-theres-a-new-must-follow/

whereas all the news now says the tables are turned:



https://www.thestreet.com/memestocks/reddit-trends/cathie-wood-vs-warren-buffett-who-will-win-in-2022

So the benefit with value investing is that you have a logical reason to expect your investments to weather economic storms, whereas when pursuing growth stocks, your life savings are exposed to much more short to medium term risk. If retirement is 25 years away, this is less important.

And believe it or not but some ''financial advisers'' today in the press where suggesting that now is a good time to get out of the FTSE, LSE, NYE, and NASDAQ and invest in AIM - Alternative Investment Market, instead.  I was shocked with that suggestion.

ToneControl

Get your 12 foot ladder out for this
Why I’ll never buy an active investment fund again | Financial Times (ft.com)

Many people know about this stuff already I think

But take a closer look and active managers look less prescient. Passive funds tracking the respective US and European indices gained more after fees — 29.3 per cent and 16.3 per cent, respectively. After fees, 82 per cent of large-cap mutual funds in the US and 86 per cent of those in Europe underperformed their benchmarks in the decade to 2020, according to S&P Dow Jones.

RandallFlagg

ToneControl said:

Get your 12 foot ladder out for this
Why I’ll never buy an active investment fund again | Financial Times (ft.com)

Many people know about this stuff already I think

But take a closer look and active managers look less prescient. Passive funds tracking the respective US and European indices gained more after fees — 29.3 per cent and 16.3 per cent, respectively. After fees, 82 per cent of large-cap mutual funds in the US and 86 per cent of those in Europe underperformed their benchmarks in the decade to 2020, according to S&P Dow Jones.

This quote confirms what is widely recognised. Low cost index funds beat higher fee managed mutual funds over the longer term.

I read this earlier:

“Nearly 90% of stocks in the S&P 500 traded above their 10-day moving averages on Friday. Since 1982, the broad index has been higher over the next year in 35 out of the 36 times when more than 90% of its stocks trade above their 10-day moving averages, according to Ned Davis Research. The firm’s version of the Zweig Thrust Indicator, which occurs when the barometer rises from below 40% to above 61.5% in a 10-day period, hit that level on Friday for common stocks only.”

The bulk of my money is in a low cost fund with a total 0.16% annual fee (the lowest Fees available through my pension provider) that tracks the FTSE USA index, a bit broader than the S&P500 by adding an extra 100 or so mid-cap US companies. Performance is broadly aligned with the S&P500.

I'm buying more units each month this year then looking at buying some Bonds (UK Gilts) and accumulating some cash as I should have enough equity units purchased by the end of this year for my retirement growth needs.

meanwhile how is Tesla doing? It's 23% down YTD but 37% up over last 12 months. Berlin gigafactory comes online this year.

ArchtopDave

I find the above interesting. I'm on a somewhat different tack. I have got some cash reserves for largely non investment emergency needs if needed, but I accept that this is actually a loss maker when you take inflation into account, as saving interest rates are way below the inflation rate.

On the investment side, I'm selling some of my bond funds on the basis that recently they've held up better than global share prices, and I see this as an opportunity to increase the holdings of the funds (ones invested in shares) that have given me consistent long term performance. Additionally once we get into the 2022/2023 financial year in a couple of weeks, I'll be putting next year's allowance into my ISA, and may be buy a couple of new funds. Clearly, a careful eye needs to be kept on the performance of markets across the globe, and any decision making modified as circumstances evolve.

CavemanGrogg

ArchtopDave said:

I find the above interesting. I'm on a somewhat different tack. I have got some cash reserves for largely non investment emergency needs if needed, but I accept that this is actually a loss maker when you take inflation into account, as saving interest rates are way below the inflation rate.

On the investment side, I'm selling some of my bond funds on the basis that recently they've held up better than global share prices, and I see this as an opportunity to increase the holdings of the funds (ones invested in shares) that have given me consistent long term performance. Additionally once we get into the 2022/2023 financial year in a couple of weeks, I'll be putting next year's allowance into my ISA, and may be buy a couple of new funds. Clearly, a careful eye needs to be kept on the performance of markets across the globe, and any decision making modified as circumstances evolve.

Freetrade plus, pays 3% interest on cash balances up to £4k, that's about a tenner a month you get for keeping ready to access cash in your account, granted that's what the plus membership costs, but seeing how it's a trading platform, earning a tenner a month from dividends is not a hard nor expensive achievement to reach,  not to mention all the additional benefits you get from a Freetrade plus account

RandallFlagg

ArchtopDave said:

I find the above interesting. I'm on a somewhat different tack. I have got some cash reserves for largely non investment emergency needs if needed, but I accept that this is actually a loss maker when you take inflation into account, as saving interest rates are way below the inflation rate.

On the investment side, I'm selling some of my bond funds on the basis that recently they've held up better than global share prices, and I see this as an opportunity to increase the holdings of the funds (ones invested in shares) that have given me consistent long term performance. Additionally once we get into the 2022/2023 financial year in a couple of weeks, I'll be putting next year's allowance into my ISA, and may be buy a couple of new funds. Clearly, a careful eye needs to be kept on the performance of markets across the globe, and any decision making modified as circumstances evolve.

I have purposefully left building retirement cash until last so it gets eroded by inflation for as less time as possible before being used in drawdown. The rationale being that the source of the cash, ie my wages is index linked through annual pay increases (hopefully).

 I already have an emergency fund, a fully funded minimum of 6 months+ of household expenses kept on the sidelines, it's more now. It's been invaluable for unexpected car repairs and vets bills, having an emergency cash fund is probably the best thing I did when getting my financial shit together, along with getting out of debt.

I'm aiming for a total retirement portfolio across my pension, wife's pension and ISA of 70% stocks, 20% bonds (Gilts) and 10% cash plus a separate cash emergency fund. I have built the stocks allocation first and as mentioned above will redirect salary sacrifice contributions to bonds and wrapped cash from 2023 onwards plus any additional savings after tax will add to this, maybe sooner if the market bounces back into the green in the 2nd half of 2022. Once I get to the desired asset allocation I will rebalance annually. I keep things simple, one low cost index fund for my pension, one for my wife's pension and one for our S&S ISA.

khaotic

ToneControl said:

An interesting narrative here:

The view in late 2020:
https://www.fool.com/investing/2020/12/30/move-over-warren-buffett-theres-a-new-must-follow/

whereas all the news now says the tables are turned:



https://www.thestreet.com/memestocks/reddit-trends/cathie-wood-vs-warren-buffett-who-will-win-in-2022

So the benefit with value investing is that you have a logical reason to expect your investments to weather economic storms, whereas when pursuing growth stocks, your life savings are exposed to much more short to medium term risk. If retirement is 25 years away, this is less important.

That's all very well to say the end return is the same, but if you'd run a trailing stop-loss, or used technical analysis and sold on a breached support level, you'd have either got out at around 90% in October 20, or about 150-160% in March 2021, in both cases drastically beating the BH returns.

And yes, I realise this is all a bit wisdom of hindsight, but that's the whole point of using either a trailing stop-loss or support levels is to set the exit level before it's reached

ToneControl

khaotic said:

ToneControl said:

An interesting narrative here:

The view in late 2020:
https://www.fool.com/investing/2020/12/30/move-over-warren-buffett-theres-a-new-must-follow/

whereas all the news now says the tables are turned:



https://www.thestreet.com/memestocks/reddit-trends/cathie-wood-vs-warren-buffett-who-will-win-in-2022

So the benefit with value investing is that you have a logical reason to expect your investments to weather economic storms, whereas when pursuing growth stocks, your life savings are exposed to much more short to medium term risk. If retirement is 25 years away, this is less important.

That's all very well to say the end return is the same, but if you'd run a trailing stop-loss, or used technical analysis and sold on a breached support level, you'd have either got out at around 90% in October 20, or about 150-160% in March 2021, in both cases drastically beating the BH returns.

And yes, I realise this is all a bit wisdom of hindsight, but that's the whole point of using either a trailing stop-loss or support levels is to set the exit level before it's reached

wouldn't the trailing stop losses have all been triggered in March 2020? Losing 20% and then having the dilemma of deciding when to re-enter the market?

longshins

Hi there, I’d like to get into investing a bit. Please could you point me to some recommended reading etc? I’m totally new to it.

khaotic

ToneControl said:

wouldn't the trailing stop losses have all been triggered in March 2020? Losing 20% and then having the dilemma of deciding when to re-enter the market?

Depending on your methods, so maybe - some let a trade run for a bit before adding a stop. But even if you stop out with a loss at say -25% at that point, you would be looking to re-enter shortly afterwards when the trend reversed. Worst case from there, you'd be in somewhere between -25% and 0 and out again anywhere between +60% and +140% depending how you're setting the stop level

ToneControl

khaotic said:

ToneControl said:

wouldn't the trailing stop losses have all been triggered in March 2020? Losing 20% and then having the dilemma of deciding when to re-enter the market?

Depending on your methods, so maybe - some let a trade run for a bit before adding a stop. But even if you stop out with a loss at say -25% at that point, you would be looking to re-enter shortly afterwards when the trend reversed. Worst case from there, you'd be in somewhere between -25% and 0 and out again anywhere between +60% and +140% depending how you're setting the stop level

and how do you know when the trend has reversed? This is always the problem

ToneControl

longshins said:

Hi there, I’d like to get into investing a bit. Please could you point me to some recommended reading etc? I’m totally new to it.

The Financial Times guide to investing

Book by Glen Arnold

RandallFlagg

ToneControl said:

An interesting narrative here:

The view in late 2020:
https://www.fool.com/investing/2020/12/30/move-over-warren-buffett-theres-a-new-must-follow/

whereas all the news now says the tables are turned:



https://www.thestreet.com/memestocks/reddit-trends/cathie-wood-vs-warren-buffett-who-will-win-in-2022

So the benefit with value investing is that you have a logical reason to expect your investments to weather economic storms, whereas when pursuing growth stocks, your life savings are exposed to much more short to medium term risk. If retirement is 25 years away, this is less important.

Reversion to the mean. Is this not a reinforcement for holding a blended index fund? A mix of growth and value, best of both worlds?