Stay Invested or Cash Out

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6th Mar '22 by Rich B

19 comments 1325 reads

Trying to hold my nerve in the current Market, but the last 6-8 months have seen my share portfolios reduce some 25%

Including a couple of Nightmare stocks.

If it wasn’t for the current Ukraine/Russia situation, I would feel confident with the stocks I own.

The market reactions to company results seem severe to poor performance and minimal upside when results are positive.

So in the current climate, I’m so tempted to sell off and re enter the market when things are more stable.

But knowing my luck I’ll miss time the market and lose out if there’s a sudden market recovery. As history has shown the importance of being invested.

Any thoughts much appreciated, on how other members are dealing with their portfolios ?

Thanks

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About the Author

Rich B

Premium Member

19 comments

aflash

6th Mar '22

Zen detachment.

Selective buying and selling.

There is no substitute for homework.

What has strong fundamentals according to my sources of information will be retained, bought or increased if oversold. That means with an RSI below 30.

What is overbought, with an RSI over 70 will be reduced. Oil stocks, Grain ETFs, Gold and Silver ETFs or miners.

Risk management. No position more than 1% of my total available funds (invested + cash)

Any cash raised is guaranteed to lose approx 10% a year.

Any solution to the Ukraine situation will lead to a huge relief rally in some sectors and a sell off in others.

Nobody has a crystal ball.

My Russian holdings (JRS and POLY) are a small enough part of my overall portfolio to hold for years. I may add because they will never be as cheap but at the first sign of improvement when they are traded again I shall want to sell.

If you remove large U.S. tech, a bear market is already in progress over there.

U.K. = O.K. because of large commodity listings.

Broad indices are unlikely to advance much in the face of rising interest rates BUT those rates cannot be hiked much because it will endanger Govt debt mountains.

Inflation threatens everything except real assets. Property. Some commodities but depends how one holds them, Gold (again!)

Stock pickers' paradise.

Yesterday has gone.

Take a fresh sheet of paper.

maillotàpoisrouges

6th Mar '22

My take on it is that the gains made on the rebound after the 2020 coronacrash were totally OTT. US Tech was the leading market and is now in a downtrend so a major headwind linked to global instability (Ukraine) and rising inflation. I started selling out in 2021 after making some good gains in 2020. I am happy to sit out for a while although I could do with parking the cash in my ISA somewhere (money market fund?) as I’m not sure what would happen if my broker went bust (not sure if money ring fenced). I was mainly in cash when the coronacrash happened. I find it difficult to find UK small caps I genuinely think are good investments these days. I’m not saying that trying timing the market is a good idea. As I get older I’d just rather hold onto my gains.

Westway001

6th Mar '22

My concern is that the massive rise in the cost of fuel, materials, labour and transport will have a hugely adverse effect on lots of industries/companies. There is a prospect that the war will drag on bringing about a full blown recession and any further deterioration or even continuation will only result in a downward spiral for stocks. I have a reasonably sized holding in £saga which fell over 13% on Friday alone.

On Thursday I was planning to stay invested but Friday’s drop has persuaded me to liquidate pretty much my whole portfolio in the next few days (well tomorrow)! I am hoping for a Monday bounce to add back a few £ first. I would rather come out 15% down than 50% and I can’t see a large rebound coming anytime soon.

Rich B

6th Mar '22

I to have a mid size holding in Saga (LON:SAGA) and fear the worst short term.

No guessing what the Market will do tomorrow!

MrBeak

6th Mar '22

debating buying poly but seems wrong

Snowbum

6th Mar '22

That's an emotional stand point with respect to a proposed investment...

I bought some last week. Suggest watching the Rick Rule video at link posted in the thread below to help with your thought processes.

https://www.stockopedia.com/co...

doctor dave

6th Mar '22

Hold. Add when prices and valuations are favourable.

jwebster

7th Mar '22

I have a rule to sell stocks when they trigger a 6% - 8% loss, so because of this I'm holding a lot of cash, except for holdings in miners and defence which are doing well.

As for the outlook.... what do we know?

Friday's drop was fairly indiscriminate, at least against the FTSE250. It was pricing in the risk of stagflation across Europe/Uk with sanctions rising inflation and reducing growth.

The US has been in a bear market for a while now, excepting the mega-cap tech firms holding up the indices.

UK stocks have been cheap for a while, and getting cheaper it seems. Takeover bids are on the up, UK is on sale.

Russia and Ukraine economies are tiny, in the global perspective.

The US long-term bond yields are low, so signalling inflation is temporary. After the covid supply chain effects have gone, return to low-growth low-rate environment.

All in all, I lean towards buying stocks again, as they begin to set up. Ideally US growth and some UK value. Not there yet.

Jeffvshepherd

7th Mar '22

I'm staying invested. Selling now could mean selling at the bottom.

Caper4

7th Mar '22

Depends whether you need the funds invested soon. If not my advice is to hold on and don’t even look at your portfolio . May be hard to do, but pointless beating yourself up for no reason. I also have a large position in Saga and the drop in share price is crazy, but so are many others . It’s interesting to see the big drop in posts on Stockopedia since the invasion and I am sure this is because many have just decided to not touch their portfolio until the situation in Ukraine is clearer .

gmtrader

7th Mar '22

This is a hard question to answer. A lot will depend on whether you have spare cash to buy more or not, but also what you are exposed to with your holdings.
No one knows where the bottom would be. Imo, a crash is long over due and it wouldn’t surprise me to see the ftse drop to 5500 or lower, but who really knows?

Today on open the Ftse has climbed back from its futures low, but it has dropped below support level and retraced back to it. I have often noticed when buying occurs first thing it leads to a sell off after. It really needs to climb above the 7000 level to stop further declines.

As for my strategy, I sold a couple of shares I was concerned about and added into my gold stocks of Shanta Gold (LON:SHG) Hochschild Mining (LON:HOC) Resolute Mining (LON:RSG) £PAF

I currently have about 35% of my portfolio in these 4.
As they rise to my targets I will sell and use the funds for equities. Currently I am fully invested.

andrewdb

7th Mar '22

"Stay invested or cash out"

This is the eternal question that is asked in good times and bad.

When your favourite share falls by 5% in normal times you ask yourself that question.
When your favourite share falls by 25% this week you ask yourself that question rather harder.

If you have been able to successfully time the market, super, carry on
If you have been able to successfully spot sector rotations, super, carry on

For the first time in nearly 40y, there is a noticeably non-zero chance of a 100% fall in everything. If you really believe that, start prepping.

I personally do not have a significantly above average record on timing the market or sector rotations. I do not think there will be a 100% fall and live close enough to a city to make the consequences of being wrong on that academic.

I do think that there are a few things that are likely over the next few years

- a big rise in defence spending (yes, obvious)
- supply of capital will be less easy (any company that needs lots of capital will pay a lot more )

So I have sold companies that look like they need to borrow / raise
New money will be put in larger / more defensive stocks
And otherwise done nothing.

dennisvictor

7th Mar '22

I don't think any time is a good time to cash out entirely, but these days I am reviewing my portfolio for the following. I suggest to do the same.

- Exposure to Russia

- Consequences of exiting Russia for any company in my portfolio

- Links to Russian ownership in any way

- Transparency in communication about plans for the future in regards to Russia

Breakout Trader

7th Mar '22

For what it's worth, this is my current portfolio of spreadbets.

The positions in Block (formerly square), Volex and Boohoo are legacy positions where I didn't respect a stop loss, and as a result I'm heavily underwater after the last few months of constant selling. I've decided to hold those and hopefully I'll see a return in the long run, accepting it may take years.

The others are focused on commodities, defence, O&G, some of the sectors which are doing ok. Basically the positions down to Begbies Traynor are in profit, Begbies and yellow cake are pretty much break even.

mwjackson

7th Mar '22

The time for selling was 2 weeks ago.

If you don't need the money you might as well hold, it will return to those levels at some point in the medium term. You run the risk of mistiming your exit and re-entry and ending up in a worse position than you are in now.

andrewdb

7th Mar '22

I have held £LMT for > 10y and it has done rather well for me too. They are not just defence. They are looking at "nuke power in a shipping container" as well as £RR and others and I expect that to be a growth area if we suddenly need to stop using so much gas.

wildshot

7th Mar '22

I check my news sources every morning. Whilst it is heart breaking to see what is happening in Ukraine every day, I check living in hope there has been a coup in Russia. If I wake up one day to see that I'm sure the market will come back up like a rocket.

Alphaflight

7th Mar '22

As long as you are well diversified then sitting tight should work fine. Well diversified these days probably means dumping government bonds in favour for cash anyway; the so-called risk free rate of return mentioned in Portfolio Theory books no longer exists.

Inflation proof hedges should be in your portfolio already...

I'd advocate holding asset classes outside of the financialized world. That means physical gold, silver, platinum.

Governments these days seem to think that they can freeze bank accounts (see Canada) or expropriate peoples assets (e.g. Russians) so think about that too. The BOE can legally bail-in UK bank accounts (a la Cyprus) if they want, so if we get another banking crisis the cash isn't necessarily safe and those government guarantees aren't worth much.

Revs8

7th Mar '22

Posted first in SCVR but applicable to this thread.

Being positive.

Out of adversity comes opportunity....

Some good quality shares trying to find a bottom today. Indivior (LON:INDV) (i hold) showing a strong bounce off support around 253p. Sales should be largely unaffected by Ukraine conflict and forward forecasts are superb.

Somero Enterprises Inc (LON:SOM) (i hold) I think it will bottom out at 400p. I'll be increasing stake around this level. Forecast div over 8% if held in a SIPP.

Others showing signs of life Legal & General (LON:LGEN) high wave signal today. Bulls looking for a bargain. If it opens above 244p then it will be an even stronger buying signal. Forecast div between 7 and 8%.

£SNEW remarkably resilient share price over the last few days (although it has dropped circa 20% in last few weeks). Bulls definitely supporting this one at 33p for now. Forecast div over 7%.

Saga (LON:SAGA) (i hold) Incredibly volatile. A bargain if cruises can return to normal. 50% upside in short term and 100% in medium (months) if travel sector returns to normal. Signs of support today but I'd like to see more before increasing stake.

I'll be increasing high quality oversold shares first (Indivior (LON:INDV) Somero Enterprises Inc (LON:SOM)).

For me the hard part now is trying to work out which stocks are being sold off simply because money is leaving the market v those that will struggle in the world of higher energy, wages and inflation.

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Rich B

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