I'd be interested to know how others approach a market downturn such as the one we're experiencing now.
In similar previous cases, I would have sold out, then bought back in when things improved; perhaps not the best approach. This time I'm trying to keep my nerve, banking on quality companies recovering in due course.
Keen to hear what others are doing. It would certainly be nice to have cash, but I'm fully invested.
Thanks...
Hedged my bets - sold half of the portfolio. That way I’m right both ways.
The trouble with growth stocks is they could yet fall a lot further if there is prolonged bear sentiment. Ready to pick up some bargains though with cash when things stabilise.
Losing out on the full recovery by not being fully invested is the cost of insurance against further falls.
I am with shipofrogs. Provided the companies one has invested in, are financially sound and doing what they say they would I shall sit on my hands, although I may add to certain holdings if the price falls far enough and the spread comes in. In the meantime I have been very fortunate to have shorted the DOW and FTSE which has helped to cover some of the loses on my portfolio. However I was less fortunate in closing the short too early, but 'half a loaf' as they say.
Best of luck
Jonno
I always remember that those who fled the market are now sitting on cash, wondering what to do with it. I propose to do nothing, noting that, on the same day Amino Technologies (LON:AMO) reported a rise of dividend of 10%, another in a run of such rises, their price fell by 2.5%, like most others. There will be some great buying opportunities when the dust settles but who knows how long that will take? Meanwhile, we can be sure that if opening Stocko this morning gave us a jolt, just think of the effect this is having on the seriously rich and the bankers that run the entire capitalist system who will be attempting to apply Newton's Second Law. I may have a second cup of coffee.
My gut instinct is this has a bit further to run yet but I will eventually be looking to buy anything that looks particularly oversold or growth stocks that are holding up well - especially those shares that I have the strongest conviction in. Luckily I have been moving gradually into two-thirds cash over the last 14 months as I was convinced we were due a correction. It's worth reiterating that the global economic outlook is still positive so I expect this to be more of a correction than total rout.
Due to luck (a prolonged broker change) and strategy (requiring a new high to buy) I'm in cash this time round. Previously I've found denial quite effective.
If this is a correction then the correct action is probably do nothing. If the start of a bear then nicobos's strategy, then whimpering in a corner and settling in for a long wait, would appeal. Who knows what this is though?
If you have a value focus then all you will see is greater value, so probably do nothing. If you are a momentum player then you are probably exiting. If quality is your bag, and long term gains are expected, then you probably haven't noticed yet or don't/shouldn't care. If you follow a hybrid strategy then there is scope for confusion :)
It looks grim for whatever strategy at the moment:
I'm tempted to set up a deep value quality screen and see if any screaming bargains start to look compelling; but they would still need to make a new high (just it might be a 3m high).
Thank you for asking this question. Very testing times and the first time I have been through a severe correction. I have had the odd bad weeks in the past couple of years (down say 3.5%) but generally I have only experienced steady increases.
However since the beginning of the year I am down 7.65%. Hardly the end of the world in the context of my gains in the past three years (2.5x). Growth is not a straight line. So I won’t be selling here. It is not where prices are next week or next month but three or five years from now.
So I will be sitting this out, it is not in my opinion 1929.
There is a great tweet from Brattle Street Capital which I read every month (I have a reminder in Outlook)
https://mobile.twitter.com/brattlestcap/status/710967138710908928?refsrc=email&s=11
“Correction and bear markets of the past 30 years. Most are 10-20% yet people waste years worrying about the next one”
And as Buffett said “I would rather have a lumpy 15% than a steady 10%”
And turn off CNBC that will screw with your head!
It is going to be an interesting week.
what ive done is to keep 25% at all times in cash ready for a crash like this, that way I have cash ready for a short. I did short the ftse but exited to early thinking the end was near, so missed out on further gains.
the other 50-75% is invested at all times between funds and stocks.
some people will buy put options for this type of event, I just find it easier to short a index. I still don't know if buying a PUT is the better way? it acts as insurance but your making a prediction. whereas a short you can react to when things actually happen, but timing can become a issue if you get in or out at the wrong time.
