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Market Correction
King Lodos
Posted: 14 May 2018 21:12:05(UTC)

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I use colour range on everything tbh .. I cluster metrics – valuation, profitability, growth, etc. – so on my full watchlist I can zoom out and get a pretty good idea of what's worth investing in.

I'd say I avoid reds more than chase greens .. I suppose technically you're weighing up a huge amount of data using a different processing system
Tyrion Lannister
Posted: 15 May 2018 00:24:51(UTC)

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Related to top slicing is the concept of “core funds”.

Why do people designate core funds? Presumably because they invest more in those funds than other investments because they think they’ll make them the most (or more reliable) money. People who top slice their core funds are therefore defying their own logic.

I have selected some core funds, currently 7 in which I intend to invest the same amount in future. By core funds, most people mean their top 1,2 or possibly 3.

I have no intention of selling any of these funds for the foreseeable future so in time the 1 or more core funds will select themselves, I.e the ones’ that grow the most.
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King Lodos on 21/05/2018(UTC)
Mr Helpful
Posted: 15 May 2018 07:31:24(UTC)

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Tyrion Lannister;62321 wrote:
Related to top slicing is the concept of “core funds”.
Why do people designate core funds? Presumably because they invest more in those funds than other investments because they think they’ll make them the most (or more reliable) money. People who top slice their core funds are therefore defying their own logic.

Yes this is indeed an apparent conflict!

Non-core positions for us are those where insufficient confidence exists, for one reason or another.
Bit tentative? Tending to 'speculative'?

Core positions are intended as hold forever (incl heirs), but the monies held in them may vary over market cycles, as the positions fluctuate in measured value. So monies might flow from core Stock positions on surging markets to core Defensive positions, (or even other core Stock positions which are suffering less than justified temporary setbacks). And the reverse on plunging markets.
But no point being too dogmatic. Even core positions may come up for scrutiny in an Annual Review and could be replaced.

To widen the thinking, sometimes with core position may :-
- Top-Slice
- Prune/Reduce
- Seriously Reduce
+ Seriously Add
+ Build
+ Bottom-Fill
+/- Other?
Depends on what is happening to position and portfolio.
3 users thanked Mr Helpful for this post.
Tyrion Lannister on 15/05/2018(UTC), Keith Cobby on 15/05/2018(UTC), Sara G on 15/05/2018(UTC)
King Lodos
Posted: 21 May 2018 05:31:22(UTC)

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Theo Shackleton;62214 wrote:
I sold out of my funds yesterday. Market too hot for me now. I await more opportunity-troughs or even a correction. Something along the lines of 2015 or worse. What I want is to drop all my cash into funds or ETFs at low prices and then leave for 25 years as per Bogle. And that is my genuine intention. But better to buy low rather than high so I'll wait until the right time comes and use all I've learnt since Feb to hopefully take advantage.

It's surely only a matter of time before the currency debasers put rates up, or some other shock comes along. It's been ten years since the crash... How far into this business cycle are we?


^^
Just reminded of this

How much changes in a week – no predictions, but a few days ago markets were expecting a China trade war .. Now it looks like it's off the table.

There's ALWAYS something to worry about .. Markets can always fall .. You have to be able to stay invested, otherwise you should be looking at bonds

3 users thanked King Lodos for this post.
Sara G on 21/05/2018(UTC), Fell Walker on 21/05/2018(UTC), Tim D on 21/05/2018(UTC)
Tony Peterson
Posted: 21 May 2018 06:34:52(UTC)

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And how, one wonders, will tony m feel this sunny day as the index reaches an all time high, after ignoring all the excellent advice offered to him by Catch the Pigeon and others?

Following gut feelings (post 46) seems to me a strategy less profitable than letting your head rule.



4 users thanked Tony Peterson for this post.
Sara G on 21/05/2018(UTC), Fell Walker on 21/05/2018(UTC), Tim D on 21/05/2018(UTC), Martina on 22/05/2018(UTC)
Tyrion Lannister
Posted: 21 May 2018 17:57:35(UTC)

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Tony Peterson;62558 wrote:
And how, one wonders, will tony m feel this sunny day as the index reaches an all time high, after ignoring all the excellent advice offered to him by Catch the Pigeon and others?

Following gut feelings (post 46) seems to me a strategy less profitable than letting your head rule.






It’s a simple rule that everyone knows, but it’s unbelievable to me how many ignore it:

It’s not timing the market, it’s time in the market!
4 users thanked Tyrion Lannister for this post.
Tony Peterson on 21/05/2018(UTC), Tim D on 21/05/2018(UTC), Sara G on 21/05/2018(UTC), Captain Slugwash on 22/05/2018(UTC)
Tony Peterson
Posted: 21 May 2018 18:51:48(UTC)

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Tyrion

It would be rather more than an understatement, of course, to say that we have had a very good day today with so many of our major holdings up by over 3%. However, I do not know what to expect tomorrow and my investment strategy is based on what actually happens in the market rather than what I think might happen.

It is my considered opinion that major UK stocks are currently, uniquely, and even grotesquely, undervalued. That does not mean I expect rises tomorrow, or this week, or next week, month or year. All I currently know is that today we had five holdings whose values demand, to me, some trimming. And not a single major in need of a discounted repurchase. Though I did nothing but watch.

In general terms I might add that our telecom holdings do not have to fall much further before I will gleefully restore our holdings to some of their former sizes. At the expense of one or more of our miners, retailers, pharma, utilities, or manufacturers. which broke above our pre-set upper valuation bounds today.

Those who care about basic investment strategy will notice the KL advocates "adding to your winners" and "dumping your losers". To me this means: buy dear and sell cheap. For me, I prefer the opposite. Sell (some) of the most profitable and buy them (and more with the help of dividends) back when they drop to bargain levels. Buy cheap and sell dear. It is, as I have so often said, the only market mantra I think worth considering.
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Luca Brasi on 21/05/2018(UTC), Tyrion Lannister on 21/05/2018(UTC), IanL on 22/05/2018(UTC), martin hargan on 23/05/2018(UTC)
Dan L
Posted: 21 May 2018 19:24:01(UTC)

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Tony Peterson;62613 wrote:

Those who care about basic investment strategy will notice the KL advocates "adding to your winners" and "dumping your losers". To me this means: buy dear and sell cheap. For me, I prefer the opposite. Sell (some) of the most profitable and buy them (and more with the help of dividends) back when they drop to bargain levels. Buy cheap and sell dear. It is, as I have so often said, the only market mantra I think worth considering.



I would suggest that part of the problem is that the kind of company that KL buys rarely if ever drops to bargain levels. You could be waiting for years for a company like Microsoft or Unilever to mess up badly enough to grant much of a discount. They just aren't cyclical enough for that. Even with Facebook's recent issues that was a blink and you miss it minor drop.

To be a value investor to me seems to go hand in hand with cyclical companies where you get more buying opportunities. I certainly wouldn't be capable of judging such things and certainly have no formula for working out when to buy and sell. I wouldn't know where to start
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Slacker on 21/05/2018(UTC), Guest on 21/05/2018(UTC), John Miskelly on 21/05/2018(UTC), Tyrion Lannister on 21/05/2018(UTC), Fell Walker on 21/05/2018(UTC), Martina on 22/05/2018(UTC)
Tony Peterson
Posted: 21 May 2018 20:30:02(UTC)

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Two months ago Unilever was 12% cheaper than in is today It is nevertheless down 8% on its price last October. I see nothing here to indicate that Unilever is any less volatile than any of the more generous dividend payers I hold. Diageo likewise.

What, to me, constitute bargain prices is a function of one's own entry point.
Tony Peterson
Posted: 22 May 2018 16:05:33(UTC)

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I know few of you will believe me when I say that I really feel for the OP who started this thread.

He has made the classic mistake of believing that his intestines gave him a privileged glimpse of the future. Rather like the haruspicies, though they used intestines other than their own.

One of the reasons people are shy of posting their investment decisions is the opportunity it gives to others to jeer when they have the benefit of hindsight.

Individual share prices, and markets, are unpredictable. No one knows what tomorrow's closing prices will be. One lesson from history, though, is that if you are totally out of the market, you will make nothing from it..

So, tony m, if you are still there,....can you share your thoughts now?

Aminatidi
Posted: 22 May 2018 17:09:07(UTC)

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Tony being rather new to this I'm assuming threads similar to these come and go with every market "correction" or any event a little out of the ordinary?
Tony Peterson
Posted: 22 May 2018 20:17:41(UTC)

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Aminatidi

Nothing on these threads ever repeats itself exactly, but there are parallels.

Over the last few years one particularly arrogant poster who called himself General Zod (who used to demand a genuflection before your replied to him) repeatedly started threads lamenting each tiddly little market fall. He has not come back for a while.

Zoddy had such a genius for making mistakes that I am looking for him to reappear with a new thread explaining how he has mortgaged his home, sold his wife, maxed out all his credit cards,to jump in before equities double for the second time in a single year. That's my signal to sell everything.

tony m
Posted: 22 May 2018 22:16:52(UTC)

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And I really feel for tony Peterson who seems to spend his life on this forum explaining his investment brilliance I as a mere mortal run a business and 3 months ago exited the market as I thought a correction was coming which did actually happen although this action is obviously anathema to tony p I avoided the capital loss and then returned to the market
tony m
Posted: 22 May 2018 22:20:25(UTC)

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Am happy to share my investments Troy Trojan, Fundsmith , Japan, Vietnam and now Crispan Odeys funds as I think a much bigger correction is coming
King Lodos
Posted: 23 May 2018 01:10:22(UTC)

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tony m;62714 wrote:
and 3 months ago exited the market as I thought a correction was coming which did actually happen although this action is obviously anathema to tony p I avoided the capital loss and then returned to the market


Well there's nothing stopping you being right.

The problem is, you have to be lucky .. And what makes luck a losing strategy is it's never the outcome you're betting on – it's the odds.

Take sports betting .. If the odds of one team winning are 1 in 20, but the bookie's giving you 1 in 50, THAT's the bet to make .. Because once you've done that 100 times, you've won 5, and you've been compensated as if you should've only won 2.

The more times you toss a coin or roll a dice, the less luck plays a part .. And if you'd been betting on the more likely winner, those odds wouldn't compensate the 1 in 20 times you were wrong, and you'd wind up bankrupt .. If people understood statistics, or that they don't know more than the average gambler, there'd be no betting shops and no casinos.

It's exactly the same in investing .. Every day, you're being given odds to stay invested – every individual decision's a coin toss; but every 100 decisions are probability playing out
Tyrion Lannister
Posted: 23 May 2018 02:12:22(UTC)

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King Lodos;62721 wrote:


The more times you toss a coin or roll a dice, the less luck plays a part .. And if you'd been betting on the more likely winner, those odds wouldn't compensate the 1 in 20 times you were wrong, and you'd wind up bankrupt .. If people understood statistics, or that they don't know more than the average gambler, there'd be no betting shops and no casinos.



Statistics are little understood by the majority of people, understanding that is a great way to make money which, of course, is exactly what the bookies do.

If I tossed a coin 3 times and got 3 tails, most people would be happy to give me less than 50/50 odds that it will be heads the next time.

A very common phrase which always makes me chuckle is the "law of averages". I've been called stupid for saying that that law is nonsense.
King Lodos
Posted: 23 May 2018 02:41:30(UTC)

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And there's a huge problem at the moment with journalists, politicians and activists who refuse to understand normal distributions.

It's part of the reason James Damore got fired from Google, and Cathy Newman had that career-destroying interview with Jordan Peterson .. When you say "Men are taller than women", or "Men are more interested in programming", it refers to a distribution:

https://www.usablestats.com/images/men_women_height.jpg

I'd say half the population struggle with that – e.g. "Well I know a tall woman", "Not all women are bad programmers" .. Half the planet can only think in binary, and that's a huge intellectual and political divide these days.
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Tyrion Lannister on 23/05/2018(UTC), George C on 25/05/2018(UTC)
tony m
Posted: 23 May 2018 09:17:40(UTC)

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Amongst all the investment theory it is my view that a decision to be in or out of a market is exactly the same as an asset allocation decision A balance between capital gain or loss and income return requires more than just staying invested
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Mr Helpful on 23/05/2018(UTC)
Freefall Junkie
Posted: 23 May 2018 09:37:20(UTC)

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tony m;62715 wrote:
Am happy to share my investments Troy Trojan, Fundsmith , Japan, Vietnam and now Crispan Odeys funds as I think a much bigger correction is coming


Well Crispan Odeys is a classic example of how betting against the market, which effectively you are doing by completely selling up expecting a correction, can go spectacularly wrong. His European hedge fund nearly halved in value in betting against the market between early 2015 and late 2017: https://www.ft.com/conte...-11e7-8c12-5661783e5589 . If a hedge fund manager with an army of analysts can't get it right predicting the future direction of the markets, there is zero chance a private investor can.
AJW
Posted: 23 May 2018 09:47:39(UTC)

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tony m;62714 wrote:
And I really feel for tony Peterson who seems to spend his life on this forum explaining his investment brilliance I as a mere mortal run a business and 3 months ago exited the market as I thought a correction was coming which did actually happen although this action is obviously anathema to tony p I avoided the capital loss and then returned to the market



Oh man after TP's lambasting, what a comeback!

Won't encourage drama or bickering here, but it's great to see conviction from different points of view (tony/TP/KL) and intellectual arguments.
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