Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

wrong timing in the market
Mariel Anne Gonzales
Posted: 05 February 2018 16:16:54(UTC)
#1

Joined: 05/02/2018(UTC)
Posts: 2

Thanks: 22 times
Was thanked: 4 time(s) in 1 post(s)
Hi. I am very new to investing and wanted to try it for the first time. I have done some research and finally decided to invest in Vanguard Lifestrategy 80% Equity. I'm 32 years old and I was thinking I still have time to have more stocks and less bonds in my portfolio. The only thing that worries me is I have entered the market at the wrong time as the indexes keep falling every single day. I have lost almost £300 for just a week of joining Vanguard. My other mistake is I have invested a lumps of £10,000 wherein I could have pound cost average. I feel so disappointed with myself and I am so worried that I made the wrong decision and will lose my money when market crash happens. Should I withdraw and sell? or shall I just stay put and hold my fund? What else can I do to rectify this problem. Please help.
Mickey
Posted: 05 February 2018 17:04:11(UTC)
#2

Joined: 21/06/2010(UTC)
Posts: 502

Thanks: 1391 times
Was thanked: 496 time(s) in 244 post(s)
Pound cost averaging does not always work out for the better. Welcome to investing and hindsight, the two go together :-) Over time equities usually do better than savings so I think you are in the right place, not sure you need 20% bonds at your age but the performance difference between the VLS 100 and 80 isn't that great, so stick with your choice and add as and when you can.
2 users thanked Mickey for this post.
Guest on 05/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
philip gosling
Posted: 05 February 2018 17:09:20(UTC)
#3

Joined: 06/01/2013(UTC)
Posts: 40

Thanks: 20 times
Was thanked: 37 time(s) in 20 post(s)


Never try to Time the market - as they say It is Time in the Market not Timing the Market that will do well for you. Mickey is also right in that at 32 you really could be should be in Vanguard 100%. In 40 years this dip or drop will be long gone.
4 users thanked philip gosling for this post.
Guest on 05/02/2018(UTC), Mickey on 05/02/2018(UTC), william barnes on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
King Lodos
Posted: 05 February 2018 17:12:49(UTC)
#4

Joined: 05/01/2016(UTC)
Posts: 2,296

Thanks: 451 times
Was thanked: 3357 time(s) in 1330 post(s)
Don't worry at all! :o)

For one, I think markets will bounce back pretty quickly.

But more importantly .. whenever you hold stocks, in any given year, there is *always* the chance of them losing 60% (or more) of their value .. That's why they pay you more than a bank account.

But in the history of markets, they've always bounced back – it's not like buying Bitcoin – you still own the same amount of the global economy now .. So be aware, in any given year you put £10,000 in the market, it could end the year being worth £4,000 .. and that really doesn't matter.

Now if you're going to need the money (all of it) next year: don't put it all in stocks .. If you don't want a 60% drop, keep half of the money in cash, and the worst case is only 30% .. But really the key is staying invested .. As they say: it's not 'timing' the market, it's 'time' in the market .. And if you can get comfortable with the ups and downs of just passively holding stocks, it's one of the few ways to get genuinely wealthy:

https://theblogbyjavier.files.wordpress.com/2011/10/jeremy-siegel-gold.jpg

And I'd very much recommend this book – from the founder of Vanguard group:

https://images-na.ssl-images-amazon.com/images/I/51BOrp0OADL._SX347_BO1,204,203,200_.jpg
9 users thanked King Lodos for this post.
North Star on 05/02/2018(UTC), Guest on 05/02/2018(UTC), Alan M on 05/02/2018(UTC), Eddy on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC), Guest on 11/02/2018(UTC), michael mezzoforte on 11/02/2018(UTC), EFFGEE on 11/02/2018(UTC), Rickenbacker Al on 11/02/2018(UTC)
Ermintrade
Posted: 05 February 2018 17:56:11(UTC)
#8

Joined: 27/09/2010(UTC)
Posts: 25

Was thanked: 51 time(s) in 20 post(s)
KL is right. You are currently 3% down, and in the days to come it may be more than that. But it would be a mistake to sell out now - then you really will have lost money. You have time on your side. Sit tight, and sit on your hands - the market will go back up again. Think long term.
2 users thanked Ermintrade for this post.
Guest on 05/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
Mr Helpful
Posted: 05 February 2018 18:54:34(UTC)
#9

Joined: 04/11/2016(UTC)
Posts: 466

Thanks: 516 times
Was thanked: 577 time(s) in 279 post(s)
Mariel Anne Gonzales;56525 wrote:

1. I have done some research and finally decided to invest in Vanguard Lifestrategy 80% Equity. I'm 32 years old and I was thinking I still have time to have more stocks and less bonds in my portfolio.
2. The only thing that worries me is I have entered the market at the wrong time as the indexes keep falling every single day. I have lost almost £300 for just a week of joining Vanguard.
3. My other mistake is I have invested a lumps of £10,000 wherein I could have pound cost average.
4. I feel so disappointed with myself and I am so worried that I made the wrong decision and will lose my money when market crash happens.
5. Should I withdraw and sell? or shall I just stay put and hold my fund? What else can I do to rectify this problem. Please help.


1. 80/20 can work out fine in the long haul. At this point a chart is usually referred to:-
http://www.multpl.com/s-p-500-historical-prices
The snag is that in VLS80, Stocks are held at 80% regardless of whether Stocks are fairly priced or expensive. Imagine a long-distance race. Every couple of laps you are asked to run backwards half a lap. So it is with high Stock weightings in expensive markets. Set-backs will occur.

2. Rest assured far larger sums are being lost by other posters here!!! And those portfolios are at further risk, at all times!
We try to learn to love and take advantage of volatility.

3. Value Averaging is a step beyond £CA, and can help with psychological and investment management balance.
https://www.investopedia...s/v/value_averaging.asp

4. Rest assured you will not lose 100% of your money.
Some investors work on the basis of a worst-case of 50% loss.
And as per point 1, the race will continue, albeit up to half a lap back.
But unfortunately there are no guarantees about that 50%!

5. Only you know how you feel, and will cope with potential future losses (or gains).
Maybe if current Stock pricing feels challenging, 60/40 would be more comfortable?
And if significantly lower Stock prices do ever arrive, then a return to 80/20 might then seem comfortable?
Find that comfort level to be able to sleep nights.
3 users thanked Mr Helpful for this post.
Mike L on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC), EFFGEE on 11/02/2018(UTC)
Sara G
Posted: 05 February 2018 19:30:35(UTC)
#10

Joined: 07/05/2015(UTC)
Posts: 539

Thanks: 898 times
Was thanked: 941 time(s) in 358 post(s)
I had a similar experience when I invested a lump sum at the end of 2007... My first reaction was embarrassment at my 'stupid' timing, but then I realised that in fact the crash was a gift, both in terms of learning (mostly about the difficulty of timing markets), and a massive buying opportunity.

No need to panic, you just need a strategy... For example you might resolve to top up your investment each month by either a fixed amount, or by the amount that your pot has fallen (whichever is greatest).

If there is a major crash, all the better in your situation...

For further reading you might also enjoy 'Effective Investing' by Mark Dampier, and a visit to the Monevator website which has lots of encouraging and helpful articles.

5 users thanked Sara G for this post.
Bellabeck on 05/02/2018(UTC), Mickey on 05/02/2018(UTC), gillyann on 06/02/2018(UTC), dlp6666 on 07/02/2018(UTC), EFFGEE on 11/02/2018(UTC)
andy mac
Posted: 05 February 2018 19:40:51(UTC)
#11

Joined: 12/02/2016(UTC)
Posts: 178

Thanks: 97 times
Was thanked: 142 time(s) in 83 post(s)
Its a learning curve

Are you using an ISA

Did you work out your risk rating
Many of the platforms allow you to work out your attitude to risk

Have you a plan is it 1yr 5yr or life

I too had a similar event when I started investing fortunately it was just after a crash and I made some serious money on the rebound so did my advisor
The lessen was do it your self

Do you want a hands on or let (and pay) for someone else doing it for you

Dont panic and as the man said if need be sit on your hands

A wise old man ( my mentor ) gave me that advice
It isnt a loss until you cash it in ( sorry crystalise a loss)

Carry on learning about the market and yourself and good luck
2 users thanked andy mac for this post.
gillyann on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
TJL
Posted: 05 February 2018 19:42:24(UTC)
#12

Joined: 14/03/2011(UTC)
Posts: 457

Thanks: 243 times
Was thanked: 358 time(s) in 184 post(s)
If you haven't got the message already, my suggestion would be don't panic.
I am not even looking at how much I have 'lost' but I know it's not insignificant.
If you are investing for the long (or at least longish) term, the current situation is unlikely to mean much.
Good luck - be brave!

2 users thanked TJL for this post.
Mariel Anne Gonzales on 07/02/2018(UTC), EFFGEE on 11/02/2018(UTC)
King Lodos
Posted: 06 February 2018 02:26:04(UTC)
#13

Joined: 05/01/2016(UTC)
Posts: 2,296

Thanks: 451 times
Was thanked: 3357 time(s) in 1330 post(s)
The big losses on Wall Street are carrying through to Asia so far .. Could be another 5% downside (on yesterday's markets) when fund valuations come through.

There are so many explanations .. I think algorithmic trading's a very likely candidate – lots of software traders are set to automatically 'de-risk', which means lots of forced selling.

Paul Tudor Jones thinks inflation's coming back strong, which might have spooked traders .. But I'd have thought you'd see more in gold .. There's also a view that the strong global economy is still riding on stimulus – and that makes calling it tricky, because either that means we wind up with a recession or more stimulus.
2 users thanked King Lodos for this post.
c brown on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
S_M
Posted: 06 February 2018 03:13:30(UTC)
#19

Joined: 17/03/2011(UTC)
Posts: 502

Thanks: 62 times
Was thanked: 272 time(s) in 172 post(s)
Mariel Anne Gonzales;56525 wrote:
Hi. I am very new to investing and wanted to try it for the first time. I have done some research and finally decided to invest in Vanguard Lifestrategy 80% Equity. I'm 32 years old and I was thinking I still have time to have more stocks and less bonds in my portfolio. The only thing that worries me is I have entered the market at the wrong time as the indexes keep falling every single day. I have lost almost £300 for just a week of joining Vanguard. My other mistake is I have invested a lumps of £10,000 wherein I could have pound cost average. I feel so disappointed with myself and I am so worried that I made the wrong decision and will lose my money when market crash happens. Should I withdraw and sell? or shall I just stay put and hold my fund? What else can I do to rectify this problem. Please help.


As others have said, a crash usually plays itself out very quickly and the recovery also doesn’t take that long. This had to happen, stocks where going one way. That is unsustainable,

It’s an opportunity to top up if you have available funds and the stomach to take on further stock market risk now you know how volatile things can be. You are 32 and I dare say will experience more crashes in your investment life, but every time this has happened in history the markets have recovered.
3 users thanked S_M for this post.
Dian on 06/02/2018(UTC), gillyann on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
Dian
Posted: 06 February 2018 05:32:09(UTC)
#20

Joined: 09/10/2016(UTC)
Posts: 215

Thanks: 184 times
Was thanked: 75 time(s) in 55 post(s)
Overstretched stocks markets are falling but US dollar is looking strong. Finally, big banks are not supporting bit-coin.

https://www.ndtv.com/bus...buying-bitcoins-1808395

I like some of the following information. They are equally good for new investors and experienced investors.

http://www.howtoinvesthq...arket-investing-15-tips/
1 user thanked Dian for this post.
Mariel Anne Gonzales on 07/02/2018(UTC)
Captain Slugwash
Posted: 06 February 2018 08:27:32(UTC)
#21

Joined: 19/07/2017(UTC)
Posts: 64

Thanks: 126 times
Was thanked: 89 time(s) in 41 post(s)
Time will see you right Mariel. All good advice and support above. A bit like AA :)

Ignore the media. They describe overnight global losses as a 'bloodbath'. In reality, a small correction.
Don't listen to this ridiculous sensationalism, avoid looking at your investments daily, continue to invest regularly and in a year or so you won't be as worried.

Good luck.
1 user thanked Captain Slugwash for this post.
Mariel Anne Gonzales on 07/02/2018(UTC)
Freefall Junkie
Posted: 06 February 2018 08:49:36(UTC)
#14

Joined: 09/06/2014(UTC)
Posts: 21

Thanks: 8 times
Was thanked: 49 time(s) in 15 post(s)
King Lodos;56558 wrote:
The big losses on Wall Street are carrying through to Asia so far .. Could be another 5% downside (on yesterday's markets) when fund valuations come through.

There are so many explanations .. I think algorithmic trading's a very likely candidate – lots of software traders are set to automatically 'de-risk', which means lots of forced selling.

Paul Tudor Jones thinks inflation's coming back strong, which might have spooked traders .. But I'd have thought you'd see more in gold .. There's also a view that the strong global economy is still riding on stimulus – and that makes calling it tricky, because either that means we wind up with a recession or more stimulus.


I agree calling this one is extremely tricky. Normally you would say that the global economy is doing well, corporate earnings are growing, there are far fewer 2008 style risks due to under capitalised banks, so this should be a short term correction. BUT these are not normal times. Will we look back in 20 years and think that everyone has been living in financial la-la land for the last few years due the massive economic experiment that is QE?

My guess (and hope!) is that the markets will bounce back strongly over the next few weeks, but who knows. Like many I am staring down the barrel of huge losses in my ISA/SIPP, but I at least take some comfort from the fact that about 45% of my retirement fund is in residential property or cash. Actually that is probably more like 55% since last week. Arg!
4 users thanked Freefall Junkie for this post.
Mickey on 06/02/2018(UTC), King Lodos on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC), EFFGEE on 11/02/2018(UTC)
Mr Helpful
Posted: 06 February 2018 09:04:34(UTC)
#17

Joined: 04/11/2016(UTC)
Posts: 466

Thanks: 516 times
Was thanked: 577 time(s) in 279 post(s)
King Lodos;56558 wrote:

There are so many explanations .. I think algorithmic trading's a very likely candidate – lots of software traders are set to automatically 'de-risk', which means lots of forced selling.
Paul Tudor Jones thinks inflation's coming back strong, which might have spooked traders ..


There is always a search for explanations.
The 'bleedin obvious' is ignored - prices were high, maybe too high!!!
4 users thanked Mr Helpful for this post.
Tim D on 06/02/2018(UTC), Mickey on 06/02/2018(UTC), King Lodos on 06/02/2018(UTC), EFFGEE on 11/02/2018(UTC)
PaulSh
Posted: 06 February 2018 09:39:26(UTC)
#5

Joined: 02/12/2014(UTC)
Posts: 79

Thanks: 21 times
Was thanked: 121 time(s) in 63 post(s)
King Lodos;56536 wrote:
But really the key is staying invested .. As they say: it's not 'timing' the market, it's 'time' in the market

Nice chart, but it uses a log scale which, although it fails to show the true nature of the gains that can be made, also minimizes the huge drops. The biggest takeaway I can see is that 30 years is the minimum period you should be looking to invest for if you want to be sure of making real gains.

King Lodos;56536 wrote:
And I'd very much recommend this book – from the founder of Vanguard group

No surprises then that the founder of Vanguard should be recommending funds like Vanguard's. And there is something to be said for purely passive funds as long as they use full physical replication, but although they may be good for investors in one way, some commentators are concerned that the rise in passive investing is causing more and more money to be pumped into companies not because they are sound, but just because they are big.
3 users thanked PaulSh for this post.
Mickey on 06/02/2018(UTC), King Lodos on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
King Lodos
Posted: 06 February 2018 09:44:13(UTC)
#18

Joined: 05/01/2016(UTC)
Posts: 2,296

Thanks: 451 times
Was thanked: 3357 time(s) in 1330 post(s)
Mr Helpful;56569 wrote:
King Lodos;56558 wrote:

There are so many explanations .. I think algorithmic trading's a very likely candidate – lots of software traders are set to automatically 'de-risk', which means lots of forced selling.
Paul Tudor Jones thinks inflation's coming back strong, which might have spooked traders ..


There is always a search for explanations.
The 'bleedin obvious' is ignored - prices were high, maybe too high!!!


The problem with this explanation is the sell-off's been very strong in Asia .. Japan's officially in a correction (over a 10% fall now).

So Emerging Mkts have sold off very strongly, and the average PE is only 12 .. Historically very cheap, with good fundamentals .. So I don't think it's valuation driven tbh.
5 users thanked King Lodos for this post.
Tim D on 06/02/2018(UTC), Mickey on 06/02/2018(UTC), Sara G on 06/02/2018(UTC), Mike L on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
Tim D
Posted: 06 February 2018 09:45:32(UTC)
#7

Joined: 07/06/2017(UTC)
Posts: 315

Thanks: 1166 times
Was thanked: 472 time(s) in 204 post(s)
PaulSh;56572 wrote:
King Lodos;56536 wrote:
But really the key is staying invested .. As they say: it's not 'timing' the market, it's 'time' in the market

Nice chart, but it uses a log scale which, although it fails to show the true nature of the gains that can be made, also minimizes the huge drops.


I disagree... the beauty of a log-scale chart is that a 10% drop (or gain) looks the same at any value. On a linear scale, 10% earlier looks tiny compared with 10% later... but in reality they feel just as painful at the time.

Somewhat annoyed by all the pundits on the radio this morning mentioning yesterday was the biggest ever points drop on the US markets. Sure, but as a percentage drop it's only the biggest in (IIRC) 6 years.

PaulSh;56572 wrote:
The biggest takeaway I can see is that 30 years is the minimum period you should be looking to invest for if you want to be sure of making real gains.


Now that I can agree with! If you play around with Monte-Carlo based investment outcome calculators or the portfoliocharts site it becomes clear that the best defense against bad outcomes is being in the market for decades-long timescales, not just years.
3 users thanked Tim D for this post.
King Lodos on 06/02/2018(UTC), Sara G on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
King Lodos
Posted: 06 February 2018 09:56:05(UTC)
#6

Joined: 05/01/2016(UTC)
Posts: 2,296

Thanks: 451 times
Was thanked: 3357 time(s) in 1330 post(s)
PaulSh;56572 wrote:
King Lodos;56536 wrote:
But really the key is staying invested .. As they say: it's not 'timing' the market, it's 'time' in the market

Nice chart, but it uses a log scale which, although it fails to show the true nature of the gains that can be made, also minimizes the huge drops. The biggest takeaway I can see is that 30 years is the minimum period you should be looking to invest for if you want to be sure of making real gains.

King Lodos;56536 wrote:
And I'd very much recommend this book – from the founder of Vanguard group

No surprises then that the founder of Vanguard should be recommending funds like Vanguard's. And there is something to be said for purely passive funds as long as they use full physical replication, but although they may be good for investors in one way, some commentators are concerned that the rise in passive investing is causing more and more money to be pumped into companies not because they are sound, but just because they are big.


If you don't use log scale, you just get a flat line that shoots up in the past 20 years .. You get 50% corrections in stocks, but being in for 30+ years, collecting and reinvesting dividends, that compounds your capital up and up.

The thing with passive investing is it helps you avoid mistakes .. The idea the average investor can beat the stock market over multiple decades and market environments, from reading books, forums, and active funds, is unrealistic.

Picking stocks is the easy bit – monkeys outperform index funds by about 2% a year – it's staying invested, buying at the right times, managing risk, being systematic, that we're really bad at


2 users thanked King Lodos for this post.
gillyann on 06/02/2018(UTC), Mariel Anne Gonzales on 07/02/2018(UTC)
King Lodos
Posted: 06 February 2018 10:08:22(UTC)
#15

Joined: 05/01/2016(UTC)
Posts: 2,296

Thanks: 451 times
Was thanked: 3357 time(s) in 1330 post(s)
Freefall Junkie;56566 wrote:
King Lodos;56558 wrote:
The big losses on Wall Street are carrying through to Asia so far .. Could be another 5% downside (on yesterday's markets) when fund valuations come through.

There are so many explanations .. I think algorithmic trading's a very likely candidate – lots of software traders are set to automatically 'de-risk', which means lots of forced selling.

Paul Tudor Jones thinks inflation's coming back strong, which might have spooked traders .. But I'd have thought you'd see more in gold .. There's also a view that the strong global economy is still riding on stimulus – and that makes calling it tricky, because either that means we wind up with a recession or more stimulus.


I agree calling this one is extremely tricky. Normally you would say that the global economy is doing well, corporate earnings are growing, there are far fewer 2008 style risks due to under capitalised banks, so this should be a short term correction. BUT these are not normal times. Will we look back in 20 years and think that everyone has been living in financial la-la land for the last few years due the massive economic experiment that is QE?

My guess (and hope!) is that the markets will bounce back strongly over the next few weeks, but who knows. Like many I am staring down the barrel of huge losses in my ISA/SIPP, but I at least take some comfort from the fact that about 45% of my retirement fund is in residential property or cash. Actually that is probably more like 55% since last week. Arg!


If Japan's anything to go by, the QE experiment could run for decades to come .. I don't think it's an option: stopping.

But I also don't think there's *much* to worry about when you factor in automation and AI, because it's unimaginable that they aren't leading to faster productivity growth .. And more efficient markets that are better at allocating capital


2 Pages12Next page
+ Reply to discussion

Markets

Other markets