The Fastest Way To Lose Money In 2020

[bitchstewie]

Really interesting read

THE FASTEST WAY TO LOSE MONEY IN 2020

[dingg]

bhstewie said:

Really interesting read

THE FASTEST WAY TO LOSE MONEY IN 2020

Good post, makes me wonder how those that were saying that they had came out of the market just when the virus struck have actually done, are they still out, when did they get back in, etc etc.

I almost bottled it on one pension fund I held in March, just as well I held on painful though it was at the time.

[thekingisdead]

Very good read.
2020 was my first big bit of market turbulence as an ‘actively interested’ (not active) investor - thankfully ‘did nothing’ and carried on buying monthly.

[T6 vanman]

I believe the only answer to this is the reigning winner of 2019, 2018, 7, 6, 5, 4, 3 .....

Mrs T6

[98elise]

dingg said:

bhstewie said:

Really interesting read

THE FASTEST WAY TO LOSE MONEY IN 2020

Good post, makes me wonder how those that were saying that they had came out of the market just when the virus struck have actually done, are they still out, when did they get back in, etc etc.

I almost bottled it on one pension fund I held in March, just as well I held on painful though it was at the time.

I got out fairly early. I started selling in February before the virus had any real impact on our markets

https://www.pistonheads.com/gassing/topic.asp?h=0&...

I got back in few months ago. In October I was 50/50 cash vs stocks/funds

https://www.pistonheads.com/gassing/topic.asp?h=0&...

My current position is about 5% up on where I was pre Covid, I still have about 10% cash though.

Based on the FTSE100 over the same period I've done pretty well

Edited by 98elise on Sunday 20th December 14:28

[Mr Pointy]

98elise said:

Based on the FTSE100 over the same period I've done pretty well

But surely the real question is where would you be if you'd done nothing & just continued to hold the investments you had in January?

[98elise]

Mr Pointy said:

98elise said:

Based on the FTSE100 over the same period I've done pretty well

But surely the real question is where would you be if you'd done nothing & just continued to hold the investments you had in January?

Fair point, however in a normal year I wouldn't necessarily be holding the same funds and stocks for 9 months.

Looking at the values of a few funds I did hold, some we up as much as 10%, some only a few %, so on balance I'm probably in the same position I would have been if I just held.

This was mostly my pension and limiting potential losses was a priority especially so close to my retirement. In a similar situation I would still revert to cash until the crisis was over.

[Scootersp]

But this is just one cycle of a huge drop. It's still hindsight, stimulus packages, furlough support, government backed company loans etc etc have meant low insolvency.

Isn't the Japanese market an example of where historic highs haven't been seen since yet and where this analysis wouldn't be a good fit.

[DonkeyApple]

Scootersp said:

But this is just one cycle of a huge drop. It's still hindsight, stimulus packages, furlough support, government backed company loans etc etc have meant low insolvency.

Isn't the Japanese market an example of where historic highs haven't been seen since yet and where this analysis wouldn't be a good fit.

Yes but the drop is in the value of the currencies that the investments are measured in

This is the quirky thing about investment performance, it never considers the currency that it is measured against to be a variable asset itself. You really see this being turbocharged when investors talk about the gold price and ignore that what has often changed is the value or even perceived value of a currency not the gold asset itself. It's just one of those weird things and few every bother or need to get their head around.

However, if we say that our equity portfolio is up 5% on Dec 31st V Jan 1st then what are we actually saying? Are we saying that the valuenof the investments themselves have risen or that the value of the currency we are comparing it against has fallen?

2020 is another 2008 where demonstrably, in the majority of investment cases, the performance isn't actually positive because the rising values are a function of the falling value of global currencies. The true performance needs to be weighted against the amount of new currency created during the year, the rate of that creation arguably being shown by the rising value of equities since the April sell off.

Anyway, to answer the OPs question the fastest way to lose money in 2020 will be the same as it is every year: over trading and gross miss management of risk. It's always the same. Investors go hunting for the biggest return possible and end up trading in and out, throwing immense performance away in spreads, fees and bad timing while
Simultaneously ignoring risk, only focusing on return.

[dingg]

I stayed fully invested, pension fund, up 14.9% since Jan 1st 2020, it's going to take a hit this week one would think but I'm happy with that....

Should say was approx 25% cash before the slump and now fully invested during March/April...

[p1stonhead]

fking OUCH

black line is me. And I got made redundant today

Edited by p1stonhead on Monday 21st December 09:56

[dingg]

anonymous said:

[redacted]

A bit of both I'd say and a bit of good luck thrown in...

I was only at 25% cash as my pension plan had that built into its risk profile as it came to my retirement age. Once it looked like we were at bottom and the fed were pumping money and Rishi said 'we will do what it takes' after announcement of furlough etc I felt confident to reinvest fully. Its worked so far....

The next 3 months may be a struggle, who knows for sure though?

[Harry Flashman]

98elise said:

dingg said:

bhstewie said:

Really interesting read

THE FASTEST WAY TO LOSE MONEY IN 2020

Good post, makes me wonder how those that were saying that they had came out of the market just when the virus struck have actually done, are they still out, when did they get back in, etc etc.

I almost bottled it on one pension fund I held in March, just as well I held on painful though it was at the time.

I got out fairly early. I started selling in February before the virus had any real impact on our markets

https://www.pistonheads.com/gassing/topic.asp?h=0&...

I got back in few months ago. In October I was 50/50 cash vs stocks/funds

https://www.pistonheads.com/gassing/topic.asp?h=0&...

My current position is about 5% up on where I was pre Covid, I still have about 10% cash though.

Based on the FTSE100 over the same period I've done pretty well

Edited by 98elise on Sunday 20th December 14:28

I'm quite a lot further up (ISA - I ignore the pension apart from macro fund choices reviewed occasionally) than most indeces, but failed to sell in the March crash. Instead, I bought heavily, but stocks I actually wanted rather than funds, stuff like Games Workshop, and Aveva (and I am glad I supped profit on the latter as it's in the doldrums right now), Netflix, and Amazon. I have had some failures (I'm lookig at you Meggit - I wrongly thought that the defence bit would compensate for the civil aviation bit - I was horribly wrong), but masked by some decent successes. I'm about 40% up on the year according to today's ISA readings, but that is flattered by big bets on GAW in the depths of the crisis and a heavy buy into Netflix and Amazon at the same time in March, and relentlessly buying dips on GAW in subsequent falls. Absent those stocks, I look to be around 20% up from 1 year ago. I have taken profit from all of them and am now not so reliant on them for growth.

This book is worth a read, by the way. I use the principles qute a lot, notably "sipping" profit and taking it to other trades. But the buld of my portfolio is index, monthly DCA, and left alone for the long-term. I actively trade about a third of what I own, and am careful to take profit regularly and put it to the long term pot if I make any money.

https://www.amazon.co.uk/Art-Execution-investors-m...


One major issue, raised in the Intelligent Money thread, is I need a platform that executes well. The delays on Hargreaves Lansdown are laughable, and are costing me money (today, in fact as I put an order in to exit my FTSE 100 tracker last night and it is still not done, as the maret is now down 3%. I don't expect HFT for retail investors like me, but HL is truly rubbish. Barclays not much better but at least allows some sophistication with orders (I use trailing stops for example). Anyone have any ideas for a decent, fast platform? Needs to be ISA for tax reasons - who needs to be doing CGT returns on regular trades??!

Edited by Harry Flashman on Monday 21st December 10:44

[Harry Flashman]

p1stonhead said:

fking OUCH

black line is me. And I got made redundant today

[/footnote]

Really sorry to hear that

[bitchstewie]

DonkeyApple said:

Anyway, to answer the OPs question the fastest way to lose money in 2020 will be the same as it is every year: over trading and gross miss management of risk. It's always the same. Investors go hunting for the biggest return possible and end up trading in and out, throwing immense performance away in spreads, fees and bad timing while
Simultaneously ignoring risk, only focusing on return.

Fingers crossed I've got both of those nailed.

I don't trade and I've tried very hard to know my appetite for volatility so I don't do daft things.

Buy suitable investments, hold them, don't panic, at least that's the plan.

[bmwmike]

DonkeyApple said:

Yes but the drop is in the value of the currencies that the investments are measured in

This is the quirky thing about investment performance, it never considers the currency that it is measured against to be a variable asset itself. You really see this being turbocharged when investors talk about the gold price and ignore that what has often changed is the value or even perceived value of a currency not the gold asset itself. It's just one of those weird things and few every bother or need to get their head around.

However, if we say that our equity portfolio is up 5% on Dec 31st V Jan 1st then what are we actually saying? Are we saying that the valuenof the investments themselves have risen or that the value of the currency we are comparing it against has fallen?

2020 is another 2008 where demonstrably, in the majority of investment cases, the performance isn't actually positive because the rising values are a function of the falling value of global currencies. The true performance needs to be weighted against the amount of new currency created during the year, the rate of that creation arguably being shown by the rising value of equities since the April sell off.

Anyway, to answer the OPs question the fastest way to lose money in 2020 will be the same as it is every year: over trading and gross miss management of risk. It's always the same. Investors go hunting for the biggest return possible and end up trading in and out, throwing immense performance away in spreads, fees and bad timing while
Simultaneously ignoring risk, only focusing on return.

Spot on. I always wondered that, why currency value is not considered. I have always held the view that buying equities is buying a chunknof future work effort and that work effort will be paid/delivered in future devalued currency. So stocks on average must go up over time because efficiencies improve, technology improves, currency devalues.

[ATM]

Harry Flashman said:

Anyone have any ideas for a decent, fast platform? Needs to be ISA for tax reasons - who needs to be doing CGT returns on regular trades??!

IG index

They do ISA wrappers. Execution is instant for me but I don't use orders. I just click click done.

You may have massive positions which could affect execution. But as far as I know IG index are just massive themselves and that's why I use them. Size matters. I reckon you'd need to billy big bks to even get near to stressing them with your position sizes.

[Harry Flashman]

Thanks! Happy to use HL and others for long term fund investing (and chop and change for cost reasons). Frankly I think I'm just going to use Vantage for this and use their own funds. It seems the cheapest way to do do index funds long term and I quite like their LifeStrategy Funds for global diversification, even if they are a bit US heavy).

But for equities trading I'd like something with both execution speed (important on a day like today) and sophistication (ability to set trailing stops, limit band buy orders etc). I'll look at IG.

[Gogoplata]

bhstewie said:

Really interesting read

THE FASTEST WAY TO LOSE MONEY IN 2020

Great post, thanks for posting that, very interesting.

Myself I did nothing. At the time I remember considering selling when things started going south, but reacted too slowly for it to be worth while. Then I considered buying more when it hit the bottom and the recovery started, but where was the bottom? And is that a dead cat bounce or the start of a recovery? As much as I wanted to be proactive I just stuck with time in the market over timing the market as anything else would be a pure gamble as far as I was concerned.

However I didn't commit to continue to invest in my S&S ISA as I usually do over the year due to not knowing if my job was safe and all the other concerns of the pandemic. I'll settle for this outcome though.

[madbadger]

Very interesting. Thanks for posting.

Validates my do nothing plan quite well, even though I was fairly sure I should have sold.