A Rare Week - when you don't want to be out of the market

[Jon39]

There has always been a difference of opinion amongst investors, about whether to buy and hold long-term, or trade the market (buy at share price lows, then sell after the price has risen).

When I first began investing in equities, I did start by trading, but eventually changed strategies to long-term holding.
It has worked well for me and I do like the aspect of not having continually make investment decisions (work). I lend my money and then expect the management of the businesses to make (hopefully good) decisions.

This year we have witnessed circumstances, which none of us have ever experienced before. On the 20th March the market (FTSE All-Share Index) was down 32·39% year to date. That decline took place during just four weeks. I would not blame equity traders, if they had sold everything by then.
Long-termers however would be staying in for the (bumpy) ride.

Following all stock market crashes, there have always been unforeseen sudden market rises. Whether such rises will hold, obviously cannot be known.
There is a saying, that you can lose more money by being 'out of the market'.
This week has been one of those very rare occasions, where a really significant unexpected rise occurred.
Being out of the market would not have been ideal for investors.


Market
Weekly increase = + 7·02%
Year to date ...... = -15·16% (an improvement from -20·73% last week)

Own Fund
Weekly increase = + 9·64%
Year to date ...... = -12·99%

This year so many companies have either reduced, or stopped payment of dividends completely. Over the long-term, dividends received can represent a surprisingly significant proportion of overall returns. I have been very fortunate with my holdings, because the reduction in total dividends (year to date) has only been 14·37%. Having holdings in difficult sectors though, could have resulted in a complete wipe-out of investment income from April onwards.

Hopefully long-termers should have had a successful week simply riding the market, but what has been the experience of in-out equity traders, both this year and this week?

[2 sMoKiN bArReLs]

It's all the luck of the draw really.

Some years ago I realised I didn't have any stocks that began with O. I bought Optare & the next day they announced a takeover which bumped up the price significantly.

[bogie]

Yes, been positive in recent week(s) as im a long term Shell holder and kept buying on the way down at £9, 10 and they have recovered a bit, still paying decent div.

My other individual shares holdings are up like AFX (foreign exchange business) getting back to where they were pre-C19

The funds my pension/ISA are in both +15%

So all good, I continue paying my usual in each month throughout the crisis, see it as good time to be buy shares/funds "cheap" and when the world gets back to normal eventually will have made some good gains.

[troika]

bogie said:

So all good, I continue paying my usual in each month throughout the crisis, see it as good time to be buy shares/funds "cheap" and when the world gets back to normal eventually will have made some good gains.

However, global equity markets are at all time highs. Covid hit when the markets were at the top of a cycle. Now they are even higher and Covid has a long long way to play out. You could argue there is plenty of trouble brewing...

[Aiminghigh123]

Monday late morning to Friday has been crazy. So glad I stayed in Airlines and travel.

This week gained 27%.

Taken some profit out but still in a lot.

5% up now with 10% cash now being held.

[bogie]

troika said:

bogie said:

So all good, I continue paying my usual in each month throughout the crisis, see it as good time to be buy shares/funds "cheap" and when the world gets back to normal eventually will have made some good gains.

However, global equity markets are at all time highs. Covid hit when the markets were at the top of a cycle. Now they are even higher and Covid has a long long way to play out. You could argue there is plenty of trouble brewing...

Yeah, it goes back up again though...its just how long you wait for the recovery. Ive given up trying to time the market, lost too much money in the past 30 years messing about, I have rarely got timing right. Now I stay invested but keep some cash to take advantage of the big dips/crashes.

Following the last 2008 crash I made the best gains ever in the shortest time window (following 5 years). Housing and banking shares were through the floor, this time around its oil, travel, hospitality taking a hammering.

[Mazinbrum]

bogie said:

Yeah, it goes back up again though...its just how long you wait for the recovery. Ive given up trying to time the market, lost too much money in the past 30 years messing about, I have rarely got timing right. Now I stay invested but keep some cash to take advantage of the big dips/crashes.

Following the last 2008 crash I made the best gains ever in the shortest time window (following 5 years). Housing and banking shares were through the floor, this time around its oil, travel, hospitality taking a hammering.

+1. It’s a shame it takes us years/decades to see this big picture. My son sold his Vanguard funds in March despite me trying to convince him not to.

Edited by Mazinbrum on Saturday 14th November 22:16

[Jon39]

bogie said:

..... as I'm a long term Shell holder ...... , still paying decent div.
The funds my pension/ISA are in both +15%

Not sure 'decent' is quite the right word, bogie.
Judging by the amount of road traffic we see now, at least there are still some customers for oil, so grateful that any dividend at all is possible.
The three payments since March are, 1st Qtr down 66%, 2nd Qtr down 66%, and 3rd Qtr, payable on 16th December, is down 65%.
Until the crisis this year, I understand Shell have not cut or reduced their dividend, since the Second World War. A tremendous record.

You mention funds +15%.
Is that your performance for this year to date? An exceptional result, when the market average has fallen 15·16%.
You certainly cannot be holding the hospitality, airlines or travel sectors.

[anonymous-user]

Yup, that's a good trick to be +15% in 2020.

My own path has been down 20% and now back a tad above where I started. I'm not expecting the next few weeks/months to go particularly well so am keeping my head down at the moment.

[bogie]

Jon39 said:

bogie said:

..... as I'm a long term Shell holder ...... , still paying decent div.
The funds my pension/ISA are in both +15%

Not sure 'decent' is quite the right word, bogie.
Judging by the amount of road traffic we see now, at least there are still some customers for oil, so grateful that any dividend at all is possible.
The three payments since March are, 1st Qtr down 66%, 2nd Qtr down 66%, and 3rd Qtr, payable on 16th December, is down 65%.
Until the crisis this year, I understand Shell have not cut or reduced their dividend, since the Second World War. A tremendous record.

You mention funds +15%.
Is that your performance for this year to date? An exceptional result, when the market average has fallen 15·16%.
You certainly cannot be holding the hospitality, airlines or travel sectors.

Ok I mean decent as in better than money sat in a bank account If you have been buying Shell at £9 or £10 a share then the dividend is OK.....if you bought in at £20 they perhaps not.

Year to date overall about 16% thanks to US market tech funds ...I only hold Shell in the FTSE100

Shell down 25% but offset by a big winner for the year, Arlo on Nasdaq +69%(bought in the crash at $2.90 when their market cap was less than cash they had in the bank....an insane market over reaction)

tech and telecoms has had a great year
https://www.boringmoney.co.uk/learn/articles/best-...

[VR99]

[/quote]

+1. It’s a shame it takes us years/decades to see this big picture. My son sold his Vanguard funds in March despite me trying to convince him not to.

[/quote]


I made this mistake too, threw the kitchen sink at my VLS 100 after the big drop in March ...then sold out most of it after the initial market recovery bounce and transferred proceeds to my cash LISA. I am in the process of transferring my Cash LISA to a S&S ISA...might aswell of just left the VLS 100 as it was....

[anonymous-user]

bogie said:

their market cap was less than cash they had in the bank....an insane market over reaction

I'm not sure that's a good indicator of an investment opportunity.

A company could easily be in that situation immediately before collapse - corporate insolvency being measured by,

• The cash-flow test: is the company able (and likely to remain able) to pay its debts as they fall due?
• The balance sheet test: is the value of the company's assets less than the amount of its liabilities (taking into account the likely future)?

[dingg]

Pension fund and sensible isas since 1st week January is up 12.5% at end of the week, luckily some was held in cash so was protected from some of the carnage in March, also about 50% was in sli global smaller companies fund,which has had a decent run lately, all now invested in a balance of IM funds.

Gambling fund is up and down like a wes drawers due to ovrr exposure to oil when the Saudis spat out the dummy and most recently due to covid stocks being punished by vaccine possibles

Edited by dingg on Sunday 15th November 15:43

Edited by dingg on Sunday 15th November 15:44

[bogie]

rockin said:

bogie said:

their market cap was less than cash they had in the bank....an insane market over reaction

I'm not sure that's a good indicator of an investment opportunity.

A company could easily be in that situation immediately before collapse - corporate insolvency being measured by,

• The cash-flow test: is the company able (and likely to remain able) to pay its debts as they fall due?
• The balance sheet test: is the value of the company's assets less than the amount of its liabilities (taking into account the likely future)?

That wasn't my sole reason. Arlo still have $200M to come from the deal they did with Verisure and are finally making the transition to service revenue vs just hardware sales. The stock price went down for no reason other than the C19 panic. I think it has a long way to go yet, hopefully back up past IPO price over the coming years.

Edited by bogie on Sunday 15th November 20:17