Investments Trade Log

[classical_Liberal]

@J+G
I invest much like a GB. I think a recession's a huge possibility. I do not expect the S&P to push new highs for quite some time (years?). Mostly though, I only have to worry about the mid to long term. Part of the beauty of Semi-RE, you don't really need any cashflow from investments. So if you want to go GB, and ease your way in, look at what asset class is the cheapest today, based on your educated opinion. Which one will likely yield you more return over the next five years based on today's prices? Sometimes that's cash equivalents. Start buying, slow but sure. Reevaluate as prices change and switch it up as needed. This is how I have treated my accumulation anyway. It gives me some sense of control over what I buy(ie not mindlessly buying at any price point), while over time, I accumulated assets for any economic environment. Obviously, I also have goal ranges for my allocation as well, I don't want to become too overweighted.

[ertyu]

Because I apparently never learn, I lined up GDX buy orders all the way down to 20. Now is at 26.5. A total of 2400 shares, unsure if I'm not buying too little. Holding this time - time horizon at least 2 years.

[thedollar]

@classical_Liberal

I've been planning to buy at S&P 2,600 as well. Seems today is our day.

[ertyu]

It will go below 2600. ES is already almost there and the US isn't even properly in deep shit yet.

[Lucky C]

-5% futures limit hit again.

To those planning to buy in today, I ask, how has the strategy of buying the first or second day of a bear market (especially starting at very high valuations) worked out historically?

From a long term value-based perspective it might make sense to buy some emerging markets or certain US stocks that have been oversold, but I would not touch a US-based index fund for long-term investing.

If there are some gains with a drop in volatility tomorrow (Friday) or Monday then maybe it will be the start of a short-term rally of 10% or so, but no reason to expect even a 10% rally would be a sign of the end of this bear market that just started.

As bad as RSI, fear/greed index, etc. have been, apparently a lot of retail investors have been buying all the way down. Today might be the start of everyone losing hope (hence the improving potential for a short term rally in the next week or two).

[IlliniDave]

I toggled my strategy yesterday and I've started to shift money from bonds back to stocks after about 3 years of the opposite. New money in retirement accounts will go ~70% stocks 30% bonds/stable. I sold a small amount of bonds yesterday and bought stocks, and intend to continue that on a regular basis.

In my nonretirement account I'm going to start buying stock funds again, but the majority will still go to bonds/cash since that will be the first bucket I tap starting as soon as next year.

Regarding Lucky C's question, no idea how it it's worked out historically. If one makes the assumption that sometime down the road stock prices will recover, buying today will put you 20-25% (maybe a little more) better off on the money in question than having ridden down from the peak. Buying today versus next week or next month, the outcome is a mystery. If we know in advance what day things will hit bottom and change course, jumping in with both feet that day represents the optimum. My plan is to just dribble a little bit in, especially after the RBDs (really bad days) to keep my AA from getting too out of whack and yes, I'll admit it, it feels to me like we are in the zone where market timing purchases will begin to pay off in medium-longer terms.

My tongue-in-cheek rule-of-thumb is a good day to buy is a day you check the market/your balances mid afternoon and feel like vomiting. A good day to sell is a day you check and are so elated you want to pat yourself on the back at your brilliance.

[thedollar]

@Lucky C

My strategy is to buy on the way down and hold everything long term.

What strategy are we comparing this to? Buying at and thereby trying to predict the bottom of a bear market? In my view that would be impossible.

[Bankai]

FTSE 100 is back to 2012 levels. I can see how this starts to look tempting - it wasn't much overvalued in the first place and assuming recovery to January prices within 2 years, that's 40% capital gains and 10% or more dividend on top. Tempting but not enough - the chart looks absolutely dreadful and I'd rather wait for s bottom to form.

[guitarplayer]

FTSE 100 is back to 2012 levels.

How likely it is you recon for FTSE 100 to fall back to 2009 levels?

[Seppia]

Lol s&p opens at -7%

[Bankai]

@guitarplayer: No idea. But it's possible - every 50% drop started as 20% correction. We're now 30% down and market is in free fall on high volume, ie everyone wants to sell. Also the news are going to only get worse in near future. Rate cuts and massive stimulus didn't help either. Id definitely wait for some signs of consolidation.

[guitarplayer]

It is quite exciting watching this. I hope the stimulus and rate cuts will slow things down a bit, so that we can accumulate more cash for discount shopping in the future.

I also wonder how will this whole mess affect the real estate in Scotland. We are still non-owners but recently put the first £8k in the 25% subsidised (cash) LISAs for-when-there-is-a-good-opportunity-to-snatch-a-cheap-1-bed.

Unlike you, we still own shares of 10 dogs of the FTSE (15th Feb 2020). They must be some 30-40% down at the moment!

[Seppia]

Bought some european stock index etf.
This is getting fun, I’ve been waiting for this for five years, I really hope it’s finally the right time.
If this drops another 30% I’ll be delighted.
Now there are already some great companies at fair prices

[ertyu]

@Seppia what ticker I don't have any euro area etfs and i need a ucits one

[Dream of Freedom]

Just took a nibble on APLE @8.66. Hotel REITs are at the epicenter of the coronavirus issue People won't stay home forever, though and prices are getting awfully cheap.

[Lucky C]

how has the strategy of buying the first or second day of a bear market (especially starting at very high valuations) worked out historically?

I ask because I consider it generally a bad idea to try and catch a falling knife, so I would suspect that buying into the market the day after a bear market starts would be premature. Maybe not a bad idea when valuations go from average to low, but certainly when valuations go from extremely high to very high.

I ran the numbers for buying the day after a bear market begins using S&P500 daily data starting in 1928, though only using closing prices. Sample size is only 10. The average drawdown from the day after the bear market begins to the maximum drawdown of that bear market is -24%. The average return 1 year later is 6%. This is all based on nominal prices and not total returns, so all inflation and dividends are ignored.

Then I added the CAPE for the first day you would be invested (closing price the day after crossing -20% point). There is clearly some correlation in drawdown and subsequent 1-year return vs. CAPE, though it is not very strong. R^2 = 0.23 for max DD and 0.18 for 1-year return.

If today is a -7% down day, CAPE will be about 22.4. Based on historical precedents and considering CAPE, expected drawdown this cycle is about -33% below today's level. Expected 1-year nominal return is slightly below 0%. Again this is only based on 10 historical bear markets but there is a clear pattern. The evidence is that we are not yet at a point where we should expect above-average returns or expect that we are near a bottom.

@thedollar I'm not critiquing a consistent dollar cost averaging type of strategy. Just posing the question of "why now?" if anyone is thinking of making a drastic move from cash to stocks on day 2 of the bear market.

[Lucky C]

P.S. there was 1 instance where the day after crossing below -20% was actually the bottom of that cycle! 10/22/57
Though CAPE was only about 13.3 then.

[thedollar]

@Lucky C Interesting data. But would you consider today the first day of a bear market?

I'm guesstimating that we are around 28% down from the top by now.

I'll bite - buying USD 15,000 worth of global index tracking.

[Seppia]

@Seppia what ticker I don't have any euro area etfs and i need a ucits one

Veur
Available in London, Amsterdam, Frankfurt, Zurich and Milan at a minimum. I buy it on Amsterdam as it has bigger volumes than the Milan one.

[Lucky C]

@thedollar I think we crossed -20% intraday yesterday but closed slightly above? So I was calling today the 2nd day of the bear market but it could be the first.

I wouldn't buy into the US now but emerging markets keep looking better from a long term & dividend perspective, even if there are huge interim drawdowns. VWO down 9% today! I'm going to buy but only a little bit because, again, falling knife.