Chronicles of fat years [2024-2027 Edition]

I would say it’s once again time to decide what is right level of volatility we can manage as an investor.

In other words - if such days (1st and 2nd august) make one feel bad, then 100% stocks allocation in „controllable portfolio“ is not right allocation.

I think that in theory, we all understand that these drawdowns are part of the reason why Equities have higher returns than Bonds. However in reality, drawdowns feel very bad to almost everyone.

Such days would always push investors to make a move. And most of the times it would be a wrong move.

I read somewhere in JP Morgan’s article that even though average returns of stock markets were 10%, average return of average investor was 2.9% because average investor doesn’t stick to the strategy. Time period 2001-2020.

Edit -: I am not saying anyone need to reduce their allocation to equities. I was talking more in general that asset allocation should be thought through deeply.

P.S -: I am currently more like <60% EQ because I am relatively new to investing and have been building portfolio slowly. I think maybe 60%-70% is max for me. At least that’s how I feel now. Maybe in few years I would be more bold :slight_smile:

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Do you include 2nd pillar in your portfolio ?

I’m nearly 100% in equity (except 2nd pillar), and I don’t think I would feel much better if my portfolio drops 3% instead of 5%, because I didn’t go all in.

It feels bad either way, even though in both cases I would still bet it recovers (that’s why I won’t sell now).

Of course if it affects someone very much psychologically this is not the way to go. For me however, talking to others & ocassionally consulting this thread & read posts of likeminded is medicine enough to keep my sanity. :sweat_smile:

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At this moment in time, with 10+ years to my kids being adults and ideally out of higher education my only two feelings are:

  1. frustration that I don’t have much cash to plug, counterbalanced by feeling confident that making a plan and sticking to it was absolutely the right thing to do
  2. intense need to keep and remain being good at my job, which allows me to continue buying

X) optimism because of the first two feelings and that I can stomach a 11% drop in two weeks
Y) seeing once more that humans are headless chickens, devoid of any control (including of their bowels), seeing people talk selling equities and going into fixed income NOW - that’s lack of planning/self awareness.

Of course everyone’s mileage can and does vary.

Edit: typos

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No. I am only referring to portfolio where I have asset allocation rights. I include 1E plan though which is also part of 2a but there I can decide myself what I want to invest in

I realise that I might have to increase my equity exposure overall. But since I am new investor, I need to learn the emotional game slowly. :slight_smile:

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No, but I have author’s blog in my RSS aggregator. Very enlightening, although very US-centered.

Not sure how much it is worth reading, though. The main idea can be formulated in few sentences, and he regularly does it in his blog.

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Not sure what this means??

Yes, volatility is very low and it feels like a strange market. On the one hand, there are signs that things are deteriorating in the economy. On the other hand, with a lot of fiscal headwinds, low interest rates and political uncertainty coming to be resolved after the election is over, it is hard to see how stocks would not continue to do very well over the next few months in spite of any economic headwinds.

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Ideally in times like these I’d want to buy, and buy more than usual - that’s what I did last year in the end of October, however right now I am committed to building up my cash reserves back to 3-4 months’ expenses, so it’s like I have o cash to plug into the market to take advantage of the 10-11% drop in VWRL.

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Wow what‘s causing this crash in the last 3 weeks? I lost like 7k lol.

Out of curiosity, did anybody buy something 3 weeks ago? :sweat_smile:

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I’m sure you know you didn’t lose anything :stuck_out_tongue:
It’s all fairy dust anyway :wink:

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Nothing happened… have a look at the End of Aug Index levels and then thinknof what you want to do.

Nop, you want to do nothing. If you want to buy, then earliest 3 days the daily declines stopped. Better after a months.

Reductions go in waves throughout the globe. US down drives Australia down, which drives US down. Things will ebb out somewhen and need 72 hours until the waves cease.

If you can, do nothing until large drops / vola cease for 3 days. Even better - wait for month end.

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Close to 3 weeks ago I bought:

  • 200 shares of PAX on July 10, book value -$216 today
  • 100 shares of ES on July 15, book value +$753 today
  • 62 shares of BTI on July 15, book value +$262.26 today

Just keep buying.™

The only thing that bothers me right now is that I have a large sum of cash becoming available at the end of next month. By then, the market will have rebounded.

So no Buying The Dip™

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Buy on margin, you will have the cash shortly, right?

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This Is Bait GIFs | Tenor

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I have a cash account at IBKR

Ah, they’ll upgrade it for you in a day or two. :ok_hand: