@smartbeta
You can use this tool to do simulation on any asset class or a mix of asset classes including rebalancing, regular contributions etc.
https://www.portfoliovisualizer.com/backtest-portfolio
So why wouldnāt I sell now?
So we know that production in China is starting again. The number of infections have plateaued, factories are opening - cool.
But, we also know that we are at the very beginning of the exponential curve EVERYWHERE else (maybe expect Iran and Japan, indeedā¦). So, chances are that production and services are going to take a serious hit in western countries as well, in the next weeks (read this Coronavirus: Why You Must Act Now | by Tomas Pueyo | Medium). Just imagine hundreds of thousands infected in Europe, same in North America, government collapsing, companies going bankruptā¦ (I clearly need help, so I am stopping here 
).
So, my dear VT will drop some more.
Yes, selling because I think its gonna drop is market timing - āand we donāt to market timingā - ok, all good. But if you know that a war is coming, why not do it? Why not just sell?
Why not just try to minimize losses but risk to miss out on a possible win.
Consider this post as written by my shaking hands while thinking I might lose a lot more (or at least have my money locked up).
PS: a āstock failing support groupā is not such a bad idea. Anybody around Lausanne?
Rest assured, everybody and their dog also knows that this is only the beginning of the virus outbreak. Markets are forward looking, the virus is priced in. What was not priced in is the oil price war, which caused the high yield bond market in the us to collapse and disturbed most hedge fund strategies. This is going to need a bailout from the US and this is only a matter of time now.
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Market timing or no market timing is not a moral position! It is a matter of ability + luck.
Staying in is 1 decision
Getting out and getting back in later are 2 (or more) decisions.
If you think you can make 2 (or more) market timing decisions and do them fairly well, then why not? You live with the consequences. And why do it only on VT? You could try market timing with some money!
Staying in may test your patience. Getting out and back in will test your luck and ability.
Disclaimer: Everything I own is in equity markets. And high percentage in value, so Iāve been hit hard. I may lose more, but for now I stay in. I donāt have any need for that that money in next 5-10 year or even longer. If Iām in for a horror ride, let that be now at age 35. I would not be comfortable to be in similar position at age 50!
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Getting in and back out will test more than your luck and ability. It will also test your nerves, as you will always be watching market prices and constantly asking yourself if ānow is the right timeā. Which may very well turn out not to have been the right time.
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I have to admit that the US made better decisions than Switzerland to slow down the spreading. But the embargo will hit aviation industry quite hardā¦I expect a crisis like in 2008.
All companies that have a cashflow that depend on monthly income will have liquidity problems.
āWhen there is blood on the streets, buy property!ā Baron Rothschild
I just hope all of us be around to enjoy the profits!
- Nasdaq Futures Limit-Down, Crude Crashes After Trump Announces EU Travel Ban
- Trump Bans All Travel From Europe For 30 Days; Tom Hanks Infected; NBA Suspends Season: Live Updates
Good luck to all, hold on tight!
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I got plane tickets to USA for right after the 30-day ban. Wonder if it gets prolonged. Btw I guess all the affected passengers of the cancelled flights simply get their money back, right?
Tom Hanks, for real? ā¦ one Juventus player got it, now the team cant play in Champions League, quarantine. Anyway, maybe they will have to cancel CL eventually
They will cancel the EM, Olympics, Grand Slam events in tennisā¦it will be a disaster.
Another 4% drop in the S&P 500 futures. Another red day.
Watch the interviews with this guy: https://mobile.twitter.com/RaoulGMI (he runs real vision and is some former hedge fund dude). He suggested bonds a few months back etc.
Tldr: this will recession will look a lot like a depression
The actual quote is more dire:
"Buy when thereās blood in the streets, even if the blood is your own. "
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Why so? They have massive local transmission and are not testing adequately, spotting international travel wonāt help a lot. Theyāre not even doing it, only citizen and residents still allowed (and afaik no mandatory quarantine when they come back).
They need to slow down the spread locally, some states are reacting but federal action would help. The market reaction seems to point to taking the wrong approach.
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Shockingly, China is the only stock market safe haven in all of this.
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which would actually be amazing for every investor in his accumulation phase (especially those that just started out investing)
Crazy to think that they had it the worst, yet China is only down -3.5% YTD.
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And they showed the path to recovery, both when it comes to health and economy. This is why Iām not panicking.
Going back to topic of market timing. Thereās considerable body if research suggesting that people really suck at this. Thatās why much better results on average gives rebalancing to original allocations between bonds/cash and stocks. Additionally, to alleviate the pain, one can DCA, even though itās expected return is lower than lump sum investing.
In any case, my position is that I was too scared before to lump sum to my planned allocation (90%), so I was DCA slowly (last few months I stopped completely due to fear and procrastinating, and I started thinking if I need spare cash to buy a house in Poland). Now the crash came, so I speed up the investments. Instead of original once a month, Iām doing now once every two weeks until Iāll reach my planned allocation.
I stick to the wisdom of āRandom Walk Down Wall Streetā by Burton Malkiel in my strategy, even though Iām not always as disciplined as Iād like to be.
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