Recent drop in stock market

Investing / Portfolios
22

Not sure if it helps, but this is my portfolio. https://app.parqet.com/p/6618f50a5ccfa5cbed0530dd

The stocks you can ignore, the ones not in USD anyway show the wrong number.

24

Buying is easy. Selling is difficult. And it should be learned if you ever intend to have any control over your positions.

I see most people here think that selling is permanent :slight_smile:

In fact, you can buy back a second later - after you sell. If you are with IB or any other fairly priced broker, the entire transaction both legs would cost you around 5 USD or so.
As for asking strangers about whether you should sell or buy:

“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”
― Warren Buffett

My advice is to learn some basics about macro events that have a major impact on stock:
inflation rates decisions, unemployment, GDP, CPI, Industrial prod, PPI, etc.
Here is a calendar that provides detailed view:

Learn also basics of technical analysis:

At that point you should have some confidence.

“Number one rule of Wall Street: Nobody - I don’t care if you’re Warren Buffett or Jimmy Buffett - Nobody knows if the stock’s going to go up, down, sideways, or in fucking circles, least of all stockbrokers. It’s all a Fugazzi.”
― The Wolf of Wall Street

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25

Hi

I understand the theory but I also understand the nervousness. I have gone through this myself couple of years back.

Theory -: stocks are long term investment, one should be okay to live through volatility and play the long game. It’s not easy to time the market so don’t bother trying.

Reality -: for new investors , it’s tough. They see stocks falling in front of their eyes and their life savings getting reduced. They think about following

  1. Let’s time the market and sell and buy again at lower price (this normally won’t have high chance of working, but who knows)
  2. Let’s just cut losses and have peace of mind (this is very individual on what peace of mind is)
  3. Let’s try to find a reason to not sell (needs a lot of research)

So if you relate to all I said above, I suggest following

for each of your position, ask yourself a question, would it be okay for you if it got reduced by further 20-30% because you believe in long term they will recover and it’s alright to wait? If the answer is NO, you should think about getting out.

After this review, you will end up with 2-3 positions. You can just hold them and watch what happens. You can choose to further add to them over coming months or just sit outside and wait while you gain confidence.

Just to share - only positions where I can say yes to question above in my portfolio are real broad index funds (either global or regional).

And remember - it’s okay to make mistakes. It’s okay to take risks. That’s the only way to learn. Everything else is theory.

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26

Don’t worry, I like this forum and tone and didn’t take anything offensive and opinions are always appreciated.
It’s just sometimes difficult to explain in words, especially in a foreign language. I know that my portfolio is more aggressive than most of what others here have. I’m aware about that and I accepted the risk, still do. I just think I have started with non VT at the wrong time and I should have bought the other VT already in August. But I can’t change that and I don’t regret it.
Really only talking about what I have bought lately.
And if I sell, think about a “better” split when buying again.

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27

One thing to always keep in mind is that stocks may never again be cheaper than they are today.
Another one, to balance it, of course, is that they could crash 50%+ tomorrow.

A good example is 1996. Stocks were highly valued, it was not that far before a bubble burst, people were publicly stating that stocks were not due for such gains as they had had until then: '96 stock market projections were widely off the mark

Yet, taking the S&P500 as a surrogate for the stock market as a whole, stocks have never been cheaper since, even on an inflation adjusted basis, even after the dotcom crash and even after the Great Recession: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=QlS8Byy8qMETFoiumufpa (scroll down to see the chart).

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28

Thanks again. It is ok for me to loose 20% or so, but it depends a little on the asset. iRobot for example, I knew it is a gamble. I lost that game and I would now just sell it to have it out of my portfolio. It is down by >50%. I don’t really care about that, same for my Nio stocks.

AVUV and AVDV I just bought last week, now I know that it was bad timing. Someone else more experienced probably wouldn’t have done this because of the geopolitical situation. And I think the split I made was not good and could rethink about that strategy if I sell something which I lately bought

The AVUV and AVDV by the way, I bought from the VOO which I sold last week, I bought VOO also in August last year. Luckily I sold VOO before it dropped as well, unfortunately it was only a small amount :slight_smile:

30

These two ETFs are well diversified and basically give exposure to small caps globally. They were created to give small cap value exposure to clients who like factor investing.

By buying these you basically placed a bet that small cap value factor will outperform global market weighted stock market (VT) and hence you increased your small cap value exposure.

There is nothing wrong with these ETFs but the challenge would be that small caps beat large caps in very long periods of time and that period can be very long and volatile. So you need to decide if you are willing to wait for a long term or you are better off with VT. That’s all.

And agreed - you should review the split of AVDV and AVUV and also their portion in your total portfolio (VT + AVUV + AVDV)

If you are interested, some comments from Bogle on factor investing and trying to time (not specifically small cap value but still I think it’s relevant)

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31

Maybe. Most likely, someone else more experienced would not take the geopolitical situation into too much account (expecially since it could turn either way, and if it is responsible for the tame drop, then a spike to the moon could also have happened depending on the news and you would have missed that one).

I think what would mostly differenciate a more experienced investor vs you right now is that the more experienced one would consider the current market fluctuations as run-of-the-mill-garden-variety-everyday-not-remarkable stock price fluctuations and anything happening to their stocks from last week as too short a time spawn to draw any conclusion out of it.

My understanding is that seasoned investors mostly become thicker skinned, not more accurate with their predictions.

Edit: Incidentally, my guess would be US inflation and FED rate expectations play a bigger role in current stocks behavior than the geopolitical situation (bar russian stocks), with earning calls influencing heavily individual stocks.

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32

Indeed all the financial news I saw tied the recent change on those.

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33

Which is ok :slight_smile:
Honestly, you can be right and I’m wrong. I am in that situation now and my brain keeps thinking about it. And yes, I would think the same regarding VT. Basically everything where I paid more (not only 1 CHF or so), I’m asking myself (and in this forum), if it makes sense to sell, wait and buy again after a war or something caused a drop below my entry price. It might be a stupid question or strategy though. A lot of people here are more experienced than I am and that’s why your comments are helpful and appreciated.

34

You don’t know if it was bad timing or not, nobody does. You think it was bad timing. I started investing in June 2021, that initial tranche took nearly 2 years to break even, but other subsequent tranches have done a hell of a lot better.

Single stocks are dangerous, a 100% portfolio in VT or equivalent is about as safe as it gets in 100% equity.

AVUV and AVDV are veeeery long plays, talking of selling them a week after buying them means you don’t really understand what they are and why they may be good.

Personal opinion: do nothing (it’s the best thing to do 99% of the time in the accumulation phase), ride it out, selling solidifies a loss, sitting on your hands does not.

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35

Thanks Wolverine. Yes, it is not only the Israel conflict, you are right. Not sure if I made it clear. I don’t really worry much and I can still sleep well :slight_smile: It is really more about optimizing, meaning making more money if selling when bought for a high price.
Maybe I can’t really explain it in a foreign language, but maybe you get my point. As an example, before the Ukraine war I sold my portfolio (Robo Advisory) and invested again after some time and made money, which is also a reason why I think about it now again. Sure, there was luck involved. Later I started with informing myself about ETFs and found this website and decided to do it by myself instead of using an active managed robo.

37

That‘s a completely wrong way to look at it.

Someone more experienced would have bought regardless of situation. You buy at a pre-set schedule when you have the money. Every time regardless. i.e. 20% of your salary every month.

And more “experienced” people are market timers, that statistically fail to time the market more often then not.

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38

Thanks a lot, I will check out the video. And yes, I should rethink about my current split, no matter if I sell or hold. Currently each of them is about 5% of my portfolio. I probably should get rid of them, also the XHB sector ETF and put this money into VT. I still like SMH (the european version) and SCHG though. 70% VT, 20 SCHG and 10% SMH maybe

Honestly, I sometimes don’t think too much and sometimea I make decisions that are bad and sometimes good :-), sometimes only because I’m bored.
From what I understood today is, that even when I lately bought and for a much higher price than the current price, it usually doesn’t make sense to sell, wait and buy again. But maybe it makes (more) sense, if thinking about adjusting the split and invest in only 3 ETFs instead of 6. Would that reason, combined with the drop of the prices of my main ETFs make more sense to you, to sell now?

39

I think I get your point but in investing, better is the dire enemy of good.

Being content with good enough is the path to investing success and financial gains.

You’ll never be right 100% of the time and you don’t have to. You just need to be right enough often enough, for which regular investing in broadly diversified cheap index funds is the surest way (not a sure way, it’s still risky, but more sure than the other ones out there).

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40

This, is very concerning. A portfolio is much like soap: the more you fiddle with it, the less of it you have. Fees are there at each transaction, if you make too many of them, even being successful will have a hard time overcoming the drag.

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41

Thanks, I guess I will do so (do nothing). Except of what I just bought AVUV, AVDV and XHB. I will think about these and probably sell, but not rebuy because it is cheaper now but to optimize my portfolio and put the money into VT, SCHG and SMH. What I would sell and transfer is about 15% of my portfolio.

42

Got it, I will do so (do nothing). Except of what I just bought AVUV, AVDV and XHB. I will think about these and probably sell, but not rebuy because it is cheaper now but to optimize my portfolio and put the money into VT, SCHG and SMH. What I would sell and transfer is about 15% of my portfolio. The reason would not be to fix a “mistake” because of timing. And then I should keep my fingers in my pocket before buying additional ETFs.
I learned a lot today, thanks.

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43

You are right, I can’t say anything else :slight_smile:
Thank you

44

Thanks to all the users who told me their opinion and experience today.

Most probably I will get rid of:
AVDV
AVUV
Tomorrow, after I read again your comments and thought about it. I bought them last week and I think it was not the best choice for me. That’s about 8.x% of my portfolio. Instead of buying now at a cheaper price, I learned to not do so and instead I will buy VT for these 8k.

Also I will get rid of irobot and Nio stocks (-60% currently) and put that money also in VT. I was afraid about this 6 months holding rule that’s why I didn’t sell it earlier, now I think it is ok to do so.

SCHG and SMH I keep in addition to VT for now. I think they are good choices, just need to think about the split, but for now I will not touch them.

After this is done, I promise to not buy other ETFs again :wink:

edit: Sorry I forgot that I also hold IBIT Spot ETF, but I know it is gambling and it is fine for me