When do we reach the bottom of the dip? (2022-24 Edition)

[ThriftySquirrel]

@oslasho

assuming the money will be invested for the long run, i like to ask following questions to get closer to the best approach:

• how much (%) of your current net worth is it?
• how much (%) of your future net worth (fire#) is it?

Rough numbers:

• ~100k CHF in the bank (about 75k CHF now in savings account).
• ~20k invested in 3a with Finnpension. Red.
• ~10k invested in crypto (mostly BTC) Green.
• ~10k invested with Selma (since 2021) Red.
• ~2k invested with IBKR (started last month) -

Some notes. I am aware that the amount that I have in the bank is, let’s say, sub-optimal. I’m keeping a high liquidity because I might need them for a Real Estate deal in my home country. Nothing is lined up or even close, just something that me and my partner are semi actively looking into. I could invest them in IBKR and sell them if needed in 6months/1year but the way things are going it’s probably best to leave them in the bank, especially in CHF. It’s also not 100% needed, it would just decrease the amount that we would need to loan out, which given the current rates in the eurozone we want to minimise.

Selma is how I first invested, quite a bit in the red at this stage but such is the market. Haven’t really touched it since 2021. The plan is to use IBKR now. I could probably lump sum about 10/20k there + 1-2k per month. That’s is in line with what I said above.

The crypto investments I wouldn’t touch. I understand that it has a much higher % than it should in my portfolio but that’s just because where I started. If we look at what came out of my bank account it was actually a rather small amount.

@Wolverine

I’d say this is a very good time to actually experience what your risk tolerance is, so I’d invest the money you can afford to loose right now at your self-assessed target asset allocation.

The earlier the experiences are done, the bigger the expected returns of the knowledge gained and the lower their costs.

@logitacher

Not only that but the best day to invest was yesterday as statistically lump sum also wins against DCA. In the end, as mentioned before, the most important is your risk tolerance.

@Yanikuza

Just bought some monthly VT

It will go down again next week, but it’s fine. That’s mean I will buy more shares next month !

I understand the idea but I’m not sure if I fully agree. Disclaimer I’m still very much new to investing so I’m probably wrong on most things, but here are my thoughts.

I wouldn’t say I have the highest risk tolerance (hence the initial question) but also definitely not the lowest/low. From my side at least there’s a difference in trying to time the market by selling/buying somewhat frequently (which I’m not planning to do) vs choosing a time or times to enter the market which is basically what I am asking about.

In the same note I also find it easier to hold while the market is in a down trend than to jump in at said time, especially when it seems like it just will keep going that way (so not necessarily to buy the dip). I have kept what I had at Selma and kept buying in to 3a even though both were very much in the red almost from the start . From crypto due to luck in timing I was very much always in the green, even though how much varied, greatly considering the crashes it had. I first bought in 2017 so it has been quite a ride, but considering I was basically always green it wasn’t that bad tbh.

[Yanikuza]

@ThriftySquirrel

I understand the idea but I’m not sure if I fully agree. Disclaimer I’m still very much new to investing so I’m probably wrong on most things, but here are my thoughts.

I wouldn’t say I have the highest risk tolerance (hence the initial question) but also definitely not the lowest/low. From my side at least there’s a difference in trying to time the market by selling/buying somewhat frequently (which I’m not planning to do) vs choosing a time or times to enter the market which is basically what I am asking about.

To be transparent. I started investing with SELMA too. In April 2021, I decided to invest on my own by choosing one of the most popular ETFs and implementing a simple, passive strategy: invest X amount every month on day X regardless of the market situation. I also apply this strategy to my 3a and to crypto.

In 2021, I followed this plan to the letter, except for the 3a account where I lumped the entire amount on the first working day of 2021 (as a test).

Then in 2022, nothing went according to plan. Because of a difficult personal situation, I preferred to invest in myself and keep some money in a bank account. It was only at the end of the year that I took some of my funds out of the bank and put them into my 3a.

In 2023, I reimbursed myself the funds taken from the bank, and then I put my strategy back in place: DCA on IBKR, 3a, crypto. And I have to say that even if the market is fickle, I feel very free. I’m devoting more time to myself: sport, couple, friends, training, work.

If I didn’t stick to my plan, I’d be asking myself every day: what am I going to do with the money in the bank? Do I buy a car? A new PC? Do I lump sum now?

By automating my investments, I don’t ask myself this question any more, I take advantage of the market as it rises or falls and of the dividends that allow me to buy more and more.

I personally feel free by doing this and I can devote more time to the present moment.

Last info: IBKR = red, Crypto= red, 3a= green.

[Wolverine]

@ThriftySquirrel

I’m keeping a high liquidity because I might need them for a Real Estate deal in my home country.

Depending on how serious you are about finding an opportunity in that direction, that would be shorter term money for me, so savings account or very conservative investments, in the currency of the prospective loan/asset expenditure.

The alternative is to consider investing more aggressively an opportunity cost for that purchase and to either accept the potentially higher borrowing costs at the time you will make that real estate purchase and/or taking invested money out when it has lost some or possibly a huge chunk of value.

I’m dealing with a lesser investable amount than you do and had adopted the later positioning. I’ve gotten out of the market at the point where enduring further losses would have endangered a real estate deal I am interested in (though that happened just one month before closing).

@ThriftySquirrel

Disclaimer I’m still very much new to investing so I’m probably wrong on most things, but here are my thoughts.

One of the important things in investing, which I believe you understand, based on how you formulate your thoughts, is that you’ll be alone to deal with the consequences of your decisions: none of us will loose any money because of it. Being able to minimize regrets and live with the consequences of our own decisions is an important trait for a successful investing career. I would tend to trust myself over others when it comes to deciding whether I have enough information or not to feel confident, and to pursue the investments I want to pursue when I do feel confident enough, as long as failure won’t put me in a desperate spot where I wouldn’t see a possibility for a good outcome anymore.

This is kind of the point I was trying to make: no matter your decision, chances are you will make “mistakes” and experience losses, either direct (the market falls and you were invested) or indirect (you were standing on the sidelines and everybody else’s assets are skyrocketting as the market did rebounce). I find important to get enough exposure to that early enough so as to get a better feel of what my actual risk tolerance looks like as early as I can. That, to me, is worth loosing a chunk of my initial investment (which was less significant than yours is), going into the market with my eyes open on the fact that I am taking risks that may result in a loss of money, but a gain in experience.

You seem to have some exposure to that already and only you can assess how much learning about yourself you are already doing, what more learning being more invested could bring and what degree of losses, if any, that could be worth for you. You might be invested adequately relative to your goals, including the real estate one. If that is the case, then my comment doesn’t apply to you: you are aldready doing fine on that regard.

You have mentioned a partner in your message. I would also make sure you both are on the same page before making my final decision. They might have a more conservative or a more aggressive temperament than you do, that can impact your investing decisions, in particular whether the money you expect to use for real estate in a few years can be invested at all or should be kept conservatively.

[Idonthaveamustache]

Do you think that the US economy will recover to its state before covid?
I know they are demographically better positioned (boomers have enough children) than EU or China but I am seeing things like picture related more and more often:

[UACcorp]

@Idonthaveamustache

I am seeing things like picture related more and more often

It’s not black and white. CVS announced closure of what, 1000 stores? Mix of experimental or trashy locations, lack of inventory, true high shoplifting, going-out-of-business-location. When there is money to be made in retail, they would have stock and display. Maybe that neighborhoud is unsafe and was picked for clicks, out of the other which will be shutting down soon.

I expect US to continue leading long term, regardless which too-old-to-govern person is president. Is it declining from peak? Sure. Is anything else ready in next 10 years to take over leadership? Not so, IMHO.

Edit: Reminds me of a quote I read in FT comments recently - dont bet against he US economy and the swiss franc.

[ma0]

Political keyword alert: probably semitrash article.

If politics is involved, you might not find unbiased info …

[KSL]

Along with some alternatives.
Here are the 5 yr Sharpe Ratios.

Related to the topic: Suggest the read ‘Why Aren’t Stocks Down More?’

Weekend Reading - Saving On Dividend Taxes With S&P 500 ETFs (Understand Financial Markets Section)

[Dr.PI]

@Dr.PI

The recovery from the October minimum was incredibly rapid. +5.2% in 6 trading days, retracing 60% of the distance between October minimum and the maximum for 2023.

Huh. Looks like it was “the sharpest global rally in risk assets in 10 years outside of the Pfizer vaccine-news rally”.

[PhilMongoose]

A Christmas rally would not be surprising and I hope there is one!

[PhilMongoose]

2 days ago, I took a punt on trashed REITs. 2 trading days later:

It seems FOMO might be making a comeback.

[Your_Full_Name]

Well done!

I like ARE, too (and incidently bought my latest tranche on Nov 30 for $109.29 … … I don’t like bragging about it, though, as this will inevitably jinx the valuation since the market (timing) gods consequently punish anyone challenging them vocally).

I like ARE because

• they’re still (slightly, ~5%) growing their Adjusted Funds From Operations (AFFO)
• they’ve steadily grown their dividend since 2010 at a nice cliff (10% CAGR over 12 years, about 6% in the past 5 years), currently yielding just above 4%. Going forward I would expect them to grow the dividend at the rate they can grow AFFO, i.e. ~5%.
• they seemed just about fairly valued around $110
• they are a niche Office REIT that owns collaborative life science office space: them getting lumped in with the Office REIT GICS sub-industry helped with Mr. Market taking their valuation down because of the WFH-makes-office-space-superfluous narrative, while in practice the ARE tenants actually need to do most of their work in the office as that is where the lab equipment necessary for doing the work is located

I like neither HIW nor BXP, though. Even if they look undervalued both feature no (AFFO) growth and froze their dividend (admittedly probably a good idea given they can’t grow their funds from operations).
Perhaps a nice bet for the market (and/or Office REITs) bouncing back short term, but - for me at least - not a long term investment.

[PhilMongoose]

@Your_Full_Name

I like ARE, too (and incidently bought my latest tranche on Nov 30 for $109.29 … … I don’t like bragging about it, though, as this will inevitably jinx the valuation since the market (timing) gods consequently punish anyone challenging them vocally).

I dithered a bit too much on this. They are all about 20% up (or more) when I figured they were oversold. I have to agree with you on ARE and also the HIW/BXP scepticism.

I’m still don’t like buying REITs at this stage as I’d rather buy them in a post-capitulation market. But I figured that even though I feel the big crash is coming, there’s no way to really guarantee when that will come and I figured you could still earn money holding through the tough patch.

[Dr.PI]

https://seekingalpha.com/article/4654810-short-selling-indicators-point-to-higher-stock-prices-at-least-for-a-while

[Dr.PI]

https://seekingalpha.com/article/4657209-sp500-double-top-breakout-to-new-highs

[PhilMongoose]

While I agree that everything is set for stocks to run up further, we also know that sentiment can also turn on a dime. But as one commentator said previously “while the music keeps playing, we have to keep dancing”.

VIX is surprisingly low given the potential for big movements in either direction.

[PhilMongoose]

The bottom is in. Powell just spiked the punch bowl and started the after-party. I’ve been waiting years for the melt-up to happen and it feels like Powell just fired the starting gun for the mother-of-all melt-ups. I just wish I’d closed my SPY short before his speech!

[Dr.PI]

Now, children, let’s say all together: “Thank you, Santa Powell!”