# When would you feel safe going back into the market?



## Tyler Durden (14 December 2011)

I think the general consensus right now, with all the things happening in Europe, rising unemployment in Australia, and nearing global recession, people are waiting on the sidelines and watching instead of participating in the market.

So if you *had to* guess, how long would it be until you decided to put more money into the share market?


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## sptrawler (14 December 2011)

The way I see it and I'm no expert just another punter, is select what shares you are interested in. 
Then research them and work out a desired entry point, if any of them enter your buy region start picking some up. You won't pick the bottom however if you concentrate on shares that have to be here in 20 years time, you won't go too wrong.
Same goes for property, we are in a period of adjustment and if property overshoots on the down side a buying opportunity may present.
We have ridden the crest of a credit wave for 20 years, it won't be sorted out quickly.
Research is the key, everything normally goes back to the long term average. Which is a reflection of average wages and average company earnings.IMO
So I guess there is no definetive time just buying opportunities.


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## LostMyShirt (18 December 2011)

Because I go in on stocks for roughly between a week and a month, I am happy to get back in at any time the 200 and Ords get to a nice stable level and jump in for a short term buy.

I will admit I am feeling a little bit shakey due to the reasons mentioned in the original post, so I try not to buy when market sentiment is down.

I set short targets so I am in and out in a short period of time. The criteria I set on a technical buy can be a little unreasonable at times, but that's just me. I go on about 80 percent technical 20 percent fundamental with any new events on the horizon.

I will say, that my long term interests are null. I have nothing in the market for the long term, because of the reasons mentioned in the OP exclusively. The time to get in the market for the long term can be taken at any time provided you are investing in a company whos exposure to such conflicts will be minimal. 

I'd say that there is a good chance of a market downturn, but when investing in the long term on a very strict set of criteria over the long term waiting years at a time, there is a good chance that the market will turn back as well. I don't believe there is any reason to believe the current crisis off-shore is going to result in a complete world collapse where we get sent back to the dark ages 

Forgive the long post - beer.


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## Tysonboss1 (18 December 2011)

I think if your an investor, and the market throws up an opportunity to buy a great business at a price that will ensure the returns over time are going to be very good it is a mistake to avoid it just because the market is a bit choppy,

Focus on knowing the values of businesses, and when you get a chance to buy indiviual shares at a price less than what a rational person would pay for the entire businesses, then buy some, if your really worried about flucuations they average in over time.


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## LostMyShirt (18 December 2011)

Tysonboss1 said:


> I think if your an investor, and the market throws up an opportunity to buy a great business at a price that will ensure the returns over time are going to be very good it is a mistake to avoid it just because the market is a bit choppy,
> 
> Focus on knowing the values of businesses, and when you get a chance to buy indiviual shares at a price less than what a rational person would pay for the entire businesses, then buy some, if your really worried about flucuations they average in over time.




The only thing that worries me about undertaking such a strategy against the market sentiment is that anything can happen the next day. At times like this, taking buys for the mid term, even thoguh a price may very well be a bargain, tomorrows woes can turn into your fantastic losses.

In the long term where you buy/hold and forget, I wouldn't be that worried as I said before, I don't think we are about to get thrown back into the stone age with a complete world collapse.


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## Gundini (18 December 2011)

Tyler Durden said:


> So if you *had to* guess, how long would it be until you decided to put more money into the share market?




How long is a piece of string?

For me it is not about a time frame, more when I think the market has returned to an uptrending market. It doesn't mean the world has solved all the problems, pretty sure they never will solve them, but more when Ben starts up the printing process for QE3 and start flooding the marketplace with ever devalued $$$'s...

When will that be? Don't really know, maybe sometime during 2012, maybe if DOW hits 9000, maybe if one of the PIIGS or FUKUS officially default, who knows for sure?

All I am waiting for at the minute is Gold @ 1400'S or Silver @ 20's and might start picking at a few other commodities shortly.

It has been a long wait but I think the patience will pay off as an investor. I am not a big fan of trading in a downtrending market, would rather go boating and fishing.


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## Ves (18 December 2011)

Gundini said:


> All I am waiting for at the minute is Gold @ 1400'S or Silver @ 20's and might start picking at a few other commodities shortly.




Wouldn't you be buying into a down-trend in both of those commodities at that level? With no income stream from each of them, what makes you so confident that you will receive capital growth? Sounds like speculation.


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## odds-on (18 December 2011)

Tyler Durden said:


> I think the general consensus right now, with all the things happening in Europe, rising unemployment in Australia, and nearing global recession, people are waiting on the sidelines and watching instead of participating in the market.
> 
> So if you *had to* guess, how long would it be until you decided to put more money into the share market?




If i had to guess i would say 5-7 years. My plan is to learn as much as i can about investing/gambling so come the next bull market i can make my fortune. Until then i will save and learn.

Cheers

Oddson


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## Chasero (18 December 2011)

Gundini said:


> How long is a piece of string?
> 
> For me it is not about a time frame, more when I think the market has returned to an uptrending market. It doesn't mean the world has solved all the problems, pretty sure they never will solve them, but more when Ben starts up the printing process for QE3 and start flooding the marketplace with ever devalued $$$'s...
> 
> ...




If gold hits 1400 long term trend line is broken.

Meaning you are 'picking a bottom' in the hope that it'll bounce.

Very risky.. (though potentially rewarding)


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## Gundini (19 December 2011)

Ves said:


> Wouldn't you be buying into a down-trend in both of those commodities at that level? With no income stream from each of them, what makes you so confident that you will receive capital growth? Sounds like speculation.




Haha, no, I don't see Gold or Silver in any downtrend, but in a long term bull market. Just would like to see some sort of base forming from this correction around these levels before they continue on their bullish way.



Chasero said:


> If gold hits 1400 long term trend line is broken.
> 
> Meaning you are 'picking a bottom' in the hope that it'll bounce.
> 
> Very risky.. (though potentially rewarding)




Charts are just that, I use them as a guide because most other people do. You can read into a chart anything you want, and everyone looks at different time frames that tell different stories.

I don't see alot of risk here. My opinion is Gold will find a base and continue to head north when the global markets are flooded with cash.

Is there anybody out there who honestly thinks QE3 will not occur in the next 12 months? Kick the ole can a bit further down the road? Can't see any other scenario myself.


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## Tysonboss1 (19 December 2011)

LostMyShirt said:


> The only thing that worries me about undertaking such a strategy against the market sentiment is that anything can happen the next day.




But if you have put the time and effort into developing a true understanding for what makes the business tick, and spent time considering how it will perform given the various possible outcomes ( not shareprice performance, actual business performance) and you have come to the conclusion that it will perform well, why worry about a 10% drop the next day.

Focus on what the business is going to do over time and forget about what the share price is doing, Because the share price movements are unknowable any way in the shorterm, all that you can know with share prices is that eventually they will either rise or fall back to a trading range near it's fair value.

All the troubles facing the global economy given time will pass, Evenutally they will be solved and the best businesses will come therough the other side having contiuned gernating earnings and will contiune to prosper, and those who continued investing and holding a mixed bag a wonderful businesses will do very well, 

In my opinion sitting trying to second guess the market, hitting refresh every 3 mins is a big waste of time and it takes you away from learning about businesses and the economy, 

Most of the posters in this forum would do better if the spent their day reading a great text on business and investment rather than clicking refresh.


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## LostMyShirt (19 December 2011)

Tysonboss1 said:


> But if you have put the time and effort into developing a true understanding for what makes the business tick, and spent time considering how it will perform given the various possible outcomes ( not shareprice performance, actual business performance) and you have come to the conclusion that it will perform well, why worry about a 10% drop the next day.
> 
> Focus on what the business is going to do over time and forget about what the share price is doing, Because the share price movements are unknowable any way in the shorterm, all that you can know with share prices is that eventually they will either rise or fall back to a trading range near it's fair value.
> 
> ...




Well that is all true, Tyson. I mst agree with you and mention that your reasoning is very sound. I will however mention that it goes against my current trading style of short-mid term investing which is reliant on T/A 80 percent and F/A 20 percent.

For the long term, I would say your reasoning to be A-1, and is something I am undertaking at this time, though have not found anywhere decent (though I have not looked all that much outside my current system) to park my money for the long term.

I have to give a large "LOL" to the "hitting refresh every 3 minutes" comment, because I do that all the time! Haha. You certainly have a point there.


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## Struzball (19 December 2011)

Interesting question...

When would I _feel_ safe?

Probably when there was 5 years of 20% per year gains when it looks like the good times will never end.
However as history tells us that's not the best time to enter the market long term.

When do I think will be a good time?  

When it resumes it's long term up trend, either at these levels in 10 years time, or when the allords is 25% lower this time next year.


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## Tysonboss1 (19 December 2011)

Struzball said:


> Interesting question...
> 
> When would I _feel_ safe?
> 
> ...




Yeah,

You hit on an important point there.

The vast majority of people make this mistake.

They see long runs of the stock market rising as meaning the stock market is a safe investment where they are sure to make money, right when it is perhaps hitting dangerously high levels and due for a correction.

and conversely, they see the period falling large falls and meaning the market is dangerous and a risky investment, right when companies are trading at the most attractive levels and will no doubt be offering above average returns in the following years.

An interesting fact is that most investors in managed funds actually under perform the long term average return of the fund, Because when the fund offers a bad year of two the pull out their funds, but after one or two years of solid returns they pile their funds in.


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## Klogg (6 January 2012)

I feel safe entering the market at any point (it's dependant on the company really), so long as I invest in a sound business that is 'recession proof' (basically, will survive a recession without too large a hit to its earnings) and isn't too highly leveraged.

On the market as a whole though, I'm a lot more confident putting money in now than I was a year ago...


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## Gundini (17 May 2012)

Might be time to drag this old chestnut back to the forum. 

On the bottom is a Gold chart up as well for a bit of fun. 

When do you feel safe going back into these markets?


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## Starcraftmazter (17 May 2012)

I haven't bought any stock since earlier this year, when Europe was starting to come into focus again and gold started heading down (I almost exclusively trade gold stocks).

All I do these days is trade indexes, and since it's just as easy to take a short position, the worries in Europe do not worry me so much as give me a great opportunity to make a lot of easy money when markets just drop, drop and drop.


I really don't know when it will be safe to get back in stocks, and I prefer not to be a pioneer in finding out


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## young-gun (18 May 2012)

Starcraftmazter said:


> I really don't know when it will be safe to get back in stocks, and I prefer not to be a pioneer in finding out




lol +1, I just wish I too had the knowledge and more so the confidence to start trading short. ill get there soon enough.


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## Aussiejeff (18 May 2012)

Gundini said:


> Might be time to drag this old chestnut back to the forum.
> 
> On the bottom is a Gold chart up as well for a bit of fun.
> 
> When do you feel safe going back into these markets?




If I'm not mistaken your chart of the XAO shows a broad head and shoulders pattern from mid 2009 up to now, with the trace about to drop off the RH shoulder. Note what happened between mid 2007-mid 2008 with the narrow head and shoulder pattern... erk.

Is it safe? 

My tip - look out beloooowwwww.....


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## StumpyPhantom (18 May 2012)

Aussiejeff said:


> If I'm not mistaken your chart of the XAO shows a broad head and shoulders pattern from mid 2009 up to now, with the trace about to drop off the RH shoulder. Note what happened between mid 2007-mid 2008 with the narrow head and shoulder pattern... erk.
> 
> Is it safe?
> 
> My tip - look out beloooowwwww.....




Yeah - I tend to agree - the new low won't be apparent until after it's climbed about 10% above it.

And given the US and China seems to be heading down, this might end up lower than March 2009.


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## young-gun (18 May 2012)

StumpyPhantom said:


> Yeah - I tend to agree - the new low won't be apparent until after it's climbed about 10% above it.
> 
> And given the US and China seems to be heading down, this might end up lower than March 2009.




The euro drama you would think should already be priced in. This sudden tank over the past week surely can't be due to this greece thing, it's old news imo, we all knew it was going to happen.  It was inevitable spain was sure to follow, as will most of the euro nations.

I'd say this is the US stimulus wearing off, just as it did last time. Bernanke will be due to announce QE3 within a month. 

And yes, much lower if it's allowed.


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## StumpyPhantom (18 May 2012)

young-gun said:


> The euro drama you would think should already be priced in. This sudden tank over the past week surely can't be due to this greece thing, it's old news imo, we all knew it was going to happen.  It was inevitable spain was sure to follow, as will most of the euro nations.
> 
> I'd say this is the US stimulus wearing off, just as it did last time. Bernanke will be due to announce QE3 within a month.
> 
> And yes, much lower if it's allowed.




I'm not sure you can price in the 'contagion effect' in the euro.  In GFC1, the contagion effect of the CDS-subprime phenomenon ended up freezing the movement of money, even if only temporarily, and a huge amount of economic activity came to a grinding halt.

Granted, the 'run on banks' appears a bit more finite, but the banks that go under will have multiplier effects given their debt linkages across the globe.  And most governments will be sitting on the sidelines this time around.

So priced in or not, it seems like 10% upside benefit vs 60% downside risk from this point.  If odds like these were offered at the races, I wouldn't be putting my money on a horse.


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## young-gun (18 May 2012)

StumpyPhantom said:


> I'm not sure you can price in the 'contagion effect' in the euro.  In GFC1, the contagion effect of the CDS-subprime phenomenon ended up freezing the movement of money, even if only temporarily, and a huge amount of economic activity came to a grinding halt.
> 
> Granted, the 'run on banks' appears a bit more finite, but the banks that go under will have multiplier effects given their debt linkages across the globe.  And most governments will be sitting on the sidelines this time around.
> 
> So priced in or not, it seems like 10% upside benefit vs 60% downside risk from this point.  If odds like these were offered at the races, I wouldn't be putting my money on a horse.




unless you could bet on them falling over and not finishing?

I read today that CBA think the fallout will be minimal to greece collapsing. Would be curious to know what banks around the globe have actually done in preparation for it, and if they believe they would be able to contain the spread or if it's out of their hands altogether.


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## Julia (18 May 2012)

young-gun said:


> The euro drama you would think should already be priced in.



Add in Mike Smith from ANZ's comments today:


> Eurozone breakup 'quite likely': ANZ's Smith
> May 16, 2012
> 
> * Read later
> ...



He followed this up by saying funding markets are freezing up.

Then you have the comments by Jacques Nasser of BHP suggesting the current government is making business conditions difficult and the announcement by whatever the Union is that they will have a week long strike on one of BHP's mines.

I don't believe the investing public has really grasped the reality of the Europe situation and therefore doubt it has already been priced in as you suggest.
I might be quite wrong.

The fear induced by the GFC has never really gone away so confidence is low.
I wouldn't be expecting any sort of bounce in the near future and was stopped out of my last holding today.

But then I'm always pessimistic.


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## So_Cynical (18 May 2012)

> When would you feel safe going back into the market?




I never left.

I've been "in the market" since mid 2007 and thru the ups and downs i have followed a simple strategy of selling shares for more than i paid for them...sometimes that takes days, sometimes weeks, often months and occasionally years.

My portfolio grown since 2009 has averaged around 25% PA...and i have achieved this largely (i believe) because i stayed "in the market" set goals and sold ONLY when appropriate.

But .. to each their own.


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## StumpyPhantom (18 May 2012)

So_Cynical said:


> I never left.
> 
> I've been "in the market" since mid 2007 and thru the ups and downs i have followed a simple strategy of selling shares for more than i paid for them...sometimes that takes days, sometimes weeks, often months and occasionally years.
> 
> ...




Simple definitely is best.  That's easier said that done, because it requires cold objectivity.  It's hard to sell when you're ahead (thinking the trend might be your friend) and probably even harder to sell when you're down.

I'm looking long and hard at LNC (68c) and DTL ($1.10) right now, despite more headwinds to come.

Anyone looking at anything else?


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## Muschu (18 May 2012)

So_Cynical said:


> I never left.
> 
> I've been "in the market" since mid 2007 and thru the ups and downs i have followed a simple strategy of selling shares for more than i paid for them...sometimes that takes days, sometimes weeks, often months and occasionally years.
> 
> ...




Yep..not for me SC.  What goes down must go up?  

Julia - if you care to explain - how do you set your stop losses?


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## ROE (18 May 2012)

it is always a safe time to move in the market if you understand the business and has reasonable confident of its prospect and the market sell it to you cheap ..

Value, Size and your position in a certain business is all that matters 

Use fear to your advantage, some value show up today in stocks I like, when Greece default it will be Bargain Galore ...


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## So_Cynical (19 May 2012)

ROE said:


> it is always a safe time to move in the market if you understand the business and has reasonable confident of its prospect and the market sell it to you cheap ..
> 
> Value, Size and your position in a certain business is all that matters
> 
> *Use fear to your advantage*, some value show up today in stocks I like, when Greece default it will be Bargain Galore ...




The traders often talk about having an edge .. fear is an edge as long as its you taking advantage of someone else's fear.

Today i was looking at my portfolio of 22 stocks thinking, what can i sell so that i can free up some cash to take advantage of this fear...and surprise surprise i have 5 stocks sitting within 10% of there 12 month highs, or all time highs...stocks that haven't really fallen much in the last 3 weeks, stocks still in substantial profit.

I'm thinking of selling big winners to buy other peoples losers, or at least manifestations of their fear....if manifestations is the right word. :dunno:


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## Julia (19 May 2012)

Muschu said:


> Julia - if you care to explain - how do you set your stop losses?




Rick, I've been in cash since soon after the start of the GFC with the exception of a very small holding (just 150 shares) in RIO which I left as an experiment with the buy and hold principle.  This was essentially to prove to myself that it was absolutely inferior to the trend following approach.

I knew I could only let it run if just a small $ amount was at stake, but thought I could do it regardless of what the market did.  Not so.  When my loss went through 10% that was it.  Sold.

Had I been more fully invested I'd absolutely not have allowed such a loss before getting out.


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## StumpyPhantom (19 May 2012)

+1

There's huge emotion involved in pressing "sell" to realiise a paper loss, esecially a large one.


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## Sean K (19 May 2012)

I'm waiting for confirmation the world doesn't end in Dec this year.


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## odds-on (19 May 2012)

So_Cynical said:


> The traders often talk about having an edge .. fear is an edge as long as its you taking advantage of someone else's fear:




Very good point. I think it is lost on most people though. As an investor you should find out what your advantage is and exploit it to maximise your returns. As for me, you win some, you lose some..... as long as the CAGR > 15%.

If there is a big crash, I sell my current holdings, buy a portfolio of a dozen stocks which have low debt, high ROC, recurring revenue etc. Then will not check my portfolio for a year!


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## odds-on (19 May 2012)

StumpyPhantom said:


> +1
> 
> There's huge emotion involved in pressing "sell" to realiise a paper loss, esecially a large one.




I actually find this easy after I read a book on trading. If you are wrong, you are wrong..............SELL!!!!!! The trick is before any purchase is to write down your sell criteria. 

- business performance
- timeframe
- another opportunity
- stop loss (if you use them)
- share price has rocketed above my valuation.


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## young-gun (19 May 2012)

StumpyPhantom said:


> +1
> 
> There's huge emotion involved in pressing "sell" to realiise a paper loss, esecially a large one.




anyone who is trading on such emotions shouldnt be trading in the market. trading requries a plan, including entry points, exit points, how long you intend to be in the trade for and so on and so forth. this then needs to be coupled with up-to-date info of the global economy, so you can make day to day informed decisions and can reassess your positions. the days of fear and greed should be long gone, but it would appear not.


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## Gundini (19 May 2012)

Tysonboss1 said:


> Focus on knowing the values of businesses, and when you get a chance to buy indiviual shares at a price less than what a rational person would pay for the entire businesses, then buy some.



 Excellent advise!



Gundini said:


> How long is a piece of string?
> 
> 
> All I am waiting for at the minute is Gold @ 1400'S or Silver @ 20's and might start picking at a few other commodities shortly.



 Still waiting...



So_Cynical said:


> I never left.
> 
> 
> My portfolio grown since 2009 has averaged around 25% PA...and i have achieved this largely (i believe) because i stayed "in the market" set goals and sold ONLY when appropriate.
> ...



 I have a lot of respect for this, well done!



ROE said:


> it is always a safe time to move in the market if you understand the business and has reasonable confident of its prospect and the market sell it to you cheap ..



 Fantastic advice...

Personally, I have never been completely out of the market during the last few years, haven't lost much, haven't made much.... But I have been waiting for these times. While I don't mind trading, I prefer uptrending markets and I think those markets are just around the corner in both Gold and Indexes. Patience is something gradually earned over a lifetime.


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## Ves (19 May 2012)

ROE said:


> it is always a safe time to move in the market if you understand the business and has reasonable confident of its prospect and the market sell it to you cheap ..



 I agree. I think much safer than if the market was heading north rapidly.


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## joea (19 May 2012)

ROE said:


> it is always a safe time to move in the market if you understand the business and has reasonable confident of its prospect and the market sell it to you cheap ..
> .




I think you need to think about that statement a little more. concentrate on cheap.
joea


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## young-gun (19 May 2012)

Julia said:


> Add in Mike Smith from ANZ's comments today:
> 
> He followed this up by saying funding markets are freezing up.
> 
> ...




i wouldn't label it pessimistic, realistic perhaps.


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## Julia (19 May 2012)

odds-on said:


> If there is a big crash, I sell my current holdings, buy a portfolio of a dozen stocks which have low debt, high ROC, recurring revenue etc. Then will not check my portfolio for a year!



Are you serious?  Regardless of what happens globally or locally, you will just ignore the effects on your p/f????



odds-on said:


> I actually find this easy after I read a book on trading. If you are wrong, you are wrong..............SELL!!!!!! The trick is before any purchase is to write down your sell criteria.
> 
> - business performance
> - timeframe
> ...



I might be misunderstanding your meaning here but do you mean you would use the above criteria to continually re-evaluate your original decision?  (That's how I'd interpret what you have said.)

If so, isn't that a direct contradiction of your first post above?


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## Muschu (19 May 2012)

Julia said:


> Rick, I've been in cash since soon after the start of the GFC with the exception of a very small holding (just 150 shares) in RIO which I left as an experiment with the buy and hold principle.  This was essentially to prove to myself that it was absolutely inferior to the trend following approach.
> 
> I knew I could only let it run if just a small $ amount was at stake, but thought I could do it regardless of what the market did.  Not so.  When my loss went through 10% that was it.  Sold.
> 
> Had I been more fully invested I'd absolutely not have allowed such a loss before getting out.




Thx Julia.  I also try to follow trends and this has kept me both in the market and out of it these past few years.
I'm OK with a loss as long as the win/loss ratio is around 50:50 BUT the % win needs to well exceed the % loss.
This has worked out OK and taken me essentially back to cash now. However I am very weary of the volatility and think your path has probably been an easier and, in hindsight, probably a better one.  So well done!
The thread topic is interesting.
I think a real question for many retirees is if they will ever have enough confidence to re-enter the market....  I feel that pressure myself.  
Anyway... We are very fortunate to live here and I have no complaints that are significant.
Regards
Rick


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## Julia (19 May 2012)

You could as easily say my path has been the laziest.
It has worked well for me.  I prefer to avoid the stress of the volatility.

I'd feel perhaps quite differently if I were still working and if the capital didn't have the responsibility of generating a reliable living, but even then I'd probably still opt for the security of the known return.


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## craft (19 May 2012)

Muschu said:


> The thread topic is interesting.
> I think a real question for many retirees is if they will ever have enough confidence to re-enter the market....  I feel that pressure myself.
> Rick




Rick, Julia whoever else is thinking about this.

2030 Indexed government bonds are yielding 1.095% as of Friday.

A  $60K income for 20 years at 1.095% requires a capital of over $1 Million even if you are prepared to consume the lot over that time frame. 

Capturing higher real yields at some stage is a really big question especially for those that don't have enough capital saved to offset the low yields.

It’s a tough predicament that many may face and societies move to greater individual responsibility via defined contribution Super hasn’t been accompanied by community education.


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## ROE (19 May 2012)

Julia said:


> Rick, I've been in cash since soon after the start of the GFC with the exception of a very small holding (just 150 shares) in RIO which I left as an experiment with the buy and hold principle.




In my opinion RIO is a bad stock to buy and hold long term.

1. It exposes to commodity cycle
2. It is a heavy capex business and required economy of scale
3. It expose to 1 type of commodity only and it's Iron Ore.
4. Low yield and will stay low yield because of number 2
5. During bad times it likely to tape on investors for more money again because of 2.


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## Julia (20 May 2012)

ROE, all good points.  Maybe, subconsciously I chose a stock for my buy and hold experiment which I knew would be less than successful due to all that you've just outlined.

I doubt that I'm any exception to the truism that we seek to confirm our existing bias.


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## stacks (20 May 2012)

Julia said:


> Rick, I've been in cash since soon after the start of the GFC with the exception of a very small holding (just 150 shares) in RIO which I left as an experiment with the buy and hold principle.  This was essentially to prove to myself that it was absolutely inferior to the trend following approach.
> 
> I knew I could only let it run if just a small $ amount was at stake, but thought I could do it regardless of what the market did.  Not so.  When my loss went through 10% that was it.  Sold.
> 
> Had I been more fully invested I'd absolutely not have allowed such a loss before getting out.




Hi Julia, you've been totally in cash since after the GFC? Thats quite a long time and quite a rally that has been missed. Although cash returns since soon after the start of the GFC may well be ahead of a lot of equity investors. And may be ahead of quite a few more soon...

Also quite a long time posting on a stock forum, when not owning stocks. I'm guessing its because you obviously have an interest in investing in stocks again? Do you plan on buying shares again given the volatility and uncertainty does not seem to have resolved itself?

What would you consider a signal that it might be a good time to buy again?


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## Muschu (20 May 2012)

Bit of a Catch 22 when bank TD rates are so poor.   Fortunately I continue to do part-time consulting work which helps significantly.


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## Julia (20 May 2012)

craft said:


> Rick, Julia whoever else is thinking about this.
> 
> 2030 Indexed government bonds are yielding 1.095% as of Friday.
> 
> A  $60K income for 20 years at 1.095% requires a capital of over $1 Million even if you are prepared to consume the lot over that time frame.



craft, I don't have and have no intention of acquiring government bonds.



> Capturing higher real yields at some stage is a really big question especially for those that don't have enough capital saved to offset the low yields.



I think you can pretty safely assume I've done all the calculations to ensure my income is considerably in excess of what I need when I make the decision to go to and remain in cash.  I have quite a chunk earning 8%, another at 7%, another at 6% and then separately enough to live on for about three years, even if there were no money coming in during that time, at call at 5.5% having just been dropped by ANZ from 6%.



> It’s a tough predicament that many may face and societies move to greater individual responsibility via defined contribution Super hasn’t been accompanied by community education.



Or perhaps community apathy?  There's plenty of education out there if you take the trouble to seek it out.  Lots to learn just on this forum.
Your general point is well made though.   Having a reasonable amount of capital allows for much more flexibility in decision making.




stacks said:


> Hi Julia, you've been totally in cash since after the GFC? Thats quite a long time and quite a rally that has been missed.



Hello stacks, yes the capacity to make more money during the rally is a point worth making.   I reconsidered a few times but have become, I think, addicted to that money just landing in the a/c without any thought or effort from me.

I know many people never see an end to their quest to make more and more money.
I had a target derived from some pretty careful calculations about cost of living over X years, inflation, life expectancy etc, and - whilst I absolutely protect that capital - I don't feel compelled to increase it any more than happens at present via left over income.  (Not sure if that is articulate enough to make sense?)



> Although cash returns since soon after the start of the GFC may well be ahead of a lot of equity investors. And may be ahead of quite a few more soon...



We'll see.  For people who haven't locked in rates they might find a greater drop in rates than we might have anticipated.




> Also quite a long time posting on a stock forum, when not owning stocks. I'm guessing its because you obviously have an interest in investing in stocks again? Do you plan on buying shares again given the volatility and uncertainty does not seem to have resolved itself?



Sure.  If there's a clear uptrend emerging.  Even then I'd never be completely invested in equities.  But if I could swap a 6% return from cash for more than that in yield plus franking credits plus some capital appreciation, yes of course I'd do it.

And I admit my continued presence on this forum is only partly to do with ongoing interest in things financial.  I like the political and general discussion also.




> What would you consider a signal that it might be a good time to buy again?



As above:  a clear uptrend.   I'm entirely happy not to attempt to capture the bottom (or the top for that matter).


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## Ves (20 May 2012)

Julia said:


> craft, I don't have and have no intention of acquiring government bonds.



 Julia,  I don't think craft was suggesting that you were.   He wanted you to think about the effect on your current term deposits of a falling long-term bond interest rate.


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## ROE (20 May 2012)

Hybrid bonds like Woolies provide very decent yield and I reckon as safe as government bonds unless you think Woolie goes belly up any time soon 

WOW,WES,TAH bonds all good yield I consider fairly safe bond.


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## StumpyPhantom (20 May 2012)

ROE said:


> Hybrid bonds like Woolies provide very decent yield and I reckon as safe as government bonds unless you think Woolie goes belly up any time soon
> 
> WOW,WES,TAH bonds all good yield I consider fairly safe bond.




This raises an interesting question.  Assume a bear market for the next 5 years and global hyper-inflation.  Where would you put your cash to work where it doesn't deflate like Mr Gaspo's balloons the day after a kid's party?

In these hybrid bonds?


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## young-gun (20 May 2012)

StumpyPhantom said:


> This raises an interesting question.  Assume a bear market for the next 5 years and global hyper-inflation.  Where would you put your cash to work where it doesn't deflate like Mr Gaspo's balloons the day after a kid's party?
> 
> In these hybrid bonds?




gold is your friend


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## Ves (20 May 2012)

young-gun said:


> gold is your friend



Can you fund your retirement with your portfolio in gold?


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## stacks (20 May 2012)

Julia said:


> Hello stacks, yes the capacity to make more money during the rally is a point worth making.   I reconsidered a few times but have become, I think, addicted to that money just landing in the a/c without any thought or effort from me.
> 
> I know many people never see an end to their quest to make more and more money.
> I had a target derived from some pretty careful calculations about cost of living over X years, inflation, life expectancy etc, and - whilst I absolutely protect that capital - I don't feel compelled to increase it any more than happens at present via left over income.  (Not sure if that is articulate enough to make sense?)
> ...



 Thanks for the reply Julia, I enjoy your posts. You seem to be in a good situation, Im sure lots of people would love to be able to live on cash interest. And if that provides what you need, then who needs the aggravation of todays volatility. Props to you.

There are however plenty of stocks with yields above 6%... but capital appreciation definitely doesnt have the same certainty as a trusty TD


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## Julia (20 May 2012)

Ves said:


> Julia,  I don't think craft was suggesting that you were.   He wanted you to think about the effect on your current term deposits of a falling long-term bond interest rate.



If anyone would like to tell me about a strategy where my capital is guaranteed, the income is almost twice what I need to live on, and I don't have to care what the market is doing for the medium term future, I'd be delighted to hear about it



stacks said:


> Thanks for the reply Julia, I enjoy your posts. You seem to be in a good situation, Im sure lots of people would love to be able to live on cash interest. And if that provides what you need, then who needs the aggravation of todays volatility. Props to you.



Stacks, you have it exactly when you raise 'the aggravation of today's volatility'.
I've been dead poor at one stage, struggled for many more years to attain a position of security, so feel justified at this stage in excusing myself from any unnecessary anxiety.


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## craft (20 May 2012)

Julia said:


> craft, I don't have and have no intention of acquiring government bonds.




Julia, 
The reason I mention the gov’t bonds is because it is an ‘Inflation adjusted’ return. If a person was buying a CPI adjusted annuity this rate would have a large bearing.




Julia said:


> I think you can pretty safely assume I've done all the calculations to ensure my income is considerably in excess of what I need when I make the decision to go to and remain in cash.  I have quite a chunk earning 8%, another at 7%, another at 6% and then separately enough to live on for about three years, even if there were no money coming in during that time, at call at 5.5% having just been dropped by ANZ from 6%.




I wasn’t refereeing to you personally. I’m sure you do have your situation in hand.
One important consideration I would mention is that ‘at call’ and Term deposits have reinvestment risk.  




Julia said:


> Or perhaps community apathy?  There's plenty of education out there if you take the trouble to seek it out.  Lots to learn just on this forum.
> Your general point is well made though.   Having a reasonable amount of capital allows for much more flexibility in decision making.



Average retirement payments are currently something in the order of $250,000 for men and $145,000 for women.  
I disagree that societies move to greater individual responsibility via defined contribution Super has been accompanied by adequate community education. 
I suspect that there will be people reading this forum and trying to educate themselves, feeling a touch overwhelmed at surviving on their payout for the next 20+ years. 

So why I wasn’t commenting on your situation I was hoping that you and others with experience and understanding would participate in a constructive discussion around safety vs return.


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## Smurf1976 (20 May 2012)

stacks said:


> What would you consider a signal that it might be a good time to buy again?



For the market as a whole - p/e somewhere around 7 (as it typically ends up at the end of a secular bear).

For individual stocks - depends absolutely on the company and whether your reason for buying is T/A or fundamentals.


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## ROE (20 May 2012)

young-gun said:


> gold is your friend




if you own an ounce of gold for eternity you still end up with an ounce of gold.

own a business or a house for eternity you end up with a lot more business and houses
and in between you can buy as much gold as you want with cash flow...

Gold is only good as a metal to store value it, it doesn't generate wealth and have very little utility, many people use it making bling bling stuff

I know Graham Turner turn millionaire with travel business
I know Rod Jones turn millionaire with education business
I know of Graham Wood turn millionaire with accomodation business
I know Rupert Murdoch turn Billionaire with news and cable tv
I know of Frank Lowy turn Billionaire with Westfield mall

I never heard or read anyone who buy a few bars old gold and becomes millionaire


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## Julia (20 May 2012)

craft said:


> Julia,
> The reason I mention the gov’t bonds is because it is an ‘Inflation adjusted’ return. If a person was buying a CPI adjusted annuity this rate would have a large bearing.



OK, thanks, craft.  



> I wasn’t refereeing to you personally. I’m sure you do have your situation in hand.
> One important consideration I would mention is that ‘at call’ and Term deposits have reinvestment risk.



Of course they do.  And that's why just a couple of days ago I moved a substantial amount that was at call when it dropped to 5.5% from 6% into term deposits in multiples of $50K.  That allows more flexibility if there's a need before the term ends to cash out some of these funds.

I can't tell what will happen in a couple of years' time or five years.  All I can do is assess what looks most likely given the present global and local situation and act accordingly.  If I'm wrong and the market suddenly takes off I feel no compulsion to stick with the present course.



> Average retirement payments are currently something in the order of $250,000 for men and $145,000 for women.



Yes, that's right, and this partly reflects the relatively short time Australia has had compulsory Super contributions, along with women's often interrupted employment history.
But imo it also reflects the apathy with which most people regard their super in that they don't take control of it.  This doesn't necessarily mean having a SMSF, but just that they need to understand how it's invested and what their options are.
Plus take a wide interest in what's happening in the world.




> I disagree that societies move to greater individual responsibility via defined contribution Super has been accompanied by adequate community education.
> I suspect that there will be people reading this forum and trying to educate themselves, feeling a touch overwhelmed at surviving on their payout for the next 20+ years.



OK, so what should they do about it?  Continue to feel overwhelmed and retreat from any effort to gain greater understanding about how to make money and retain it?
What I hear from such people over and over again is:  "Oh, Super is just a con.  I hate that I am forced to have money in it".  This shows a complete lack of understanding that Super is merely a tax advantaged vehicle in which to invest, not an investment of itself.   It's up to individuals to understand this and go on from there.



> So why I wasn’t commenting on your situation I was hoping that you and others with experience and understanding would participate in a constructive discussion around safety vs return.



 Always happy to so participate.  But an important factor is one's stage in life.
Someone in their 30's earning a decent income is going to be able to take a whole different approach from a retiree who is generating all income from their capital.

I read posts from people who are 'averaging down' and think, hell, you wouldn't be doing that if you actually had to generate a living from your capital.
So we all have different requirements for different strategies for different reasons.


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## xyzedarteerf (21 May 2012)

ROE said:


> if you own an ounce of gold for eternity you still end up with an ounce of gold.
> I never heard or read anyone who buy a few bars old gold and becomes millionaire




I have heard of many instant millionaires who are penniless in just under a year . a fool and his gold are soon parted.


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## Out Too Soon (13 June 2012)

You can never "feel safe" going back into the market BUT, a: I have some spare cash & the bank is giving me nothing for it.  b: We have had a bear market for a long while now c: The markets have recently revisited lows reached 6 months ago. a+b+c= now is as good a time as any to take a dip again (doing lots of research at present which I haven't bothered with for a Looong while)  ((Did you miss me? ))


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