Anyone go ALL IN at the depths of a crash?

[StockyGuy]

Reality is most of us don't have a nice bundle of cash gathering cobwebs (ie earning pathetic bank interest) ready to go when one of the big crashes or bear markets occurs.

I'm talking 1987 crash, 2000 crash and 2007-2009 crisis, in particular.

In the event, I suppose you'd go for index ETFs or stocks like BHP and the big four banks.

When the GFC hit I simply had insufficient cash to take advantage of the discounts.

I'm wondering if I should stay entirely out of stocks and save my pennies, until the next big crash occurs.

Anyone succeed or fail wildly adopting this approach? Failure would certainly be possible where you used leverage and underestimated the length of the downturn, or where you bought stock in a business that went under.

 

[Indoril]

Trying to catch the bottom of anything from a daily swing to a market "crash" is near impossible. During the 2008 crash, how many people do you think thought they were getting a bargain before the prices kept going lower and lower and lower...

 

[tech/a]

Buy high and sell higher.
Easier!

 

[sptrawler]

The problem is a crash usually follows a strong bull run, getting out before the fat lady sings isn't easy.
I remember at work when the GFC hit, a mate had sold out only months prior, he jumped back in when it plateaued, we thought he was lucky.
Then it really tanked.lol

 

[StockyGuy]

Buy high and sell higher.
Easier!

Mr tech/a, having read a fair # of your posts I humbly say I simply am not in your league. Not only in knowledge/skill, but also, I think, capitalisation. You may be able to consistently do that; I simply can't.

But generally I agree with doubtfulness of the "all in after crash" plan - a lot of things have to align for it to work.

You need to be kind of in-between - wealth-wise. The seriously wealthy probably wouldn't like to have their money at the mercy of a possibly many years-long bear market. OTOH, you need to be wealthy/comfortable enough that you can put at least 10s of ks in and not be desperate for it. (There's little benefit putting very small amounts in to strategies designed to benefit from very broad long term trends.) You also need to have the cash ready to go at the time. Basically you gotta be debt-free and not too close to retirement.

Indoril, those people you mentioned did not factor in how long a bear market can last. This is not a get rich quick scheme.

sptrawler, the strategy I mention is probably more for non-traders who are NOT otherwise in stocks. When the govt is giving out cheques and dodgy pink batts perhaps it's time to buy index ETFs, and cultivate patience.

But yeah this is all much easier said than done. Chances are you wont buy quite at the bottom (not that you need to) and will have to endure many years of disheartening stock prices.

 

[Smurf1976]

Outside of superannuation my first share investments were in 1999.

Yep, it ended in disaster but taught me a lot about market cycles, valuation, bubbles and so on.

Next time around I was selling heavily from the start of 2007 and was out when the GFC hit. Been there, seen this movie before and wasn't going to be caught again.

I missed the actual bottom but caught most of the past bull market. Not all but I'm better off than if I held continuously since before the GFC.

This time it seems I am early once again. I'm not out of stocks but I've certainly been reducing my holdings one stock at a time since March this year. The reason isn't about the ASX as a whole. Just a lack of value at the individual company level plus the extreme valuation of the US market will bring the bears out sooner or later. With central banks moving to tighten and the oil market tightening it's another re-run of the same movie. I've seen this one before.

I'm not into calling tops in markets but if someone held a gun to my head and demanded an answer then I'll say sometime in the first 5 months of 2018 for the major US indicies. No comment for the ASX but if the US starts going down then Australia is unlikely to be going up at that point.

I sure don't try and pick exact tops and bottoms but using weather as an analogy if it's 38 degrees outside then that's near enough to the top for me. Likewise if there's frost on the ground then that's near enough to the low.

 

[tech/a]

If you live in Alaska you’ll be permanently cold
If you live in Dubai you’ll be permanently
Hot

Find momentum and hop on it
Look at A2M

It’s way easier than waiting for a crash

 

[Indoril]

Indoril, those people you mentioned did not factor in how long a bear market can last. This is not a get rich quick scheme.

My point was only that how do you know when it's hit the bottom and ready to buy in again?
Look at sptrawlers comment about what happened to his friend. It's probably a similar story to many.

 

[zac]

The problem is a crash usually follows a strong bull run, getting out before the fat lady sings isn't easy.
I remember at work when the GFC hit, a mate had sold out only months prior, he jumped back in when it plateaued, we thought he was lucky.
Then it really tanked.lol

It's very hard to pick a market bottom (or top) with any degree of accuracy.
I've switched gears in trading where I used to be a 'value investor' through FA and while that's a very good way to invest I've been thrown too many curve balls.
So now I do FA on Global Macroeconomics and being a contrarian investor.

So my question is has anyone been relatively successful or at least had confidence through studying the market conditions at the time? I've been in the markets post GFC so am wary that any success could purely be attributed to the sustained bull run (despite what media says).

 

[tech/a]

So my question is has anyone been relatively successful or at least had confidence through studying the market conditions at the time? I've been in the markets post GFC so am wary that any success could purely be attributed to the sustained bull run (despite what media says).

And whats wrong with that.
If you cant profit in a bull market then you'll never profit in any market.

Go where the momentum is in your direction and go there often!!

 

[zac]

And whats wrong with that.
If you cant profit in a bull market then you'll never profit in any market.

Go where the momentum is in your direction and go there often!!

No nothing wrong at all, market historically is heading up 70% of the time. I agree with "the trend is your friend"
Maybe my point hasn't come across well in words.

A point in this thread was made that someone thought they were buying low but the market crashed lower so I was wondering if anyone was able to read the market with some confidence to get an appreciation of likely moves or turning points. I understand no one can predict a top or bottom but can make an appreciable assessment.

 

[tech/a]

Search a thread I posted a long time ago.

Picking tops and Bottoms.

I understand no one can predict a top or bottom but can make an appreciable assessment.

YES

 

[traderxxx]

interesting thread
yes i probably would go all in, or nearly all,

but before that I have just finished the process of getting all out since the market open this morning.

 

[tech/a]

So this is your top or close enough to it?

 

[traderxxx]

yes hopefully the top, but, as you said close enough to it,, is good enough, have picked today though.
so we will (c)
already missed selling spi in the 20,s twice, monitoring a new calc for the spi
at 5929 so hopefully it will have a go for that.

 

[StockyGuy]

Hmmm IF the US stock market crashed in the near-term, and then consequently ours did, RBA basically have nowhere to lower interest rates further to generate growth. To lower our interest rate even more, in a "flight to security" scenario where people prefer USD to AUD ANYWAY, could make us be at US50 cents.

Then there's fact government has a serious budget deficit, unlike last time when K Rudd was at the helm. So don't expect additional stimulus measures.

Anyway, just paranoid musings...

 

[stevo2]

Picking bottoms only results in smelly fingers!

 

[Garpal Gumnut]

Depends on the crash, if a real crash.

All in.

I'm near all out now.

gg

 

[robby986]

I'm comfortably retired now, mainly because l kept buying shares after the crash, in the same way as before the 2008 crash. We lived on my wife's wages and I threw everything I earned into the market. I think you have to look at it as buying a share of a company for the dividends and the capital growth is the cream. It was very tough doing this as you are going against the crowd. I'd often buy $10000 worth of shares and they would immediately slump. I relied on years of experience and reading about the long term trajectory of shares to keep myself on track. It was a frightening time to buy. And buy. And buy, and lose money, and lose yet more money on paper. I was in my sixties so I didn't relish the prospect of going broke and having to work until I dropped. The market started to turn around 2012 and in a very short time We were made very wealthy on paper by people who were now prepared to pay a lot more than what I paid for the shares we owned. I still wonder at this! I retired in 2013 after being made redundant. The cash settlement from the redundancy was invested in shares. I have sold houses and invested them in shares. We now live very well off the dividends we received. Investment is now my full time occupation. The companies I was invested with paid healthy dividends throughout the panic yet many people were selling at less than half price for the same share.I still buy shares for the long term. Generally I buy stocks that have demonstrated at least five years of steady income and are cheap P/E compared to the index. I concentrate on the dividends I receive. I generally try to return 6% before franking credits. I've, moved away from direct share ownership to a more index/lic fund bias for diversification and easier management. My top holding is with IHD- my other holdings are ARG, CDM, NSC,TOT,VAS,DUI, WBC. 80 odd percent of our wealth is in shares and 20% is in cash. I recently took a profit selling down DUI and a large holding in VEU as they had increased in value and I wanted to take a profit. As I have an SMSF in retirement I don't pay CGT. if I was holding them outside the SMSF I would not have sold them. I would prefer to keep them for the dividends. My advice is to stop trying to pick the bottom or the top. Those I know who have tried have failed or have been lucky. The WBC shares I bought recently, just before they went ex dividend. They pay around 6% plus franking credits. I looked at the graphs and they have been hammered because of the royal commission. Everyone has sold them down. I figured they would drop after they went ex dividend and they would go up and I would sell them to someone else for a profit. I have too much long term exposure to banks. Looks like I'll be holding on longer than expected as they are still sinking. Hopefully I will be compensated by a nice income stream in the meantime. Who knows? Not me. This is a tough mental game but if you keep buying regularly over time and don't do what everyone else does in the panic of a crash you will prosper. Unfortunately you will only know if you can do this when the crash is on. Good luck to you.

 

[Darc Knight]

Depends on the crash, if a real crash.

All in.

I'm near all out now.

gg

Posted 19 March. Interestingly the ASX 300 took a drive right after this post, then regained all those losses plus some.
Everytime I hear someone out or getting out I think about jumping too.