Anyone go ALL IN at the depths of a crash?

[systematic]

I never get to go all in after a crash (unfortunately), or at a peak (fortunately). I'm always all in.
Empirical evidence (related to my style of investing) convinces me that I'm probably better off all in over a long period of time.

 

[Cam019]

I guess what you are saying it that the dollar cost averaging that would have earned about 9% over that time would have earn less than 9% once you factor in inflation, that is true.

but inflation is still a curse on the trend follower, especially the one that got it wrong and earned 0% or worse lost 10% on average each year.

What I am saying is this - we should always consider real rates of return. You said that someone DCAing over time is guaranteed to succeed - earning a nominal annualised average return of 9%. But once you factor in inflation, that will be significantly less. Let's us use VAS for example, in 2010 VAS had a nominal return of -1.49%. Slightly negative, not terrible right? But when you factor in inflation, VAS's real rate of return for that year was -4.41%. Not insignificant. Now do that for every year in a 20 year period and tell me what the annualised average return is. Index investing and DCAing has become this religious like cult where apparently is has become impossible to outperform markets. Obviously I disagree and wish these people would factor in one of the biggest drags on performance returns - inflation, before they start espousing their zero effort nominal annualised average returns of 7-9%

100% agree. Inflation is a curse on all market participants regardless of strategy.

I am not here to argue which strategy

Whole heartedly agree. Futile exercise from both sides.

but you also have to admit that if you try you are opening yourself up to the possibility of a worse result.

True. Always the possibility of this.

After all for every $1 you beat the market average return by, some one else has to underperform by $1 to fund your over performance, that’s just simple math.

Also true.

If you recommend 100 people take up trend following rather than dollar cost averaging, some will win some will lose, but if you recommend 100 people take up dollar cost averaging the market, all 100 will get the market average return, which over time has proved to be a decent return.

This is probably true. But, if I am going to have to sit through a 40-50% drawdown, I want to be putting the odds in my favor that I will be getting more than a 7-9% nominal rate of return. Sitting and leaving my returns to chance without having some protection like a stop loss or trailing stop isn't my view of the world and does not suit my trading psychology.

 

[Value Collector]

What I am saying is this - we should always consider real rates of return. You said that someone DCAing over time is guaranteed to succeed - earning a nominal annualised average return of 9%. But once you factor in inflation, that will be significantly less. Let's us use VAS for example, in 2010 VAS had a nominal return of -1.49%. Slightly negative, not terrible right? But when you factor in inflation, VAS's real rate of return for that year was -4.41%. Not insignificant. Now do that for every year in a 20 year period and tell me what the annualised average return is. Index investing and DCAing has become this religious like cult where apparently is has become impossible to outperform markets. Obviously I disagree and wish these people would factor in one of the biggest drags on performance returns - inflation, before they start espousing their zero effort nominal annualised average returns of 7-9%

100% agree. Inflation is a curse on all market participants regardless of strategy.


Whole heartedly agree. Futile exercise from both sides.


True. Always the possibility of this.


Also true.


This is probably true. But, if I am going to have to sit through a 40-50% drawdown, I want to be putting the odds in my favor that I will be getting more than a 7-9% nominal rate of return. Sitting and leaving my returns to chance without having some protection like a stop loss or trailing stop isn't my view of the world and does not suit my trading psychology.

9% return over the time frame being discussed does best inflation, and in general holding shares is a god inflation hedge over time, because the assets owned and the products produced have natural inflation hedges.

but as I mentioned bringing up inflation is a red herring, because your trend follower is equally affected by inflation.

——————
inflation lowers the spending power of money, but the reason it does that is because prices rise over time.

Therefore, the prices of the products sold by the companies on the stock market rise over time, as to the capital value of the assets they own, this over time increases the shares prices, giving long term holders a natural inflation hedge.

for example when baked beans were $0.25 a can Woolworths probably made $0.01 profit selling it, but now that baked beans are $1.25 a can, they make $0.05 selling it.

So Woolworths and most other companies on the markets profits will increase in value to match inflation due to the revenue streams expanding with inflation, so there is a good chance that the long term holder will be protected from any inflation over time.

 

[Cam019]

9% return over the time frame being discussed does best inflation, and in general holding shares is a god inflation hedge over time, because the assets owned and the products produced have natural inflation hedges.

but as I mentioned bringing up inflation is a red herring, because your trend follower is equally affected by inflation.

——————
inflation lowers the spending power of money, but the reason it does that is because prices rise over time.

Therefore, the prices of the products sold by the companies on the stock market rise over time, as to the capital value of the assets they own, this over time increases the shares prices, giving long term holders a natural inflation hedge.

for example when baked beans were $0.25 a can Woolworths probably made $0.01 profit selling it, but now that baked beans are $1.25 a can, they make $0.05 selling it.

So Woolworths and most other companies on the markets profits will increase in value to match inflation due to the revenue streams expanding with inflation, so there is a good chance that the long term holder will be protected from any inflation over time.

I understand what you're saying, but, are you really trying to explain to me that just because someone is a buy and hold investor, that inflation adjusted returns don't apply to them? Because that is insane.

Yes, stocks are a hedge against inflation because historically they have outperformed over and above the rate of inflation. However, that doesn't mean you can just exclude inflation from the real return calculation for buy and hold investors. They are subject to it, just like the rest of us.

Here is something just for interests sake - annualised average real return for VAS over a 10 year period from 2010 - 2019: 0.93%

I think trend following can do better than that.

 

[Value Collector]

I understand what you're saying, but, are you really trying to explain to me that just because someone is a buy and hold investor, that inflation adjusted returns don't apply to them? Because that is insane.

No I didn’t say that at all, my original point was simple pointing out that dollar costing averaging into the example given would have improved the return from 2% to 9%.

you then brought up inflation, which in the example is a red herring because the 2% return is still going to be affected by inflation, dollar cost averaging doesn’t increase the inflation risk.

And all this is a red herring because inflation over that period was far below 9% anyway, so I don’t know why you are beating the dead horse about it, it has nothing to do with my original point.

 

[StockyGuy]

Praying for a crash these days, but no dice, yet.

Does anyone really do the tedium of moving around a decent sum between all those bank deals with arcane rules to squeeze the absolute most from a cash account? All saving interest rates (even on term deposits - which I'm not interested in) are uninspiring now, but the sometimes ok deals on comparison sites look a lot better than what I'm currently receiving.

But it's a lot of aggravation for things like intro rates that only last 3 months or deals that mean I gotta make certain # of transacs a month on their visa debit card and/or have linked transaction account. Could mean sometimes going with purely online neo banks or credit unions, any entity that guarantees up to government-backed threshold that has the best rate offer at the time.

Trying to squeeze the max rate out of savings products, hopping from account to account, seems like a special purgatory but might be wise if your pot is decent, to somewhat offset erosion by inflation (that may soon get crazy).

This is kind of an anti-trading post, so likely a bit against the grain. Everything safe just seems too expensive at the moment.

 

[over9k]

Praying for a crash these days, but no dice, yet.

Does anyone really do the tedium of moving around a decent sum between all those bank deals with arcane rules to squeeze the absolute most from a cash account? All saving interest rates (even on term deposits - which I'm not interested in) are uninspiring now, but the sometimes ok deals on comparison sites look a lot better than what I'm currently receiving.

But it's a lot of aggravation for things like intro rates that only last 3 months or deals that mean I gotta make certain # of transacs a month on their visa debit card and/or have linked transaction account. Could mean sometimes going with purely online neo banks or credit unions, any entity that guarantees up to government-backed threshold that has the best rate offer at the time.

Trying to squeeze the max rate out of savings products, hopping from account to account, seems like a special purgatory but might be wise if your pot is decent, to somewhat offset erosion by inflation (that may soon get crazy).

This is kind of an anti-trading post, so likely a bit against the grain. Everything safe just seems too expensive at the moment.

Why not go for a value stock like FMG or T?

 

[StockyGuy]

Why not go for a value stock like FMG or T?

Personally, because I have a plan to buy up certain stocks and certain ETFs in the next crash. Details will be discretionary based on what is hit harder than the average but can take the punch, in my view, and survive and thrive. Aiming for safe multibaggers over long term.

It's hard keeping powder dry as I watch S&P 500 marching toward 10,000, if only to spite me

 

[Value Collector]

Praying for a crash these days, but no dice, yet.

Does anyone really do the tedium of moving around a decent sum between all those bank deals with arcane rules to squeeze the absolute most from a cash account? All saving interest rates (even on term deposits - which I'm not interested in) are uninspiring now, but the sometimes ok deals on comparison sites look a lot better than what I'm currently receiving.

But it's a lot of aggravation for things like intro rates that only last 3 months or deals that mean I gotta make certain # of transacs a month on their visa debit card and/or have linked transaction account. Could mean sometimes going with purely online neo banks or credit unions, any entity that guarantees up to government-backed threshold that has the best rate offer at the time.

Trying to squeeze the max rate out of savings products, hopping from account to account, seems like a special purgatory but might be wise if your pot is decent, to somewhat offset erosion by inflation (that may soon get crazy).

This is kind of an anti-trading post, so likely a bit against the grain. Everything safe just seems too expensive at the moment.

Plenti is a good place to store some cash.

I also obviously use cash holding to offset interest on my home loan, which is has the added benefit of being a tax free return.

 

[StockyGuy]

Plenti is a good place to store some cash.

I also obviously use cash holding to offset interest on my home loan, which is has the added benefit of being a tax free return.

The P2P stuff is not gov guaranteed and not funds at call. Perish the thought, but in a true situation where something serious goes down, with genuine safe stock bargain implications, I would not wanna have money returned to me reliant on citizen borrowers repaying me like that.

Yeah you're right if you have a home loan then offset will be best, as you'll save more on that than you get from a bank account.

 

[Value Collector]

The P2P stuff is not gov guaranteed and not funds at call. Perish the thought, but in a true situation where something serious goes down, with genuine safe stock bargain implications, I would not wanna have money returned to me reliant on citizen borrowers repaying me like that.

Yeah you're right if you have a home loan then offset will be best, as you'll save more on that than you get from a bank account.

I think if you check out Plenti’s provisionfund, you will find it offers investors quite a lot of protection, and puts it in a better position than most alternatives such as corporate bonds etc.

But no it’s not government guaranteed, (neither are banks over certain limits), but then again things that are government guaranteed offer negative returns at the moment after tax and inflation, so you have to make a decision about earning a return or reducing risk.

I keep some cash at bank, but I hate having more cash in the bank than my offsets accounts can absorb, so I put some into Plenti.

 

[dyna]

The safest (?) interest rate in the world, pays less than 1.5 % [ 10yr US treasury bills ] Mr. Warren Buffet's not doing any better than that, with his billion dollar cash hoard. So, getting nothing on my cash in the bank, is just the price I pay for not being 100% invested. Even though I expect this bull share market will press on higher, I was taking money off the table in the last few months of this 2020-21 fiscal year. It uses up franking credit offsets for one thing and I'll plonk 27+ grand into super in July. I like holding cash. Even when it's a poor investment ,like now! You can do other stuff, if you've got it.

 

[sptrawler]

I think if you check out Plenti’s provisionfund, you will find it offers investors quite a lot of protection, and puts it in a better position than most alternatives such as corporate bonds etc.

But no it’s not government guaranteed, (neither are banks over certain limits), but then again things that are government guaranteed offer negative returns at the moment after tax and inflation, so you have to make a decision about earning a return or reducing risk.

I keep some cash at bank, but I hate having more cash in the bank than my offsets accounts can absorb, so I put some into Plenti.

What happened to Ratesetters, or is that now Plenti?

 

[qldfrog]

What happened to Ratesetters, or is that now Plenti?

Post in thread 'Anyone go ALL IN at the depths of a crash?' https://www.aussiestockforums.com/threads/anyone-go-all-in-at-the-depths-of-a-crash.33525/post-1126553
Good returns but getting lower and lower, and IMHO not worth the risk .
On a personal view
I invested a bit of cash but now in withdrawal mode.heading from 5 figures toward 4.
They had a scheme funding energy saving /solar in SA and from memory returns around 6pc.
All gone and not interested to lend to someone getting money for new bazooka exhausts for his car with no collateral.i let this to the people on the other side of my political views
RS now Plenti did well and was probably saved by the job saver plan.
But not so sure in the future, especially for multi year view.
But easy web interface,good platform

 

[Value Collector]

What happened to Ratesetters, or is that now Plenti?

They split from the UK based parent, changed their name to Plenti, and listed on the share market.

 

[divs4ever]

all in ??

probably not i am terrible at picking bottoms and on the rare time i do i often end up with a part-filled order so the brokerage takes the sweetness out of the bargain , now assuming March 2020 was not a real crash , then i haven't been in a real crash yet , but from what i have learned in 2018 and 2020 when the market really gets moving there are so many places to watch ( and i could see how you would be tempted by an index fund in sliding market , because i did so with VAS in 2011 , although not all my ready cash , just dabs of it )

will i buy a few things in the next big correction ( or crash ) YES , but probably not use all the reserve cash just in case there is a bargain out-of-step with the market

the hard on a downturn is knowing when the pain has stopped ( remember that term 'dead-cat bounce' that can be tragic , if you don't have a steady income to fill up the treasure chest between dips )

just remember to assess you ability to fill up the warchest after the spending spree

please try very hard NOT to be a forced seller

 

[sptrawler]

Is opportunity about to present? Is this the bust before the boom, or the bust before the abyss?

 

[Dona Ferentes]

Is opportunity about to present? Is this the bust before the boom, or the bust before the abyss?

wait a week.

Das Kapitulation needs to occur.

 

[JohnDe]

My phone has gone off. I have been adding stocks to my price watch list for several months, at very low prices that I thought were more realistic for the quality stocks that I picked. I'd put in several prices, ranging from average to extremely low. Every so often one wold go off. This morning my phone is binging away like a Christmas melody.

Prices may be heading towards pre-pandemic pricing, or it could be a big blip for a week.

Watch and wait.

 

[Telamelo]

Reckon thing's likely to get worse (pending capitulation/crash imo).. how low will market's fall too ?