Is it a good time to invest in ETF index funds?

[Belli]

I don't feel any real connection......nor an affinity with the share market in general'' If there is a collapse in the markets you will see there is a very powerful connection with the markets and LICs/ ETFs!

Of course you are entitled to your opinion but what did I do when "corrections" occurred?

Hint: I haven't sold any shares apart from swapping STW for VAS when it listed.

 

[Sharkman]

"I don't feel any real connection......nor an affinity with the share market in general'' If there is a collapse in the markets you will see there is a very powerful connection with the markets and LICs/ ETFs!

that's because you're looking at it thru the lens of a trader. switching to monthly candles and zooming out to 20+ years will give a better reflection of what the long term buy & hold investor sees. when viewed thru that lens, not even 2 years on and the COVID crash of feb/mar 2020 is already starting to resemble mere noise in the greater scheme of things for the likes of IVV. it is still prominent for VAS, VGS etc., but in a few years time there's a good chance it'll just be noise on the monthly candle charts of VAS/VGS as well.

 

[divs4ever]

Post #75 is an excellent example of:




To implement the concepts in Post #75 would require a mandatory tarot reading followed by a deep study of chicken entrails,then a reading of the latest horoscopes in the local newspaper and knowledge of what will occur at indeterminate future point.

actually i use instinct , a very loose theory based on Elliot Waves and spent many years mixing with race-course urgers , con-men , sales-people of various types , bearing in mind short-term market movement is prone to emotions , manipulations , information distortion ( liars , cheats , influencers )

so working out mid-term TRENDS is not impossible , sure i got the current mining cycle wrong , but i took SOME profit when sensible , and mining shouldn't collapse completely ( in my lifetime .. but then i am over 65 ) and kept adding when it was sensible ( even when the plan is off-track )

now obviously the global economy MIGHT still regress back to the Stone Age and that is a risk you have to factor in ( nothing is a 100% safe investment )

trends are basically easy .. sometimes folks are too cautious , sometimes folks are too optimistic , until 80% of the world practice Yoga ( or meditation ) there will be trade-able trends but you will need a bit of patience to wait for the trend you can exploit ( and that is where the skilled traders have a big edge on me )

AND obviously understanding the competition is a big help .. i would use a completely different plan if investing in the Amish Community ( hard work and accumulation would work there ) while if competing with Wall Street Millennials , you would wait until their over-reactions give you an acceptable opportunity to take

 

[Ann]

Let me just start by saying, the only way I believe anyone should be involved in the markets is by feeling comfortable about one's investment/trading style. So at no time would I ever criticize anyone's choice of participation or how they approach their investments. It is a very personal choice and a person needs to be able to sleep soundly at night.

Of course you are entitled to your opinion but what did I do when "corrections" occurred?

Hint: I haven't sold any shares apart from swapping STW for VAS when it listed.

I am not talking about a correction, I am talking about a collapse as happened in '07. Not until this year, fourteen years later has the fund got back to its original high.

that's because you're looking at it thru the lens of a trader. switching to monthly candles and zooming out to 20+ years will give a better reflection of what the long term buy & hold investor sees. when viewed thru that lens, not even 2 years on and the COVID crash of feb/mar 2020 is already starting to resemble mere noise in the greater scheme of things for the likes of IVV. it is still prominent for VAS, VGS etc., but in a few years time there's a good chance it'll just be noise on the monthly candle charts of VAS/VGS as well.

I always classed myself as a long term investor and monthly charts were always my starting point. However, I did draw the line at seeing my capital evaporate and had a certain line or moving average where I would say, enough is enough. I wanted to keep my capital intact. At the time of the '07 collapse, all my exit triggers had slowly moved me out of the market before the collapse. The '87 crash took nine years to recover. The '07 crash took fourteen years to recover, one has to ponder how long the next major crash will take to recover, twenty years? I can truly assure you I will not be alive at that time.

I read something fairly recently, don't know who worked it out, but it resonated with me. They did a calculation of capital appreciation over a given period of time using an index and then they calculated that if you exited the markets at near highs and re-entered at near lows the $value difference between a buy and hold was astonishing. That has totally altered my perception of the market. Having said that, until now I have been time poor, recently I have retired I can spend the time to focus more on the market. Others may not have that luxury.

Now let's look at the long term monthly chart on Log scale and do a quick calculation, there is an astute buy-in after the price has regained from its initial sell-off of $35.37 May 2004, it is held through all the ups and downs until December of 2021 at a price of $68.90.
So we see our capital has almost but not quite doubled in approximately 17 years.

Then if you did those calculations I mentioned, I bet the investment could have done considerably better, particularly if new money was added at every new low buyback.

 

[divs4ever]

Of course you are entitled to your opinion but what did I do when "corrections" occurred?

Hint: I haven't sold any shares apart from swapping STW for VAS when it listed.

so far ( considering i have only been in the market since very late 2010 ) the cash reserves accumulate because of take-over deals , sensible profit-taking , and not rushing in to deploy the excess cash , so the 'corrections ' i have been through are just shopping opportunities ( not forced or panic-selling ) .. now of course getting in early on a solid investment is a very good reason to resist selling

SOMETIMES i have resisted selling down when in 140% to 150% profit , but that depends on the business , ( some push the risk barrier aggressively , so i like to lock out investment capital losses )

BTW using hindsight was the swap to VAS as fruitful as hoped ??

 

[divs4ever]

I am not talking about a correction, I am talking about a collapse as happened in '07. Not until this year, fourteen years later has the fund got back to its original high.

yes that is something that concerns me .. my strategy has not been CRASH-tested , sure March 2020 felt like it at the time , but the K-shaped recovery belies that , i am trying for an income source/supplement from the investment portfolio rather than capital gains , but 2020 showed me some uncomfortable lessons , which might easily repeat in a real crash

 

[Sharkman]

I read something fairly recently, don't know who worked it out, but it resonated with me. They did a calculation of capital appreciation over a given period of time using an index and then they calculated that if you exited the markets at near highs and re-entered at near lows the $value difference between a buy and hold was astonishing. That has totally altered my perception of the market. Having said that, until now I have been time poor, recently I have retired I can spend the time to focus more on the market. Others may not have that luxury.

yes that is absolutely correct, but it's also a massive IF. most people who try to do that will likely end up buying at the top when they get greedy/FOMO and selling down the bottom when they panic. if you're one of the few who can reliably enter and exit at the optimal time, kudos to you.

but i still think most people (including me) are better off just trying to blot out the noise and holding long term, rather than attempting to pick tops and bottoms, getting it wrong, missing out on long term gains due to "waiting for the bottom", or worse still, losing money by buying at the top and selling at the bottom, then vowing to never touch the stockmarket again and leaving all their money parked in cash.

my post was mainly to point that out to the OP, since i think they mentioned they were new to investing in stocks? but your point is valid and if they want to try their hand at picking tops and bottoms, they are of course free to do so.

 

[Belli]

I am not talking about a correction, I am talking about a collapse as happened in '07. Not until this year, fourteen years later has the fund got back to its original high.

Yep - on a price basis if that is what you mean.

However, when I have been informed of that, the people who have said it to me overlook this aspect. It's as if they don't believe dividends/distributions exist.

Day on day info.

S&P/ASX 200 Accumulated Historical Rates - Investing.com AU

Access free historical data for the S&P/ASX 200 Accumulated.

au.investing.com

 

[qldfrog]

Yep - on a price basis if that is what you mean.

However, when I have been informed of that, the people who have said it to me overlook this aspect. It's as if they don't believe dividends/distributions exist.

View attachment 135390

Day on day info.

S&P/ASX 200 Accumulated Historical Rates - Investing.com AU

Access free historical data for the S&P/ASX 200 Accumulated.

au.investing.com

That is why XNT should be your reference, and not the asx 200 and XAO, and then for these returns to be meaningful, they should also be cpi indexed..and here i draw a blank as i am not aware of any available xnt cpi indexed.
What the point if comparing rotten apples if both returns are negative.
With a 10% cpi,many US nyse ETF returns are not that flashy and risk included, stockpiling toilet paper might not be that bad an idea?

 

[Ann]

Everything you say holds profound wisdom. There is not a word with which I could disagree.

yes that is absolutely correct, but it's also a massive IF. most people who try to do that will likely end up buying at the top when they get greedy/FOMO and selling down the bottom when they panic. if you're one of the few who can reliably enter and exit at the optimal time, kudos to you.

No kudos, time in the markets from around 1998ish. I have had all those emotions and more. FOMO, greed, desperation, elation at dumb luck, disappointments, watching my capital evaporate and selling, being a dumfck, being a smartarse, thinking I had found the way to easy profits. Been there done all that!

but i still think most people (including me) are better off just trying to blot out the noise and holding long term, rather than attempting to pick tops and bottoms, getting it wrong, missing out on long term gains due to "waiting for the bottom", or worse still, losing money by buying at the top and selling at the bottom, then vowing to never touch the stockmarket again and leaving all their money parked in cash.

Yes, I so agree! It can be a totally demoralizing feeling every move is the wrong one and giving up. This is why I would never criticize the buy and hold of an index. I have even given that advice to my son, until recently. Some years ago I gave him a few bob and told him to invest it in any fund he chose. He chose an off-market Vanguard fund where he would top it up on a regular basis. It didn't seem to give him much upside but I chose not to interfere. It pretty much kept up with inflation (which was negligible). Now I am seeing stuff about Vanguard doing a lot of shorting good companies and beating them down. They must be making a bomb but they are sure as hell not passing it on to the investors. I also note they say they are selling down because a major investor has left them. I figure if someone wants out who knows a shipload more than me, then who am I to argue. I worry about the ethics of the company and started to talk with him about crypto and then talked about how disenchanted I was with both Blackrock (Ishares) and Vanguard . He is a clever boy and got the hint. He is about to sell out of Vanguard, not my suggestion. I tend to think a bit early, I can see more upside still but he made his decision and he will be out sooner rather than later. Will he miss the top? Probably, will he care? No! Do I care? No!

my post was mainly to point that out to the OP, since i think they mentioned they were new to investing in stocks? but your point is valid and if they want to try their hand at picking tops and bottoms, they are of course free to do so.

As we both know, picking bottoms and tops can almost be an impossible task. However, there is a way to sort of know when something has potentially bottomed looking long term or even short term. That is a basic rising support line or two. I should add, once I found charts and practised a lot it all got so, so much better and easier.

 

[Value Collector]

Let me just start by saying, the only way I believe anyone should be involved in the markets is by feeling comfortable about one's investment/trading style. So at no time would I ever criticize anyone's choice of participation or how they approach their investments. It is a very personal choice and a person needs to be able to sleep soundly at night.



I am not talking about a correction, I am talking about a collapse as happened in '07. Not until this year, fourteen years later has the fund got back to its original high.



I always classed myself as a long term investor and monthly charts were always my starting point. However, I did draw the line at seeing my capital evaporate and had a certain line or moving average where I would say, enough is enough. I wanted to keep my capital intact. At the time of the '07 collapse, all my exit triggers had slowly moved me out of the market before the collapse. The '87 crash took nine years to recover. The '07 crash took fourteen years to recover, one has to ponder how long the next major crash will take to recover, twenty years? I can truly assure you I will not be alive at that time.

I read something fairly recently, don't know who worked it out, but it resonated with me. They did a calculation of capital appreciation over a given period of time using an index and then they calculated that if you exited the markets at near highs and re-entered at near lows the $value difference between a buy and hold was astonishing. That has totally altered my perception of the market. Having said that, until now I have been time poor, recently I have retired I can spend the time to focus more on the market. Others may not have that luxury.

Now let's look at the long term monthly chart on Log scale and do a quick calculation, there is an astute buy-in after the price has regained from its initial sell-off of $35.37 May 2004, it is held through all the ups and downs until December of 2021 at a price of $68.90.
So we see our capital has almost but not quite doubled in approximately 17 years.

Then if you did those calculations I mentioned, I bet the investment could have done considerably better, particularly if new money was added at every new low buyback.

View attachment 135366

The crashes recovered a lot quicker than the years you state when you factor in dividends, especially if those dividends are being reinvested.

if you want to get a more accurate picture of how fast the markets recovered look at the accumulation index chart, because that factors in dividends.

Also, you will see all these big crashes have followed sharp rises, so it’s very unlikely you will be caught putting a large lump sum in right before the crash, especially if you are dollar cost averaging as I suggested.

if you had put $100k just before the 2007 GFC, it wouldn’t have taken 14 years to return to $100k, because the compounding dividends would have boosted up the number of units you owned every 6 months, so even if it took 14 years for the unit price to recover, you would own more units.

 

[Ann]

if you had put $100k just before the 2007 GFC, it wouldn’t have taken 14 years to return to $100k, because the compounding dividends would have boosted up the number of units you owned every 6 months, so even if it took 14 years for the unit price to recover, you would own more units.

..and if you had bought an investment apartment in 2007 for 100k including rent how would that equate today?

 

[divs4ever]

yes that is absolutely correct, but it's also a massive IF. most people who try to do that will likely end up buying at the top when they get greedy/FOMO and selling down the bottom when they panic. if you're one of the few who can reliably enter and exit at the optimal time, kudos to you.

but i still think most people (including me) are better off just trying to blot out the noise and holding long term, rather than attempting to pick tops and bottoms, getting it wrong, missing out on long term gains due to "waiting for the bottom", or worse still, losing money by buying at the top and selling at the bottom, then vowing to never touch the stockmarket again and leaving all their money parked in cash.

my post was mainly to point that out to the OP, since i think they mentioned they were new to investing in stocks? but your point is valid and if they want to try their hand at picking tops and bottoms, they are of course free to do so.

i have found buying at the bottom ( and selling at the top ) often leave me with part-filled orders ( that never fill completely ) leaving the brokerage to take the cream out of the trade , so am happy to buy in a falling market and sell into a rising one ( at pre-selected prices ) getting the deal done at a tolerable price , HOWEVER most are comfortable going WITH the trend

and yes the OP did say they were new to stock-investing , but had some background in real estate , and SOME of that experience is liable to be a foundation for share investing ( valuation , assessing risk , and some understanding of debt and leverage ) HOWEVER possibly with limited research time .

 

[Belli]

That is why XNT should be your reference, and not the asx 200 and XAO, and then for these returns to be meaningful, they should also be cpi indexed..and here i draw a blank as i am not aware of any available xnt cpi indexed.
What the point if comparing rotten apples if both returns are negative.
With a 10% cpi,many US nyse ETF returns are not that flashy and risk included, stockpiling toilet paper might not be that bad an idea?

I have to admit I have not the faintest what the XNT is.

As I'm in my eighth decade I'll probably not bother finding out at this point. Quite OK with the knowledge the FP informed me I could spend a six figure sum from the SMSF and not run out of funds until I am ...... well, I am not aware anyone has lived as long as that. And I also receive a goodly sum from dividends/distributions for my share holdings outside of superannuation. If push came to shove I could do quite OK on those alone.

LOL. My kids are probably quietly tapping their toes with impatience waiting until.....

OK peoples, I've had my say. I'll leave you all to it and slip back into obscurity which is where I am most comfortable.

 

[Sharkman]

Now I am seeing stuff about Vanguard doing a lot of shorting good companies and beating them down. They must be making a bomb but they are sure as hell not passing it on to the investors. I also note they say they are selling down because a major investor has left them. I figure if someone wants out who knows a shipload more than me, then who am I to argue. I worry about the ethics of the company and started to talk with him about crypto and then talked about how disenchanted I was with both Blackrock (Ishares) and Vanguard

interesting. do you have links to any articles on the subject? not saying that you're wrong, just want to educate myself a bit, given that i have a significant chunk of my capital invested in both Blackrock and Vanguard ETFs (and am quite satisfied with what i've been getting from them so far). i've never heard of this type of thing before, though i haven't exactly gone specifically searching for it either.

 

[Ann]

interesting. do you have links to any articles on the subject? not saying that you're wrong, just want to educate myself a bit, given that i have a significant chunk of my capital invested in both Blackrock and Vanguard ETFs (and am quite satisfied with what i've been getting from them so far). i've never heard of this type of thing before, though i haven't exactly gone specifically searching for it either.

It is in the company notices. I am about to serve up dinner, so let me get back to you later please.

 

[divs4ever]

Now I am seeing stuff about Vanguard doing a lot of shorting good companies and beating them down. They must be making a bomb but they are sure as hell not passing it on to the investors. I also note they say they are selling down because a major investor has left them.

now from what i have READ from Vanguard ( but assume Blackrock is doing also ) is Vanguard are lending out ( client's ) shares to traders ( some of which are short-sellers ) and harvesting some extra cash that way , but IF significant cash is being drawn out of the wholesale funds yes they would also be selling the underlying stocks , as well

why i have my Vanguard ETFs up for sale ( at a price ) is their decision to use the voting power under their management to change company policies ( often diluting my direct voting intentions )

please note i sold my only Blackrock holding early this week , for the same reason

will that cash go into rival ETFs .. MAYBE or maybe into LICs

if Vanguard and Blackrock want to shape investment agendas , fine , but they can do it without my cash helping

 

[divs4ever]

I have to admit I have not the faintest what the XNT is.

S&P/ASX 200 NET TOTAL RETURN​

ASX: XNT Index

Last Price81,350.300
Today's Change Up 1,037.200 (1.29%)

relax i am not super clever .. i had to look it up myself ( because i had no idea either )

cheers

 

[Belli]

Jesu. I vow this will be the last for a long, long time.

First. The PDS for goodness sake and it refers to the underlying funds not the bloody index funds such as VAS. Get an understanding if at all possible.

Second. Vanguard intends to offer it's own Superannuation fund in Australia. As it is going down that path it isn't going to mange other institutional superannuation funds investments. A couple of those institutional ones have worded the exit (and a number have moved to StreetTraks) as them leaving and not Vanguard dropping them. The politics of business, folks, the politics of business.

 

[divs4ever]

Jesu. I vow this will be the last for a long, long time.

First. The PDS for goodness sake and it refers to the underlying funds not the bloody index funds such as VAS. Get an understanding if at all possible.

View attachment 135394
Second. Vanguard intends to offer it's own Superannuation fund in Australia. As it is going down that path it isn't going to mange other institutional superannuation funds investments. A couple of those institutional ones have worded the exit (and a number have moved to StreetTraks) as them leaving and not Vanguard dropping them. The politics of business, folks, the politics of business.

yes that is a more detailed version of what i remember reading ( NOT saying Ann is wrong just that i had not seen the same article as her ) , and why any share-lending activities were NOT the primary reason for my intended exit , ( remember i am a contrarian so Vanguard lending out BKL or PME or other tightly held shares MIGHT give me a buying opportunity , when others are short-selling )

HOWEVER shaping company policy directions , that is a different matter in my eyes