What would you buy and hold if every stock was -40% off?

[DeepState]

Ves, moved the discussion to Thought Bubbles.. as this has moved far off the thread topic.

 

[MrChow]

Just some ideas for the topic:

Funerals (Propel Funerals to be listed)
Hospitals HSO
Vitamins BKL
Dentists ONT
Accounting Software MYO
Paint DLX

Industries with limited cyclical earnings exposure, companies that have industry scale / brand leadership, attractive ROC metrics. Valuation contraction to provide a discount back to value range in a market downturn.

 

[Huskar]

It is actually not that straightforward to know what to buy when the whole market is down significantly. In 2008/09 I thought I was really clever buying an ETF over the ASX200 at what turned out to be very close to the bottom in March 09 (about 3200) but that was actually the wrong decision: apart from ETFs often lagging the index they track (due to ETF holdings not exactly mirroring the underlying and more in built costs than you might expect which compound the lag over time) I found to my chagrin and surprise that a year or two later I had only made a 20-30% return. This is after one of the greatest bear markets in history.

On reflection, I realised that what I should have done is - rather than look for broad exposure to the market or even robust companies that will plod away through thick and thin - buy deep cyclicals. The reason for this is because, provided they make it through (a big if, but the thinking is that the majority of those that have failed will have failed by the time of a 30-40% market pullback) then they will enjoy far greater margin and profitability expansion than the companies that have been profitable throughout.

This is simple maths: to go from 1 (or even -5) to 10 is a much percentage increase than to go from 10 to 20. Multiple expansion often compounds this increase.

So buy Flight Centre (from $4 to $20 in a year and at one point $60) or mining contractors or service providers rather than supermarkets or non-cyclicals (which is what you should be holding - although of course cash would be better - prior to the 30-40% broad market fall).

This is not to say I am not a fan of dollar cost averaging into ETFs as an entirely legitimate and profitable exercise for almost all investors, it is just not the correct play at market bottom.

Bump. And I still don't know what to do.

"I wasted time and now time doth waste me" (Richard II)

 

[peter2]

Sometimes doing nothing is the right thing to do.

 

[Dona Ferentes]

Sometimes doing nothing is the right thing to do.

and a bit of prepositioning, perhaps. "Fail to plan, plan to fail".

 

[Redbeard]

In May 2020, to the original question... Something that was paying decent dividends 2 years ago.
IE a sold company that does not have its share price valued by Whispers in the Wind.

 

[Belli]

Do exactly as I am doing. Buy the index or my preferred LICs when excess cash is to hand.

 

[InsvestoBoy]

Bump. And I still don't know what to do.

"I wasted time and now time doth waste me" (Richard II)

Huh?

In your quoted post you bought an ASX 200 ETF in March 2009 and "a year or two later" (double huh?) you found you had only made a 20-30% return?

AFAIK the only ASX 200 ETF on the market at the time was STW.

STW total return from March 01 2009 - March 01 2011


when was this period that you only made a 20-30% return?

FWIW, I don't really understand you're saying you still don't know what to do but in the quoted post you were telling everyone they should buy deep cyclicals? How'd that work out in March 2020?

Also FWIW, the ASX 200 in March of 2009 was chock full of deep cyclicals.

 

[Garpal Gumnut]

Well we will have an opportunity to buy the banks at 40% less than present prices at least by the end of 2020.

gg

 

[noirua]

I continue to hold 8 American and Canadian gold shares for some time. Apart from Covid19 connected gamble shares there appears little else worth holding. Other than gold and silver itself.
B2Gold Corp Com Npv BTO
DRD Gold Limited ADR (Repr 10 Ordinary NPV) DRD
Franco Nevada Corp Npv FNV
Newmont Corp USD1.60 NEM
Pretium Resources Inc NPV PVG
Barrick Gold Corp Com Stk (CDI) ABX
K92 Mining TSXV:KNT
Torex Gold Resources Inc (PK) USOTC:TORXF
--
Others held are Newcrest, Greatland Gold AIM:GGP sold 10 days ago, Red5 RED bought back a few weeks ago, Silver Lake SLR sold a month ago, Ramelius RMS bought back 6 weeks ago and Katora Gold AIM:KAT purchased late on Thursday.

 

[noirua]

I have bought a few Bitcoin, quite expensive just for one. The action on the 12 May where most mining software will be useless will make mining an expensive new equipment and electricity burn.

On May 12, the reward per miner will be cut in half again, to 6.25 new bitcoin. The effect is that the supply of bitcoin coming onto the market is reduced. Previous halving events, which happen every four years, have preceded big price increases in bitcoin.