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Any chance the downward trend and volatility..how long?

Discussion in 'Managed Funds & Index Funds' started by archangelsupreme, 28th Oct, 2007.

  1. archangelsupreme

    archangelsupreme Well-Known Member

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    I entered into the CFS Geared Share at the worst possible time...when it peaked in mid-October....it has since continued to drop...and i'm now like $400 below what I invested..

    Not so much super concerned as I acknowledge the nature of Geared Investments and I'm just a new investor and will be here for the long haul...

    ...though just wanted to ask when can we see things stabalise a bit more....do you think the Election will add to the volatility?
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Part of the problem is that we have had historically low volatility over the past 3 years ... people (especially those new to investing in the markets) aren't used to volatility like we normally get.

    Geared funds get hit particularly hard by sharp drops in the market ... but they generally recover well and still outperform over time. You just need to give it time!

    You really can't take a short term view with a geared fund.

    I wouldn't be getting too concerned yet: Performance Chart: Colonial First State Geared Share Fund
     
  3. Simon

    Simon Well-Known Member

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    You like volatility in a fund or you wouldn't have chosen a geared fund.

    with upwards volatility you have to weather the downwards at times.

    If you are in it for the long term then stop watching the prices. Just check them when you need to make any decisions :)
     
  4. Glebe

    Glebe Well-Known Member

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    If you're in it for the long haul why was entering in Mid-October 2007 the worst possible time?

    Change your mindset buddy. Being keen is good at times, but so too is a sense of detachment.

    The fact that three weeks into your investment you're asking this sort of question tells me that you haven't developed that detachment yet. It will come.
     
  5. archangelsupreme

    archangelsupreme Well-Known Member

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    I guess you'er right.. I haven't developed the detachment.

    I keep looking at prices every 2nd day or something. Just my nature I guess.

    Any help on how to reduce this urge?
     
  6. Glebe

    Glebe Well-Known Member

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    It will come. I look at the prices all the time too, but the emotional response to increases or drops lessens more and more. Like a junkie you eventually require bigger hits to get the same reaction :D

    Throughout the course of your journey you'll come across crazy increases in value, then corrections, and so on. You get used to it. After the crazy increases it's best not to think of all of the money you see on the screen as yours, because the market wants some of it back after a while. The process repeats but so long as generally the trend is up it's all good.
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Actually no, volatility is a measure of how far it moves away from the trend.

    A strong upward trend on its own is not volatility ... have a look at this chart: Performance Chart: Colonial First State Wholesale Small Companies - Core ... that's what low volatility looks like (and the fund still returned 50% for the year) ... and this is what high volatility looks like: Performance Chart: Colonial First State Wholesale Small Companies - Core

    Here's a geared share fund for comparison: a bit higher volatility: Performance Chart: Colonial First State Wholesale Geared Share ... followed by very high volatility: Performance Chart: Colonial First State Wholesale Geared Share
     
  8. DaveA

    DaveA Well-Known Member

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    Pretend like you sold them...

    I got rid of most of my funds within the past few weeks for other investments and now i cant even be arsed to open my spreadsheet for that tracks my prices, so maybe you could try this...
     
  9. MichaelWhyte

    MichaelWhyte Well-Known Member

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    Too true! My fund is up about $10K today, but it just seems more and more like play money. From the bottom of the recent correction up to now, its turned around and recovered over $100K so that's starting to feel tangible. ;) I still check my unit prices every day though. I like to watch! :eek:

    Cheers,
    Michael
     
  10. archangelsupreme

    archangelsupreme Well-Known Member

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    Wow, you must have like $1million invested or something....????

    Care to transfer your dividends to my bank account...help a newbie investor??:):)
     
  11. MichaelWhyte

    MichaelWhyte Well-Known Member

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    Something like that... ;)

    And a lot less than others on this forum I could name with 10 times my meagre holdings! :eek:

    Cheers,
    Michael
     
  12. Simon

    Simon Well-Known Member

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    I been thinking about this lately. It is all about thinking bigger. :)

    When I started out I invested $2K in a major float. That was a huge sum to me and the missus and we discussed it no end and she was never really happy about me spending it.

    Now I can spend $50K on a share and she isn't even interested in what it was. She would be hard pressed to name any shares we own.

    The day I can tell her over dinner that I bought $200K in something and her not be interested can't be too far off now can it? ;);) Then it will be $500K, then $1M etc

    So what I am saying is that you got to start conditioning your mind to accept larger and larger numbers or you will never be a successful investor.

    Hope this post makes sense - I often struggle to articulate my thoughts.
     
  13. MichaelWhyte

    MichaelWhyte Well-Known Member

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    No struggling there mate, good post!

    And I agree completely. Its also funny how quickly this can happen when you start investing in earnest. You need to temper your language though with the non-investing community. I literally just had a brief discussion over the partition at work with a workmate over a modest goal to pick up a deep-water frontage house and land on Pittwater. It was related to another discussion over an adjoining partition with a good mate who's also into sailing. The second guy though threw back tone and a comment like: "For you that won't be a problem right" as if to say "arrogant prat" or "as if!". I calmly asked him what he meant by that, was my goal too ambitious or innappropriate in any way. He back-tracked and ended up just finishing with something like "You need to be careful with your relationships when you're so driven. Been there, done that". I pointed out that my wife has a similar goal and we're aligned in our thinking. He just sort of went "Oh..." and withdrew.

    Anyway, you can become blase about numbers when you do this long enough, but you need to be careful in your communication as often those you're talking to can see your numbers as way WAY out of their comfort zone.

    Cheers,
    Michael.
     
    Last edited by a moderator: 29th Oct, 2007
  14. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    This is why I never talk specifics about my investments with my family or (non investing) friends. I will talk concepts and discuss real estate and shares, but I won't tell them exactly what we own ... and I especially won't tell them how much debt we have (they really couldn't comprehend those types of numbers).

    It helps to keep things in perspective too ... my previous employer offered a sales commission plan that could potentially see me earning another $5K - $10K per annum ... if I worked my butt off all year and got lucky with the state of the IT market. When I pointed out that my interest bill alone was approaching $5K per week ... it makes earning $5K per year for a lot of hard work, really not worth the effort.
     
  15. archangelsupreme

    archangelsupreme Well-Known Member

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    Can you be my sugar daddy???:):):)
     
  16. handyandy

    handyandy Well-Known Member

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    Never a truer word said.;)

    It's not just way out of their comfort zone but they can't even comprehend where you are at and the level at which you are operating.

    Cheers