Hold or Sell ?

I've been hearing stories of impending doom and gloom.

Should I hold my funds or sell them? What would YOU do?
They have been sitting passively for some time now. Overall they have lost me money (over 5-6 years), but I basically ignored them, made contributions when I could and let them do their thing.

Managed Funds
Platinum International Brands Fund
CFS Geared Australian Share - Core
Vanguard Emerging Markets Shares Index Fund
Colonial First State Property Securities Fund

Valued at about $45K.

Thank you for any assistance.

 

Puzzle worth of billions dollars

Just based on the fact that the funds have been held over 5-6 years, which means GFC crashed them down first and the current EU crises have crashed them down further and very effectively.

Could we say damages have been done? Could we say it would be worse and much worse? Could we get the losses calculated in worst case?

It is the hardest time for anyone to decide holding or selling. Holding? You would fear the thing becomes worse. Selling? You would worry the train leaves without you. It is a puzzle worthy billions of dollars.

Question again and again until seeing the logic

Would you think EU be broken out?

If EU broken out, how low XAO can be?

Do you think your funds would drop down to GFC level?

Two possible scenarios: EU broken out and all in water or Greece defaulted but EU alive. Which has higher probability?

Right decision doesn't always mean better result

Any scenario means pains less or more. It is a question few can really answer except yourself. Once we are in the ruins any decision would not be hurting-free in short term. Do you want to be hurt and forget? Do you see better consequence to hold?

The best option is that we are never be the losers and once we lose too much even God would refuse to help us since we commit to be wrong. Doom and Gloom in the past were sure but is it really so in 2 years or 5 years time?

No any intention to provoke personally but let us sane. If we are sane we can make right decision even no one can be sure we lose less.

 

Hi Compleks

Why are you considering selling - do you need the funds for something else, due to average performance or another reason?

You have to understand each investors situation is very different.

Kind Regards

 

You asked the question, "what would YOU do?".

I'd be assessing my cashflow and seeing if I can make regular contributions to this series of managed funds. "If" the doom and gloom that you speak of occurs, then I'd simply continue on with my merry plan and maybe even try to increase the regular contributions.

That's just me though.

 

Hi zudjian

What if the funds are duds (below average performers), would you continue to make regular contributions to them?

Kind Regards

 

Andrew,

I took Compleks' query to mean would he a) remain in the market or b) exit the market.

The point I'm trying to make is that I'm prepared to methodically invest in markets irrespective of whatever "doom and gloom" is on the horizon.

You've defined a "dud" fund as one that has below average performance, so to answer your question specifically, yes I would be prepared to invest in such a fund as long I was comfortable with who was running the fund and I believed in their skills, strategy and method. A good example of this might be investing in Berkshire Hathaway even though the absolute return has been a full 10% below the S&P500 over the last 3 years.

 

"Should I hold my funds or sell them? What would YOU do?"

If it was me, I would sell them a long time ago !!!
If they lost you money over last 5-6 years, what makes you think that the same funds (or other funds), will make you any money in the future?

I know...Some advisers will say that you should invest long term and maybe in 10-20 years they recover.
You have to make a decision if you have enough time to wait for them to recover and want to wait that long for any extra money (after inflation of course).

 

If I was in my 20's and wanted to retire at 65, I would regularly contribute to my funds over my life. I would try to buy more in a depressed market.



Johny.

 

I wish I sold them a long time ago.
Or never bought them, haha.

Thanks for all the replies guys. I know I need to sit down and reassess my goals. Been putting it off for a while now.
I'll hopefully be back in a week or two with some good goals.

Thankyou all

 

Sitting down vs Knee jerk: I prefer sitting down too without matter how bad we have done in the past. We just need to remember "market doesn't give us to do the scientific trials and errors and we have to protect ourselves when next time we want to take any action.

IT bust has passed by for more than 10 years. GFC has passed by about 5 years. Too many people have lost their shirts. If the bad capitalism would not be into its end in next few years, it seems have to recover including the price of the funds spread over the whole market. We may still could not get all of losses back but we just could not do better by selling on fire.

Listening is important, sharing is critical too, but your life and your money have to be played by you and only you. You win or lose due to what you do and then you can say it is me to make my life! Or, yes, you could not go too far away from the limitation of the whole environment.

 

I'd avoid anything with this word.



I'm not going to tell you what YOU should do, but I will tell you what I'm doing and what I think.

I think most stocks are at about FAIR value though an argument could be made that over the last couple of weeks have leaned towards the "cheap side" of fair value- ie they are not cheap, but they are not expensive.

I'm actually selectively buying these days (note that my investment strategy focusses on finding earnings and value and my time frame is a lifetime so I'm very ready to handle some dips in price if company earnings are maintained, in which case I'll buy more).

That said, I'm buying in slowly though, and I'm still over 50% cash, mainly because I think there might even be some better buying opportunities over the next 6 months, but I'm not SUPER worried. That said, I also don't think it's a time to be worried you might miss the boat, I suspect these fair prices will be around for the next few months.

That said, there is a LOT of fear out there - you know when 10yr JGB yields are at record lows people are ******** themselves, but on the plus side when people are scared you are unlikely to be significantly overpaying for your investments, but of course that doesn't mean better buying might not be around the corner.

I think the most important thing is you change your mindset from worrying about "prices" and worrying more about "earnings".

 

I don't know about fair price but things aren't looking the best atm.
I just sold my last 1000 shares and all my savings are now in cash including super.

Forget managed funds. IMO right now it will be better to look for a high interest term deposit (while they are still around).....

 

Hi Chris

Your strategy of timing the markets, has it done well over the long term?

Also, do you compare the results to a buy and hold strategy?

Cheers

 

Both of strategies of timing the market, and buying and holding strategy, have the catches.

You cannot buy at peak before GFC at the end of 2007 and hold for what you want. It is wrong to go extreme at any direction.

It is the best to buy at the time all of warriors just want to sell anything they hold. However you can not buy anything with a sure lowest price.

***
There are conditions and contexts for any idea to win out.

1. what to hold
2. when to get
3. what can be afforded
4. when to sell

Whom are you? If you were George Soros, you would not buy thing to hold for decades. He plays the things by zoom in and out for buying and selling. If you were Warren Buffett, you would not bet on British Sterling just for its doom or gloom.

***
No self-awareness, you just could not get what you want. Things are good to you may be bad to me.

Soros and Buffett have different mental frameworks but they both can get the sure gold in the road ahead when no one can see the gold. Few can timing correctly as the same as few can buy and hold for their fortune snowballs.

What're your catches in the way you view the market and life under what conditions or context? Absolution of right or wrong is not exist.

***
What if your shares go up 3 years and drop down another 3 years with the sum negatively? Why doesn't Buffett dislike to hold gold? It doesn't generate the income if you don't sell. So Soros plays the gold and Buffett doesn't due to their own ways in the market.

Be extremely safe to walk, run, pause, and get out wisely and intelligently in the limitation of your road map. Don't put your toes onto the land you would die or your kind would die.

We need to find the dead areas for what we believe. If you believe something, can never die, and just get what you want at the price you want to pay, you just get your snowballs bigger and bigger.

***
XAO this time seemed quite reluctant to lead the world into GFCII. However the traders and investors have been really hurt. They cannot act without emotion simply.

Why do you timing? Why do you buy and hold? Sort of confidence to let you feel you would be OK even worst happen. You cannot buy and hold for a decade and find you get nothing or in the traps.

There are black swans. You could not hold without incomes for your budget for years. Once you are in the hell, all of your belief would be questioned by you not anyone else.

***
What do I hope? I could not be a investor since I just not be qualified:

1. Know some sure gold piles ahead?
2. Know next decade are upward only?
3. Have sure income from enough bond type investment at the worst time?
4. Have a good mental framework for dynamic changes everywhere?
5. Skillful steer forward with a road map I know the catches or valley of death?

I do prepare for what if Greece exits out of EU or not. I am waiting for Greece exits, China slows down at surprise, and US just lost more jobs at one time. Don't say they are impossible. Actually the whole world have not ideas what Greece would do on 17 June 2012.

***
GFC II? Who knows?

It seems the warriors need the last hit and then they would give up to run in the ruins. Worse could be much worse when the warriors run in the ruins. The run can build a positive self-destructive loop within it all are dizzily in swirling. Do you remember when XAO started to sell for no tomorrow? The last straw need to be seen!

If they would give up to run anymore it is the time I provide my services to them. It is safe even not lowest price I should pay out! Good enough and enough is enough!

 

Well I'll preface by saying that I only have $100,000 of investable assets, with the rest of my money being tied up in my business assets. And if that didn't convince you that I don't know what I'm talking about - I'm only 27 - so I don't want anyone reading this post thinking my strategy is like a well oiled machine.

That said, I think you might have misinterpreted my strategy.

So to your question - have I outperformed the market over the last 5 - 10 years?

The honest answer is, I don't know exactly. I've never really taken the time to study the exact returns I've achieved, mainly because I only have $100,000 so me outperforming the market with $100,000 is never going to be my primary source of income so its not really worth my time at this stage to work out what my exact performance is.

That said, I just had a quick look at my trading history for the last 7 years, and I'd be almost 95% certain I've beaten the stock market from both a total portfolio perspective (ie when you consider that I was 30 - 60% cash at various points over the last 5 years) and both on a pure equity performance basis (ie the stocks that I have bought over the last 3 years have generally outperformed the market).

If I had to put a number on it I've probably outperformed over that period by a good 50% - 100%.

I'm not saying it was all investment genius, there is always a bit of good fortune involved.

That said, you mentioned that I "time the markets" that isn't that true. I generally buy with the intention of holding, but I do go long periods where I do nothing, waiting for the next stages of financial crisises so that prices to come down to more reasonable levels.

I have a bit of a modified value investment approach strategy, ie the first thing I'm generally looking for is an industry I like, then I'm looking for a business that is priced at good value, then the next thing I'm looking for is a sustainable business (ie a business that has an obvious future, because I do want to buy and hold) and then to add a bit of spice these days more and more I'm making my investments with some macro considerations, ie I'm taking into account currency fluctuations and looking for investments aboard as much as I am locally. Though when I invest abroad I'm generally doing it when the AUD is high and I generally buy indexes of countries that I like the prospects of.

Also whilst I haven't implemented this strategy yet I will likely move into buying individual stocks on certain markets that have heavy international exposure, when I feel the AUD is overvalued.

So obviously right now with the AUD falling, I'm looking a lot more at the local market, unless another country's market has fallen relative to the AUD (which can happen with emerging markets).

One investment that I do own, and I've mentioned it before on these forums, that is a speculation more than a long term investment, is that I have quite a bit of gold and silver, which I started buying back in 2008. It's not my intention to hold these investments forever at this stage as I would like to eventually divest them to move my capital into more productive assets, but with all the financial turmoil and unresponsive governments around the world I can't help but it's prudent to hold onto these investments for the time being, and I suspect that will continue to be the case for the next couple of years.

This is generally what I do.

Though I'm learning the hard way that this shouldn't be a strict rule because unfortunately - things change.

A good example for me was a few years ago I decided there was a certain market I wanted to invest in because I believe in the growth prospects of that industry, then I went into the market studied the relevant businesses to see if there were any stocks that fit my criteria, I found one, was happy with my choice, everything was going well then 18 months later the company was bought out. Of course the problem was, I knew next to nothing about the new company, but I was allocated stock in their company and then over the next 12 months, with the hold part, of that strategy in place I lost about half my capital.

This is an example where sometimes it's just better to sell.

Another great example is the landscape changes... ie the internet is created and this dramatically changes the way business is done - it will help some business models and destroy others. You can't buy and hold when major game changing events like this happen.

Or the financial crisis happens and the world decides it's going to move to Basel III requirements for banks, so the super profits that bankers/shareholders have enjoyed over the last 10 - 20 years are just not going to be there in 5 - 10 years time.

Buying and holding isn't a "smart" strategy - it's a lazy strategy that will get your average results (which is fine for most people). What is "smart" is buying good businesses that produce earnings at a price that is at a discount to it's likely NPV, but NPV can be heavily effect by major events, so when major events happen the businesses should be reviewed and a continued investment or divestment decisions should be made on present circumstances not past.

So from my perspective, if you buy an asset that is undervalued with the intention of holding, but then it goes up and becomes very overvalued, there is nothing wrong with scraping the holding plan, and just selling and looking for greener pastures...

 

Hi Chris

The simplest way to compare the performance of your portfolio is to compare your long term return, to a portfolio that was invested into 100% cash over that term or 100% into the All Ordinaries Index over that term.

You mention some very good points about investing, particularly in relation to buying companies at a good price. This is so important but unfortunately not many investors do this.

I avoid commodity, currency and macro strategies as I don't believe I can add value over the long term. But that's a debate for another thread.

Cheers

 

Oh I understand how to work it out, it's just that I continually add more funds to my investment capital over time that I earn via my day job income, which makes the calculation difficult.

See I think everyone needs to also understand how the whole system works to understand the micro, and vice versa, ie in 2008 you might have found a great valued business in Greece with great micro fundamentals but then the country imploded and took lots of well run businesses with it.

The same goes for Australia, you might look at an Aussie manufacturing firm and think it's undervalued whiled the AUD is at 70 cents, but when the AUD goes to $1.10 it's out of business. So you need to know what drives currency prices.

Same goes for your local investments - if the AUD drops by 50%, but the ASX goes up by 50% you are 25% worse off than when you started, relative to the world, but your investments will have gone up in nominal value...

And commodities are no different, if you don't understand how commodity prices effect an economy then you don't really understand the economy, ie if/when oil goes to $150 different economies/investments react differently, ie if you are the US or Japan you go into recession, if you are Russia it's boom times.

My point is I don't think you can say you do one without at least understanding the impacts of another.

Eg, many property investors seem to only focus on understanding property, but they fail to understand business, economies or even money itself, and my greatest fear for property is actually another major commodity price contraction which will reduce mining investment and the value of exports and will probably push Australia into recession causing contracting housing credit levels, which will put further downward pressure on property prices cementing lower future price expectations (which can already see people are staring to worry about), creating a self fulfilling prophecy of downward property price movements until such time as they reach fair value (which of course will be a very painful process and will create a large negative feedback loop for the general Australian economy)...

My point is it all starts with an external commodity price shock, which property investors ignore because they think it's not related, when in fact property prices have probably been more influenced over the last 10 years by macro economic conditions and commodity prices than by which street you have bought on...



I think these days with so much volatility and leverage around the world good long term investments can't be made while focussing on only one discipline. You need to understand the system otherwise you are just gambling. Hell even when you understand the system you are still largely gambling these days because there is so much irrationality out there...