Surely the bull market is going to end soon.. with pain..

Dear all,

Please note that whist this conversation is really interesting I wanted to be clear that its dicussion I was interested in not specific dollar amounts. Thats private.

MJK

 

Tropo,

Using stop losses effectively is really difficult if its managed funds your invested in. I find if I request a redemption it can be executed anywhere between 3-7 days later. Sometimes its good timing and sometimes its terrible.

MJK

 

Hi MJK,

That's not my experience. For redemptions, a request to sell down units received by 2pm is executed at the closing unit price of that day. Its buying in using a margin lender that takes time and can hurt. The selling down seems to be instantaneous.

Cheers,
Michael.

 

Actually that makes sense Micheal.
I had been using a platform for growth funds and they are slow. They only "go to market" twice a week I think.
My Navra is a direct investment but I've never sold Navra units.

Still you cant set up an automated stop loss with funds though. You have to call/fax it in.

MJK

 

Michael,

Was that your experience with all managers/funds or just the Navra redemptions?

MJK

 

If your redemption takes 7 days it’s still not that bad.
Waiting 7 days to be executed and losing say 1% or 2% is a better deal than do nothing and lose 20% or more....
Successful investor/trader defines loss before engaging the market (shares, MFs etc).
If you know in advance the max. you will lose (having stop in place) you are freed from worrying about anything the market may throw at you.
Correct exit (not entry) delivers a gain.

DaveJ sold all his MFs 2 or 3 weeks before last Christmas (and many others - I guess)
But yes...you must have a system in place and follow it (the hardest part!!).

 

I was too afraid to look at my actual loss during the bear phase of the market. I knew that the value of my holdings had dropped but I did not know how much. But last week I had to check how much money I could spare to fund a property purchase. About 15% loss- ouch it hurts- only after looking at it.

Lucky or unlucky the off the plan was orginally due to settle in January 08 but it has been delayed to July. Had it been in January I would have sold more than half of my holdings in Nov/Dec and would have made a great gain on some holdings and a slight loss on the others. But would have been paying mortgage from January. Now most of my holdings are below purchase value and I am scraping money from all sources to fund the initial amount.


What I have learnt from this experience is that:


1. I have come to understand what style of investing suits me. I do agree that it will over time through knowledge and experience change and evolve but down at heart, I am very conservative and borrowing to invest is not my style unless the borrowing costs are very cheap.

2. The trends of unit prices are not all telling. I have invested based on the long term trends and it has been a mistake without any solid research to back up the underlying share prices. I know I should have studied the shares and the numbers, for my sake and for my moneys sake, but I didn't, trusting the judgment of professionals and other investors on the forums to be better judges.

3. I need a lot of cash reserves, or sources where I can access cheap money easily, which I am sourcing at the moment (4-5%pa). $50.00 a month has helped me. Knowing my style and knowing that I invest everything except for leaving cash reserves for 3 months living expenses I need to stack away more money. OK, that $50.00 hasn't made much interest, but if it were easily accessible I would have invested in something and would have been very cash tight, when I needed it.

 

Food for thought Tropo. Thanks for your post.

MJK

 

If anything....Michael’s generosity (re his post above) should give you enough food for thought.

 

One of the great things about exchange traded investments. You have alot more control over buy and sell prices.

I got burnt a couple of times by managed funds unit pricing. I'd submit the application, 2 days later its processed and on that day the unit price was on the more expensive side.. Then drops back a few days later.

Stuff that.. but over the long term it probably doesn't matter.

 

Michael

I remember the time.
Having an idea of your exposure I was very worried of your situation and I was glad to see that you decided to get out when you did.

Mate, consider yourself lucky, you could have lost so much more...

Anyway, don't worry, dust yourself off and wait for the next boom to come.
I can't wait...

Cheers

 

I was fully invested leading up to around XMAS, thinking of a Santa Claus rally.

But when my stop losses were hit just a few days before Christmas, my mood changed and I had an inkling of something bad about to happen - so I sold my 100k of Platinum Asia at 2.90 a unit on Dec 20th - and now that would be 14k down and I am sure we would have had a margin call too.
I wish I had done the same with my 350k of Navra funds (do a Navra on the Navra like I did 2 yrs ago) - I am now down around 60k. Would be a very good time to get back in IMO (or maybe when the asx200 hits 4800). But they are over 6% better than the market - probably more , and its long term anyway.

 

The other day, NAVRA were down to about 93c from $1.20

Punched in a start date of 1-07-07 to now and got the below for the fund:

Fund: Australian Retail FundStart Date: 5/1/2007End Date: 12/3/2008Performance: 1.18%



I've tipped some more funds in to drop the LVR a few days ago, hopefully Suncorp get thier act together as I'm happy to pick up a few more at a lower rate

 

Well, I actually do not believe in selling. I believe you should always be investing some of your money, even in retirement, always rebalance your portfolio, and never sell. Main reason to sell was of my ML, having a badly setup portfolio, and wanting a to setup a diversified and less volatile portfolio.

Michael, I have been following your posts both here and on SS and understand that the last few months have been particularly stressful for you. Whether you lose $10k, $100k, or a multimillion dollar business, a loss is a loss, and I hate losing money. I have learnt something from this. And I totally understand where you are coming from RE housing stress. over 80% of my income goes to servicing housing debt.

Hearing about others losing $$$ is good and bad, a loss is a loss, but a least we are all trying to learn from our mistakes and to improve our financial security and futures.

Alan, and others RE detailing $$$ amounts. I am a fairly open person, and do not mind talking about $$$ in my posts. I do not expect anyone to detail their positions, and if I have offended anyone by posting $$$ amounts, then I apologise and will think before I post next time.

Now that I almost have my money in the bank, I need to really think what I want to do with it. Put it into my offset account, buy into a managed fund using cash, or buy into a managed fund with 40-50% gearing

 

On the cotrary, being open with figures is fine. My comment was more along the lines of "I hope you don't think I'm prying"

Cheers Learning.

MJK

 

Absolutely, without a doubt. Thanks Michael.

PS. I have lost large dollars also. Basically all of last years gains.
The only people that havnt are those that where out. The game for me is now to protect my original equity i.e. what gains I've made from selling realestate and drawn from LOCs. Forget about last years gains, theyre gone.

Thats why I wanted to know if people that are still in the market at this late stage are still thinking of exiting or are in for the long haul.

MJK

MJK

 

I'm sitting on paper losses of about $140k, about 35% of share portfolio, or about my last 18 months growth. Bugger. No point in selling unless forced, the assets are still producing income and have some hope of long term recovery.

However, I may have a very large CG this year (from property), and may sell some duds that will take too long to recover (property funds etc) to offset the CGT. Maybe I buy them back later at a time and manner not considered as a wash sale. This market brings on some horrible emotions, but it's too late to sell now, I missed that time a while back (no stop loss or plan, thanks for the lesson Tropo).

I would have sold down some last November but for my margin loans being on 12 months pre-paid fixed. Would have been cheaper to forgo that interest and pull out, but that’s just 20/20 hindsight talking.

 

Ok.....I reduced but will probably be looking at starting to enter again over the next couple of months. No need to reduce further for me.

Structuring to finalise Settlement of new PPOR/Renovating etc. is the priority, followed by an adequate buffer and then I'll probably begin to buy back in. Possibly in a couple of stages but we'll see. From there I'm in for the long, loooong, loooooooooooong haul. As long as they fit the structure that is working for me, they can outlast me.

 

You and me both. We are settling on a PPOR (buy and sell) which will yeild large LOC. I will begin to re-enter, in stages I think, and hold loooong also. I still consider holding shares and managed funds on margin as a good way to access realestate based equity, so long as things level out or improve in the next few months.

MJK

 

I've just read back a few weeks of posts, and feel for Michael and his situation.

I'd like to fill you in on my position.
All told, my share portfolio is down from the peak about $115k. But I have only realised a few small losses, and secured some gains.

I don't have a ML (shares bought from LOC) so I don't have any margin pressure.

Yes, I am heavy in banks and miners, so half my portfolio has been under a lot of pressure. But I don't care about the solvency of CBA for example, and I never intend to sell them.

I always planned to buy and hold. So my strategy is still intact.
And I can sleep at night, knowing that my cashflow is well under control.

A recovery will happen, but it might take 12-18 months to ride through.

But the question I put to everyone is this: If we know that shares are going to fall further, then why not short the DOW or SPI London-to-a-brick? Go on, I dare ya.

The market prices in sentiment as of today. Half the pressure is demand, half is supply, that keeps the market afloat. In other words, today's 5200 is based on a balance of factors. Sure, as the market drops, the pressure increases on those who are geared, which tends to accelerate the fall. And we have seen hedge funds mucking with short barrages, increasing the downward pressure.

But the market still has a buy price. I am tired of being told that having money in equities is crazy right now. What better time to buy than when the market is depressed and everyone else is selling?

That doesn't mean I'm buying, but it does mean that I'm not selling.

Stop losses and exit strategies are indeed a great idea, which is why I have GSLs on my speccies - and I have been sold out of three in the last couple of months.

But I don't intend to ever sell BHP, even if the hedge funds attack resources next. And I don't intend to sell the banks, or any other ASX50 stocks that I hold. Simply because I believe in the long term (20 years) upward returns of quality shares. Some might say that I'm always bullish - I guess I'm always positive, yep, but I know that there will be pain at times. But I made sure that I was never going to be in a position where I would be sold out on someone else's terms.

Why should I sell out now? Sure I'd save the LOC interest. But I'd forgo the fully franked dividends which nearly cover the interest costs. I am very prepared for the market to take another hit, just as I'm prepared for it to turn around.

At least this way I know that I'll be IN the market when it starts the next bull run!

One more thing I'd like to add: shares, or any other asset class, for that matter, should not be anyone's entire investment strategy. Asset allocation is critical, and I can defend my position as follows:

My PPOR: about $800k ($150k owing P&I)
My IP: about $400k ($200k owing IO)
My super: about $130k - all international shares
My shares: about $380k - 90% in ASX50 ($376k owing IO)
Cash: $50k (100% offset against PPOR)

So I have $1.2m property (68%), $500k shares (29%), $50k cash (3%).
I am still a long way off my preferred allocation of 45%:45%:10%.

If anything, I should be re-balancing by selling my IP and putting most into shares.

So, again, why should I sell my shares, could somebody tell me?