Stock market

[Andy_W]

Bad day today - but remember what Buffet said when others are fearful be greedy.

It is a bit over the top as a piece of advice, but I tend to consider big general market sell offs as buying opportunities when a business/fund has good fundamentals.

Yeah, the VIX is really high at the minute, it's pretty nasty.

But, what is putting me off is all the people who are talking like that are saying "the market is fundamentally sound", but all they're doing there is basing that on data from when before Trump took over, Trump could make that very much not sound, very easily. Things won't be sound with 25% tariffs, that's going to hurt everyone and then when Tesla can't sell a car as his target market hates him and when others like Nvidia have their own problems with DeepSeek or whatever.

There's now a 35% chance of a US Recession this year, and the S&P 500 is still trading at a P/E of 29, so it's still expensive. This could get a lot worse before it starts to get better.

It's just a case of whether it continues to sink, which it certainly can do, or it rebounds off this. Maybe all the tariff talk is temporary bluff to allow Trump to bend the rules and gain some pro-US outcomes, but I don't think Trump is that smart.

I'm debating whether to just continue the dollar cost averaging each month (maybe even change to each week), and see this through to the bottom, or whether just to park any extra in bonds or whatever.

I still think mid term AI is going to be key to making so many things much more efficient, so I still think we're on the up as a whole, but this could be a really nasty bump in the road.

 

[Thelittlefella]

Yeah, the VIX is really high at the minute, it's pretty nasty.

But, what is putting me off is all the people who are talking like that are saying "the market is fundamentally sound", but all they're doing there is basing that on data from when before Trump took over, Trump could make that very much not sound, very easily. Things won't be sound with 25% tariffs, that's going to hurt everyone and then when Tesla can't sell a car as his target market hates him and when others like Nvidia have their own problems with DeepSeek or whatever.

There's now a 35% chance of a US Recession this year, and the S&P 500 is still trading at a P/E of 29, so it's still expensive. This could get a lot worse before it starts to get better.

It's just a case of whether it continues to sink, which it certainly can do, or it rebounds off this. Maybe all the tariff talk is temporary bluff to allow Trump to bend the rules and gain some pro-US outcomes, but I don't think Trump is that smart.

I'm debating whether to just continue the dollar cost averaging each month (maybe even change to each week), and see this through to the bottom, or whether just to park any extra in bonds or whatever.

I still think mid term AI is going to be key to making so many things much more efficient, so I still think we're on the up as a whole, but this could be a really nasty bump in the road.

I DCA every month into the S+P 500 and a global tracker (I know there is a lot of cross-over) and I've put in an extra £1000 a couple of times over the last couple of weeks off the back of 2/3/4% drops. I'm in a similar position to you, I'm considering continuing with this strategy and putting in extra every time there is a slight drop, but then also holding off a bit to see if there is a more significant crash like drop before putting in a bigger lump.

 

[Andy_W]

I DCA every month into the S+P 500 and a global tracker (I know there is a lot of cross-over) and I've put in an extra £1000 a couple of times over the last couple of weeks off the back of 2/3/4% drops. I'm in a similar position to you, I'm considering continuing with this strategy and putting in extra every time there is a slight drop, but then also holding off a bit to see if there is a more significant crash like drop before putting in a bigger lump.

Yeah, it's an odd one, but thing is like I say it might just be a bluff and then everything picks up again, and if it does it would probably rocket back to where it was, so would end up missing the boat on those gains.

I put about half my salary into a basic world index each month but also sit on quite a lot of cash and another chunk with my bank which is quite bonds heavy, as an emergency/ rainy day fund or to lump in at a good opportunity. Can't make my mind up at the minute, which probably means I just won't do anything different, and just wait it all out.

Probably about 20k down over the last couple of months :S, but overall still about 10% up for the year so certainly not complaining. At least I'll be moving my yearly max into one of my ISA's when the market's in the shitter, this hopefully short term dip will save me a fair chunk in tax long term.

 

[Sheriff_John_Bunnell_ret]

I got some stocks about 8 years ago. So far I've made about 8 clams.

 

[swordtrombonefish]

Maybe all the tariff talk is temporary bluff to allow Trump to bend the rules and gain some pro-US outcomes, but I don't think Trump is that smart.

He's tried it before and it didn't work then...crying wolf again with the same trading partners is not going to work. People are clued up to desperate don and they won't accept his bully boy tactics

 

[Thelittlefella]

Yeah, it's an odd one, but thing is like I say it might just be a bluff and then everything picks up again, and if it does it would probably rocket back to where it was, so would end up missing the boat on those gains.

I put about half my salary into a basic world index each month but also sit on quite a lot of cash and another chunk with my bank which is quite bonds heavy, as an emergency/ rainy day fund or to lump in at a good opportunity. Can't make my mind up at the minute, which probably means I just won't do anything different, and just wait it all out.

Probably about 20k down over the last couple of months :S, but overall still about 10% up for the year so certainly not complaining. At least I'll be moving my yearly max into one of my ISA's when the market's in the shitter, this hopefully short term dip will save me a fair chunk in tax long term.

Sounds like we're both grappling with the same issue (although it sounds like you have a bit more invested than I do). I've had a lump sum that I've been wanting to invest for a while. Initially because because I'd maxed out my ISA allowance, and the later because the market was seemingly just waiting for a crash by the time my allowance re-set.

I've bought some of the dip recently, but even that has dropped since buying. I'm like you in the fact that I don't want to miss a great buying opportunity where I can get my lump sum it at lower prices and miss out on any potential bounce back, but also don't want to lump in now only for it to crash 10-20%. I'll probably keep adding £1000/£2000 every week or two from now on until the full amount is invested and then just continue with my DCA after that.

I'm invested for the long term, so I'm hoping that either way I'll look back in 10/20 years and realise it's made very little difference either way although it will be just my luck to see a lost decade

 

[Redwurzel]

Yeah, the VIX is really high at the minute, it's pretty nasty.

But, what is putting me off is all the people who are talking like that are saying "the market is fundamentally sound", but all they're doing there is basing that on data from when before Trump took over, Trump could make that very much not sound, very easily. Things won't be sound with 25% tariffs, that's going to hurt everyone and then when Tesla can't sell a car as his target market hates him and when others like Nvidia have their own problems with DeepSeek or whatever.

There's now a 35% chance of a US Recession this year, and the S&P 500 is still trading at a P/E of 29, so it's still expensive. This could get a lot worse before it starts to get better.

It's just a case of whether it continues to sink, which it certainly can do, or it rebounds off this. Maybe all the tariff talk is temporary bluff to allow Trump to bend the rules and gain some pro-US outcomes, but I don't think Trump is that smart.

I'm debating whether to just continue the dollar cost averaging each month (maybe even change to each week), and see this through to the bottom, or whether just to park any extra in bonds or whatever.

I still think mid term AI is going to be key to making so many things much more efficient, so I still think we're on the up as a whole, but this could be a really nasty bump in the road.

Interesting post

To answer some of your points - the market is sound to me, because demand is solid to strong for many products and services, US unemployment is low and not increasing, there is lots of liquid money floating about looking for a home, Trump is likely to cut US taxes to increase demand further, interest rates to me are low in the USA and falling. People can borrow 10 year loans at 4.22% today, just below long term US inflation, US dollar is still quite highly valued, GDP in US still quite high. Tariffs come today and go tomorrow what does that say? To me its says they are, in general temporary and he is playing games. He will not want to damage the stock market.

The risk of recession could come from say people borrowing to buying stuff like Bitcoin and Tech Stocks and then losing money and panic selling. In US people do this sort of thing and its almost unknown in Britain. Bitcoin, TESLA and Nvidia are all well down in the last 2 months. In the 1920s US investors bought too many shares, borrowing to do so and creating a massive bubble in 1929. When prices dropped lots of Americans felt much poorer and stopped spending.

Trump only came in on Jan 20th so it will take time for data to come in, but I don't here stories of panic in the USA in the last 7 weeks. The dollar would be falling quite quickly if the US economy was struggling. It has fallen a bit about 5% - panic I would say is over 20%.

If you think AI is the future, don't you think Nvidia will do well, even with Chinese competition?. I heard recently NVidia was on a P/E of 22 which says its a cheaper than average share. I tend to buy Technology Investment Trusts because you are buying their brains and a good spread of technology. They have lost me money recently, but had also allowed me to retire early. They look value now but were over valued. Everyday I read and hear about how technology is entering our lives and how it actually dominates the lives of many people now even when they don't want it to. My advice is diversify a bit from Tech too, for example land , people will always need it and value it in its different forms - residential housing, leisure, offices, storage, food production, forestry and its reducing.

I am a fan of pound average costing and regular saving - if you leave it alone it takes some of the emotion away, particularly emotional swings. I am finding it harder to see bottom and tops!

I reviewed this yesterday, now, for modest new monthly SIPP contribution

50% Ruffer Investment (anti-share fund - Gold, Inflation linked bonds - a balance for tech shares)
25% Liontrust European Dynamic (Cont. Europe is cheap, war is forcing govt spending)
25% Jupiter Asian Income (Asia is cheap and growing fast)

 

[Nano]

The long term trend will always be up so whether you buy now, yesterday or tomorrow then compared to 10, 20 or 30 years in the future there will be very little difference. If your strategy has always been monthly investments then you had that strategy for a reason so keep doing it.

You can make quick wins, and quick losses, by trading but the likelihood of either is the same. You are unlikely to beat the average for the market in the long run so get in, stay in and don't think about about it too much because you might do something you regret.

 

[VladKinder]

“The key to making money in stocks is to not get scared out of them.” Peter Lynch

"When a dress is on sale you want to buy but people's behaviour it's opposite in the stock market; you want to buy higher and sell lower. You need to fight that emotion." Stanley Druckenmiller

“The stock market is the only market where things go on sale and all the customers run out of the store.” Cullen Roche

 

[VladKinder]

In his book "Just Keep Buying" Nick Maggiulli calculated that historically DCA beats Buying the Dip 70% of the time, and that is when someone can perfectly buy the dip.
If someone is out by 2 months in buying the dip DCA wins 97% of the time.

 

[Thelittlefella]

View attachment 88494

In his book "Just Keep Buying" Nick Maggiulli calculated that historically DCA beats Buying the Dip 70% of the time, and that is when someone can perfectly buy the dip.
If someone is out by 2 months in buying the dip DCA wins 97% of the time.

This is the difficulty, I know that I should just put my lump sum in now, but there's an urge to hold off. I'm therefore doing something in the middle, and putting in parts of the lump sum every few days/weeks as the markets are going down.

 

[VladKinder]

This is the difficulty, I know that I should just put my lump sum in now, but there's an urge to hold off. I'm therefore doing something in the middle, and putting in parts of the lump sum every few days/weeks as the markets are going down.

Not advice, but you can spilt into three pots:

Third lump sum.

Third you DCA.

Third you hold for a big dip/crash (say 20-30% from a high)

Then a decade or so down the line see which has done the best.

The main thing though is not to sabotage yourself by doing anything silly.
You don't have to do anything special to get good returns over the long term, just avoid trying to get rich quick.

Richard Thaler once said that Rip Van Winkle would make the best investor.
He would invest in a diverse global index fund, fall asleep for 20 years then awake to find he's outperformed nearly every other investor.

And just to add a football analogy, In is book The Little Book of Behavioural Investing, author James Montier did a study on Goalkeepers facing Pens.
He found 90% decided to dive left or right, when around a third of pens go down the middle, so more pens would be saved if the Goalie did nothing.
But when asked why they dived most Goalies said because they felt like they need to look like they were doing something, make a decision.
With investing the best thing to do the vast majority of time is: Nothing.

The main thing is just to keep adding money that you don't need anytime soon.

 

[Andy_W]

Interesting post

To answer some of your points - the market is sound to me, because demand is solid to strong for many products and services, US unemployment is low and not increasing, there is lots of liquid money floating about looking for a home, Trump is likely to cut US taxes to increase demand further, interest rates to me are low in the USA and falling. People can borrow 10 year loans at 4.22% today, just below long term US inflation, US dollar is still quite highly valued, GDP in US still quite high. Tariffs come today and go tomorrow what does that say? To me its says they are, in general temporary and he is playing games. He will not want to damage the stock market.

The risk of recession could come from say people borrowing to buying stuff like Bitcoin and Tech Stocks and then losing money and panic selling. In US people do this sort of thing and its almost unknown in Britain. Bitcoin, TESLA and Nvidia are all well down in the last 2 months. In the 1920s US investors bought too many shares, borrowing to do so and creating a massive bubble in 1929. When prices dropped lots of Americans felt much poorer and stopped spending.

Trump only came in on Jan 20th so it will take time for data to come in, but I don't here stories of panic in the USA in the last 7 weeks. The dollar would be falling quite quickly if the US economy was struggling. It has fallen a bit about 5% - panic I would say is over 20%.

If you think AI is the future, don't you think Nvidia will do well, even with Chinese competition?. I heard recently NVidia was on a P/E of 22 which says its a cheaper than average share. I tend to buy Technology Investment Trusts because you are buying their brains and a good spread of technology. They have lost me money recently, but had also allowed me to retire early. They look value now but were over valued. Everyday I read and hear about how technology is entering our lives and how it actually dominates the lives of many people now even when they don't want it to. My advice is diversify a bit from Tech too, for example land , people will always need it and value it in its different forms - residential housing, leisure, offices, storage, food production, forestry and its reducing.

I am a fan of pound average costing and regular saving - if you leave it alone it takes some of the emotion away, particularly emotional swings. I am finding it harder to see bottom and tops!

I reviewed this yesterday, now, for modest new monthly SIPP contribution

50% Ruffer Investment (anti-share fund - Gold, Inflation linked bonds - a balance for tech shares)
25% Liontrust European Dynamic (Cont. Europe is cheap, war is forcing govt spending)
25% Jupiter Asian Income (Asia is cheap and growing fast)

Great post.

Yeah, I'm certain NVIDIA will do well they're still the best chip manufacturer, but others will catch up, unless NVIDIA break them all. It's just a case of how well they do, isn't it? Some say more efficient models like DeepSeek might cut demand for chips, but I'm not convinced by that, I just think we will still use the best chips and just do more with them. I'm certainly no expert on all of this, but do have an interest in it.

Another problem with NVIDIA though is if they block those chips to China, then that's a massive market which would almost disappear. They could have gone from like a P/E of 30 with a 130 share price, and that P/E 20 at 100 shar price or whatever they're at now could go to P/E 30 at a 100 share price if earnings drop, then it's expensive again, bt expensive at that low price, so could just keep dropping.

It's all very complicated.

I used to have a smaller account for more messing around, which had a load of individual picks in it, but I don't think I'll be buying any more NVIDIA as a sole stock though. I'm glad I got out of that when I did, which was when it was about 125 I think. Thing is I just sold that and bought NDX or S&P 500, can't remember which, and then sold that and just went all world instead. It's risky still, as I'm very high in equities but I've got time, so I'm not fussed.

 

[Andy_W]

The long term trend will always be up so whether you buy now, yesterday or tomorrow then compared to 10, 20 or 30 years in the future there will be very little difference. If your strategy has always been monthly investments then you had that strategy for a reason so keep doing it.

You can make quick wins, and quick losses, by trading but the likelihood of either is the same. You are unlikely to beat the average for the market in the long run so get in, stay in and don't think about about it too much because you might do something you regret.

Yeah, totally agree with this.

The only way I see it no longer going up is when this low birth rate really bites or growth stops a rapid rise. I don't really get how there could be major growth if western populations get older and older and maybe even smaller and smaller. If we keep making young peoples lives **** and don't sort out this wealth divide then I think there will be a population decrease quicker than people expect.

I don't know what would happen in that instance, as it's never happened since the stock market existed. That's what scares me a bit about relying on the long term trends of everything going up, as it's gone up in line with populations and major growth acceleration. The western world is probably not far off growing as much as it can, or that growth might slow.

Still think we're a couple of decades away from the real trouble of that mind, so might not even play much or any part before I retire.

 

[Nano]

Yeah, totally agree with this.

The only way I see it no longer going up is when this low birth rate really bites or growth stops a rapid rise. I don't really get how there could be major growth if western populations get older and older and maybe even smaller and smaller. If we keep making young peoples lives **** and don't sort out this wealth divide then I think there will be a population decrease quicker than people expect.

I don't know what would happen in that instance, as it's never happened since the stock market existed. That's what scares me a bit about relying on the long term trends of everything going up, as it's gone up in line with populations and major growth acceleration. The western world is probably not far off growing as much as it can, or that growth might slow.

Still think we're a couple of decades away from the real trouble of that mind, so might not even play much or any part before I retire.

It's probably the opposite. As long as central banks keep printing money then assets that aren't cash will keep going up faster than cash. Banks will print more money as economies become worse.

 

[Andy_W]

It's probably the opposite. As long as central banks keep printing money then assets that aren't cash will keep going up faster than cash. Banks will print more money as economies become worse.

Yeah, don't disagree with that. The stock price might still go up then, but the value of that, as in what it's equivalent to probably wouldn't?

What I'm probably getting at, is if you put £1/ loaf of bread into the stock market in say 2010, you might get £2/ 1.5 loaves of bread back in 2020. But if you put in £2/ 1.5 loaves of bread now, we might end up with £4 coming out, but it can't even buy one loaf of bread. The number goes up, but the value doesn't.

Need to still be beating inflation, and printing money will just devalue what that money gets you.

 

[Thelittlefella]

Not advice, but you can spilt into three pots:

Third lump sum.

Third you DCA.

Third you hold for a big dip/crash (say 20-30% from a high)

Then a decade or so down the line see which has done the best.

The main thing though is not to sabotage yourself by doing anything silly.
You don't have to do anything special to get good returns over the long term, just avoid trying to get rich quick.

Richard Thaler once said that Rip Van Winkle would make the best investor.
He would invest in a diverse global index fund, fall asleep for 20 years then awake to find he's outperformed nearly every other investor.

And just to add a football analogy, In is book The Little Book of Behavioural Investing, author James Montier did a study on Goalkeepers facing Pens.
He found 90% decided to dive left or right, when around a third of pens go down the middle, so more pens would be saved if the Goalie did nothing.
But when asked why they dived most Goalies said because they felt like they need to look like they were doing something, make a decision.
With investing the best thing to do the vast majority of time is: Nothing.

The main thing is just to keep adding money that you don't need anytime soon.

When you say different pots, do you mean across three different providers?

 

[Nano]

Yeah, don't disagree with that. The stock price might still go up then, but the value of that, as in what it's equivalent to probably wouldn't?

What I'm probably getting at, is if you put £1/ loaf of bread into the stock market in say 2010, you might get £2/ 1.5 loaves of bread back in 2020. But if you put in £2/ 1.5 loaves of bread now, we might end up with £4 coming out, but it can't even buy one loaf of bread. The number goes up, but the value doesn't.

Need to still be beating inflation, and printing money will just devalue what that money gets you.

The asset will perform better the weaker cash becomes so holding the asset becomes more appealing. In your example bread would be a good investment vs cash. Would stock vs bread be a better investment is the only question (or gold, property, bitcoin etc). People with money will still invest in assets and if cash is devaluing, because of inflation then assets that beat inflation will become more attractive and that could be everything. Even in the worst recessions the most successful businesses survive and then they are left with less competition so investments in global indexes will ensure that they will beat inflation.

The sort of event that would mean businesses can't even function enough that markets stop going up probably means conditions are so bad that our investments are the least of our worries.

 

[VladKinder]

When you say different pots, do you mean across three different providers?

No. The provider doesn't matter as long as you keep costs low.
So you want a global ETF that has a expense ratio of 0.2% or lower, then buy it on platform that doesn't charge excessive fees.
Trading212 is my preferred choice (I hate the name because no one should be trading, they should be investing)
A global tracker should pay a small divided of about 1.5%, which is more than enough to cover your fees.

By 3 pots my suggestion was that if you are unsure how to invest your money: now or later, you can do both.
Lump sum some, DCA some, keep cash for a crash. Or 2 of the 3.
There's no one size fits all. It depends on your age, experience, goals, tolerance to risk and volatility.

The main thing is to pick a strategy and stick with it. Do not bail out when the market goes down, if anything put more money in if it's money you don't need to pay bills with.

The data which can help you keep a cool investing head in a crisis

Four bite-sized pieces of research showing investors are best served not making decisions in the heat of the moment.

www.schroders.com

 

[northernrower]

My global EFTs are with Vanguard's Lifestrategy range - 60 and 100%.

I've also got investment in the S&P 500 and Bitcoin.

Hopefully this mix will be enough for early retirement!!!!