Panic, yes. A lot. I invested all my savings which I had kept for buying a house next year in ETFs as I thought what could go wrong? And I invested mostly in Dec and Jan when the market was already at the peak. I am alreday down 25% on a huge amount so worried that it may not recover by the next year. Right now my hope is to recover at least my money. Don’t want any profit.
Oh sorry to hear that! I hope it recovers in time for your move.
I’m sure you’re aware by now, but you shouldn’t invest any money you’ll need it the next 3-5 years. Investing is a long term game - 10 years plus!
An appropriate read.
Thanks. I thought ETFs are safer than individual stocks. I was ready to take a risk of some fall but 25%, I never anticipated. When it started falling, for every fall I thought that was the bottom. Learning the hard way I guess.
This resource is helpful to build foundational knowledge, do get acquainted if you haven’t yet:
This experience might make you stay away from from stock market, what is important is keep in touch with market and not be overly pessimistic.
Lots of sound thinking here:
Not wanting to teach you how to suck eggs, but ETFs are no more and no less than a basket of stocks that is designed to track a certain index. Therefore, if the market goes down stocks go down, thus the ETF goes down.
They’re not safer, but they are more likely to give you returns in line with the market as you don’t have to manually pick the underlying stocks as professionals do that for you.
Therefore, they are “safer” from a performance perspective, but they they are not “safe” from the vagaries of the stock market performance.
Actually, they are safer. Almost all ETFs take away unsystemic risk, leaving only market risk. This is not the case for individual stocks, so ETFs are by definition safer.
Absolute safety is a fallacy, it does not exist. However, investing right before a crash is incredibly unfortunate. Very sorry for that. However, investing should never be done with a 1 year time horizon.
For anyone who holds US stocks in particular, this blog has some very relevant information.
“Recently, on a market cap/GDP perspective, we exceeded the highs of the tech bubble. The stock market was valued at 150% of GDP. We were at 140% in 2000. We’re at 125% now.
To put this into perspective, at the lows in the early 2000’s bear market, we got down to 75% of GDP. That is 40% down from here.
And what happened during the recession of the early 2000s? Unemployment peaked at only 6%. To put this into perspective: unemployment was 6% in 2014 when we felt like the economy was booming. In the early 2000’s, we barely had a decline in GDP. The overvaluation in the market meant that an extremely mild recession was enough to send markets into a 45% peak-to-trough decline.
In 2008, the market was not as expensive. We were at 110% of GDP. The valuation fell to 57% of GDP. If we fell to this level from here, it means markets fall by another 54%. Hello, S&P 1,250”.
So basically, if you are happy to risk the value of your investments falling by another 54% from current levels, then by all means hold. Basically if you don’t need the money for the next 5-10 years then fine. However, anyone who needs the cash within the next couple of years should seriously consider the points raised.
The GDP impact of shutting down countries, nevermind stores, is a complete unknown. It’s going to get an awful lot worse before it gets better in my opinion.
When Apple moves everybody moves. And sector specific very large ETFs are inherently exposed to company risk one way or another. There’s a blurry line between market risk and unsystematic risk.
I feel sorry for the poor lot who are late 50’s and were 18 /20 or 23/25 into their endowment and have now been whacked with a massive shortfall. Probably on top of the shortfall have lost the job as well with limited chance of another.
Guess the banks will want a PG of the shortfall , or we get huge amounts of equity release schemes that shift the debt
Very very sad for people who thought they had a nest egg and been knocked over with a tyson punch
“Be fearful when others are greedy and greedy when others are fearful.”
I would hope anybody that close to retirement would have diversified away from equities - for example Vanguard Lifestrategy 40 is a 60:40 bond/share split and is almost the same price as it was at this point last year. Although even LS100 is only 10% down indicating how much growth there was between Apr → Feb.
That’s why pensions ask you to specify a retirement age, in order to start shifting money into to safer options. Well that’s what i’ve always assumed
Those invested in anything esoteric depending on the black stuff might be:
No panic. went all cash (Exception Eurasia mining) at early start of crash. Now started to put back selectively.
It’s the humour on the S&P 500 going up when the sentiment was to be down.
No panic, I’m waiting to start picking up discounted stocks here and there as the market starts to regain soon semblance of reality.
Irritatingly, most of the stuff I want is pretty much where it should be, and well above the limit I was hoping for, whist the rubbish is plummeting. Can’t help but think this will be a recession with two very distinct tiers of company.
That hasn’t stopped me chucking some beer money at CCL and the like though can see them climbing back to 20 within 6 months, I reckon they probably have enough liquidity to last to the new year.
Yes, I’m in a loss and monies are going down. Only down about 5% though so hoping for a nice spike when things recover