I’m sure like many others the last few days on the LSE have been really poor. I’ve gone from being up on my £900 investment by about £20 to now only about £5. This is over a 6 week period. I’m just really concerned I’m going to start seeing a loss in what I’ve invested. The thought has crossed my mind to sell ? Can anyone give me some advice please. Thank you.
Time in the market is better than timing the market.
The stock market is always volatile so there will be times when it falls.
Here’s some info that I collected about how to handle the volatility & what’s happened in the past - Current US tech bloodbath.
We also wrote a blog post about this.
I hope that helps!
Relax. Investments in the stock market are for the long term. If you don’t need this money for a year or two at least (hopefully lonnger), and you are confident about the companies you invested in, it really doesn’t matter if it is down by 1%, 5%, or 20%, and it will go back up again.
Short term flucations are typically nothing to be worried about, but it does depend on what you have invested in.
If it was 1 company and the drop has been because the company is on its way to bankruptcy, you should probably sell.
If you’ve invested in a broad index tracking ETF like VWRL, then the drop means you should probably try to buy more, because you can assume it will rise again in the future and you’ll make even more money.
I’m in the red overall in my Freetrade account. I bought a wide range of stock last month when android went live. At first I was in the green but it’s dropped back over the last few days. some things are still showing a decent profit, others are showing a loss.
I’m not worried though. I will just hold and collect dividends. I’m confident I will be well in profit later this year.
Have a bit off a look into Stock market Seasonality. it is traditionally a bit slow from May onwards and picks up towards the end of the year (although this can’t be guaranteed)
It’s interesting the different attitudes people have to this. My personal rule is never sell unless you have made money.
The reason being I pick solid stocks that are very unlikely to go bankrupt, but if they did I would just have to write the money off. I do this to avoid panic selling on bad news or a market crash. When I first started I used to sell on bad news, fearful of dilution or bankruptcy, and invariably stocks would go up again (though sometimes it takes years). If you’re in it for the long haul and like the company I can’t see a reason to sell if it goes down - on the contrary often a good time to buy more.
Yes it does thank you. I think I just need to ride the storm out for now instead of panicking. Like a lot have advised most of my investment is in ETF’s with only a few dabs in individual stocks like Glencore (I know bad move) and ITV.
I don’t think it’s prudent to be blind about these things. Yes, you shouldn’t react to the slightest bit of negative market news. But you have to look in to the specifics of the company in question. If they have actually announced they are going in to administration, you sell! There’s no point making a 100% loss when you can make a lesser loss instead.
Generally speaking, if you’re picking stocks on the basis of some rationale (and not just doing so effectively randomly), then you should be rebalancing and checking if your portfolio still matches your rationale. Even a determined “buy and hold” investor should not hold on to terrible companies. They should sell to buy something else if there is now a better company according to their criteria.
@anon287192 I’m trying to look at this from the perspective of a beginner - the biggest mistake people make is too much trading, trying to react to news (which is already old news as far as the market is concerned). Clearly there will be some circumstances where it’s sensible to sell to avoid a complete loss. But just as an example in 10 years of investing I’ve never had to sell because a company was going to go into administration, and I suspect by the time I realised that was the position, I’d have lost 80-90% of the investment anyway. It just hasn’t happened, though I accept it could happen. I don’t think you should describe strategies which are not yours as blind, they’re just different.
The advice to hold is not for the circumstance you outline, but for the hundreds of other similar circumstances that would make a beginner sell (gone down 10% must sell! bad news about company being sued, must sell! etc). It’s far more common and likely to sell for those reasons and justify it to yourself with the reasoning that they might go to 0.
Everyone has a different strategy, with more or less activity required. Some people do very well with a simple buy and hold strategy, and I’m inclined to think for a beginner it is better than attempting to rebalance frequently. Screening stocks and picking on that basis with relatively active trading is your strategy, and I’m sure it works well, but I’m not sure it’s something I’d recommend to a beginner starting out. Companies do not usually become terrible overnight, it’s often a long process, so there’s plenty of time to sell if you think a company is not keeping up or headed in the wrong direction.
Don’t worry about it @Pazza. If this was September and today was January it would be a value of around £750! Markets can be very volatile - but they always have recovered and usually within months. If you find it depressing or worrying it’s best not to look. The news always reports the dips and crashes, but never reports the long term gains. Remember we are all in the same boat. If yours go down, mine will go down too. Perhaps mine will go down more. None of us have lost anything.
Have a read of Bob - the world’s worst investor.
We’re actually largely in agreement, and this is not my strategy. Ideally it wouldn’t be relevant for a beginner investor, but there are beginner investors who attempt to pick (screen) stocks. I was only pointing out that that logic dictates if you’re following a stock screening strategy, even if it’s with the goal to buy and hold, you still follow your own strategy every year and keep screening. Importantly, you screen your own stocks in addition to new ones.
A Warran Buffet style investor who avoids selling at all costs still sells when appropriate.
6 week period?
Shares are extremely likely to beat other investments but only over timescales measured in years not weeks.
Very few short term traders make money.
Your a great lot I appreciate all your comments and of course reassurance. Thank you
There’s a fun little game here to try to illustrate this time-in-the-market point. Obviously oversimplified, but you get the idea -
Relax. Just look and think long term. I was the same when I first started on here. Now my investments can vary by about £80 a day. I just let it do it’s thing and keep on investing every month
Ride the wave, practice pound cost averaging and you’ll be set for a good retirement. If you’re concerned on your shares fluctuating short term maybe you are investing for the wrong reason or are scared to lose that money. If this is money you can’t afford to risk try looking for a high interest savings account
I would advise to read some of the Warrent Buffet books or Ben Graham - The intelligent Investor.
Typically stocks are going in waves. goes up/ retraces /goes up and so on. I try before buying to project this company for 10 years. So typically holding stock for 10 years you would eliminate all the noise in the market. Makes you sleep better. Same happens with your pension fund or saving account in the bank its just you dont see it behind the curtains. Life got many ups and downs.
Depends how risk averse you are - if you’re concerned about making any kind of loss I’d just put the cash in the bank.
Worry not. As said earlier it is time in the market, rather than “timing”. Few can master the latter.
This is where pound cost averaging is your friend. Coupled with Freetrade’s compelling model of zero/low cost transaction fees, just drip feed into the market. On “down” days you get more shares for your money. In fact really bad days are when I prefer to buy. I would only buy in a rally if FOMO was winning in my mind. Buy into quality companies and periodic drip feed invest throughout the cycles and try to ignore the gyrations of the market. Don’t invest money you envisage needing in the very short term.
I’m down 3.65% but I’m not worried, I’m kind of ok with it because as our mate Buffet says (we do like to quote him, or in my case paraphrase) “you only want the stock price to go up if you plan on selling soon, otherwise you want it to go down (within reason) whilst you accumulate”.