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Is anyone panicking yet ?

Discuss Stock buying Shares, tips and ideas for stock market dealing
tournesol
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Is anyone panicking yet ?

#289330

Postby tournesol » March 9th, 2020, 12:17 pm

The most interesting thing I've read recently is an explanation of a key indicator proposed by Warren Buffett to identify inflexion points in the market.

It's of general interest rather than being specific to Hur, but I thought some might find it interesting.

I usually switch off when people start referring to WB and claiming to recycle his insights, but actually the contents of the following links makes intuitive sense and, if nothing else, looks like it fits the data.

Basically it compares the total market cap of the entire US market with the US GDP/GNP

It's a bit like doing a P/E calculation at the level of the entire country.

Worth reading I think.

Here's a couple of links:-

hTTps://www.ccn.com/buffett-indicator-s ... -over-yet/

hTTps://www.gurufocus.com/stock-market-valuations.php

Moderator Message:
I've relocated this post by tournesol here as being more appropriate than the HUR thread. Because it is earlier-in-time than Wicked Lester's first post it tried to rename the thread on me. So I have reverted the thread back to the original title as given by WickedLester. Apologies if that has confused anyone. regards, dspp

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Is anyone panicking yet?

#289463

Postby WickedLester » March 9th, 2020, 6:11 pm

I just wondered what other Fools feelings were towards the coronavirus scare and recent stock market falls.

My SIPP is down some 20% from its position just a few weeks ago although i'm satisfied that I have nothing in there that is significantly overvalued I am braced for further pain.

I haven't sold anything yet although I may bite the bullet and get rid of what remains of my small SAGA shareholding as it is clearly very exposed to the coronavirus epidemic.

For the most part though I am of the mind that many of my holdings have substantial cash balances and can ride out any downturn and feel that now is not the time to panic.

So are other Fools going to sell and wait or sit tight and ride out the market?

AleisterCrowley
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Re: Is anyone panicking yet ?

#289467

Postby AleisterCrowley » March 9th, 2020, 6:24 pm

Wait and buy slowly (not going all in)
I'm about 25% in cash. It was much lower as a percentage a few weeks back, and I haven't touched anything :shock:

I'm moving to more globally diversified passive investing - not much protection against global pandemics obviously! I'll probably drip cash into VWRL, and possibly pick off a few UK shares that look tempting

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Re: Is anyone panicking yet ?

#289470

Postby doug2500 » March 9th, 2020, 6:27 pm

Personally I, like yourself, feel that my collection of companies have robust enough balance sheets to weather the storm so I'll sit tight. I try to view them as businesses not tickers and TRY not to worry about day to day valuations. I have a long time scale which makes it (slightly) easier.

The time to sell IMO is past. If you had the foresight - great, but my plan is not to try to time the market but remain, more or less, fully invested. I'd be too worried that I might sell out just at the point it goes up 10%.

Of course it could get much worse, the FTSE hitting the 4000's would be bad but not without precedent. But even at these levels some things look very tempting to dabble in. I have about 5% cash which I'm tempted to deploy.

Things that look tempting to me:
Somero
Zytronic
Hargreaves Lansdown
Simplybiz
K3 capital
Fevertree
Jarvis securities
Numerous IT's

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Re: Is anyone panicking yet ?

#289471

Postby WickedLester » March 9th, 2020, 6:33 pm

It's funny that you mention Zytronic Doug as I have a few shares in them and feel that they will warn soon as they do a lot of business with casinos in the Far East. If and when they do I think that is the time to buy more. Personally I am holding off buying more at the moment but they have a rock solid balance sheet and a good record of profitability.

dspp
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Re: Is anyone panicking yet ?

#289472

Postby dspp » March 9th, 2020, 6:35 pm

In Oct 2007 entering early 2008 the FTSE 100 went from about 6700 to about 3700, so a decline of about 45% from peak. It was back at about 6700 by Oct 2013, some 6-years later. However the bulk of the action happened between Apr 2008 and April 2010, just 2-years.

A longer view would be to look at the Dow where it took 30-years to return to the 1929 point. But even then the bulk of the action was in the central 2-4 years.
https://www.macrotrends.net/1319/dow-jo ... ical-chart

Personally I am doing nothing.

regards, dspp

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Re: Is anyone panicking yet ?

#289475

Postby JohnB » March 9th, 2020, 6:45 pm

By all means sell and buy new to rebalance avoiding capital gains. If you just sell you are locking in your losses. The question is whether we are seeing 6 months disruption, and then back to previous conditions, or a proper recession. If you feel the former, the market has gone down too far, if the latter you should have sold at Christmas, 'cos its too late now.

Me, I'm not a market timer, so I will just rebalance (probably away from the UK, I'm a Remainer) and ISA transfer, but I know I don't better than the market, other than it tends to over-correct.

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Re: Is anyone panicking yet ?

#289476

Postby SalvorHardin » March 9th, 2020, 6:46 pm

Not panicking and unlikely to do so. I've lived through falls like this before. It helps that although I live off my portfolio I have a big margin of safety (a 50% fall in dividends doesn't affect my standard of living).

I bought something at lunchtime today. About £25,000 worth of CLS Holdings, a pan-European property company, before going off to Taunton races this afternoon.

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Re: Is anyone panicking yet ?

#289483

Postby monabri » March 9th, 2020, 7:17 pm

In the words of Paul Daniels.."not a lot " (but I don't like it).

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Re: Is anyone panicking yet ?

#289486

Postby fca2019 » March 9th, 2020, 7:24 pm

Sitting tight, not going to sell and crystallize losses, not going to buy either in this market, except I will slowly drop feed into Sipp though to get tax relief.

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Re: Is anyone panicking yet ?

#289487

Postby scrumpyjack » March 9th, 2020, 7:34 pm

Certainly not panicking. It is just for situations like this that one keeps a large cash buffer.

Given that we have had nearly 12 years of rising share prices, I guess this is now a bear market. It is not just about CV-19. Bear markets last a lot longer than a week or two and the drop is usually more than we have experienced so far. So I would not rush in yet buying. This has a lot further to run. It will take months for CV-19 to run its course and I can’t see a significant bounce until that situation becomes much clearer.

The oil turmoil adds another dimension. It will take a long time to play out as shale is not going to shut down. The extraction kit has been bought and needs to be used as long as there is a marginal contribution. It may not be economic to start new shale sites at the current oil price, but no reason to shut down existing ones?

Longer term I see no reason why things should not recover as they have in the past.

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Re: Is anyone panicking yet ?

#289494

Postby dspp » March 9th, 2020, 8:02 pm

scrumpyjack wrote:Given that we have had nearly 12 years of rising share prices, I guess this is now a bear market. It is not just about CV-19. Bear markets last a lot longer than a week or two and the drop is usually more than we have experienced so far. So I would not rush in yet buying. This has a lot further to run. It will take months for CV-19 to run its course and I can’t see a significant bounce until that situation becomes much clearer. The oil turmoil adds another dimension. It will take a long time to play out as shale is not going to shut down.

Longer term I see no reason why things should not recover as they have in the past.


tournesol wrote:The most interesting thing I've read recently is an explanation of a key indicator proposed by Warren Buffett to identify inflexion points in the market.

It's of general interest rather than being specific to Hur, but I thought some might find it interesting.

I usually switch off when people start referring to WB and claiming to recycle his insights, but actually the contents of the following links makes intuitive sense and, if nothing else, looks like it fits the data.

Basically it compares the total market cap of the entire US market with the US GDP/GNP

It's a bit like doing a P/E calculation at the level of the entire country.

Worth reading I think.

Here's a couple of links:-

hTTps://www.ccn.com/buffett-indicator-s ... -over-yet/

hTTps://www.gurufocus.com/stock-market-valuations.php


The world has been toppy for quite a while, but as always knowing when to get off and go to cash is only ever easy in retrospect. It is certainly beyond my normal abilities. On this occasion there are - so far - two pro forma initiating events (CV-19 and ROPEC fall out). Maybe historians will tell us they are caused by other underlying factors (rejuvenation of superpower rivalry, etc). And they will likely trigger other major problems in turn. Or maybe the politicians of today will be able to get things under control swiftly for at least another electoral cycle. I always underestimate what politicians up for election can manage to shovel onto the next generation.

I really don't know, so I am sitting tight, staying invested, and touching nothing. It is a funny old world when the most stable share in my portfolio is TSLA !

However if this lasts into April 2020 then many people sitting on 12-years of gains will get a chance to do some helpful CGT moves by B&ISA-ing.

regards, dspp

(p.s. quite why tournesol saw fit to drop that bit of Buffetology into the HUR thread beats me, but by linking it like this I have put int in a more relevant place. I will now move the original post as well, if I can do so).

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Re: Is anyone panicking yet ?

#289499

Postby SalvorHardin » March 9th, 2020, 8:27 pm

A problem with the Buffett indicator (US market cap. / US GDP) is that it doesn't take into account the much bigger overseas sales made nowadays by American companies compared to, say the 1960s. These have increased market value dramatically but not increased American GDP. See this article:

http://www.forbes.com/sites/mikepatton/2016/04/30/why-warren-buffett-might-be-wrong/amp/

It looks great now, but strict application of it would have got most investors out of the stockmarket sometime in 2014-15. Missing out on a heck of a lot of gains.

It's a bit like using book value to value Berkshire. This has become increasingly outdated, as many of us Berkshire shareholders know. That's because the wholly owned and majority owned subsidiaries have in recent years become a much bigger part of the company than the investment portfolio (many operating companies shares trade at several times their book value).

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Re: Is anyone panicking yet ?

#290244

Postby tournesol » March 12th, 2020, 6:17 pm

SalvorH

I disagree.

Perhaps I'm being simple minded, but an alarm bell that rang loudly in 2000-1 and again in 2008-9 and again a few months ago seems to me like it's offering a useful service.

I lost 66% in 2000-1 and 50% in 2008-9.

I went 100% into cash a few weeks ago and have avoided the pain of the last few weeks.

If I had exited before the crash of 2000-1 and then again before the crash of 2008 then my portfolio would be a significant multiple of its current value even if I had exited in 2014 and stayed in cash ever since.

I'd accept an indicator which is right 3 times out of 4 any day.

Bagger46

Re: Is anyone panicking yet ?

#290262

Postby Bagger46 » March 12th, 2020, 7:20 pm

tournesol wrote:SalvorH

I disagree.

Perhaps I'm being simple minded, but an alarm bell that rang loudly in 2000-1 and again in 2008-9 and again a few months ago seems to me like it's offering a useful service.

I lost 66% in 2000-1 and 50% in 2008-9.

I went 100% into cash a few weeks ago and have avoided the pain of the last few weeks.

If I had exited before the crash of 2000-1 and then again before the crash of 2008 then my portfolio would be a significant multiple of its current value even if I had exited in 2014 and stayed in cash ever since.

I'd accept an indicator which is right 3 times out of 4 any day.


You did not lose 66% in 2000-1 and 2008-9. According to your post you stayed invested, hence you did not lose anything, you could only have lost by selling. Admittedly you could have made more by selling ahead of those crashes, providing your re entry point was good, a lot more if it was optimal. But I have met very few seriously experienced investors who recommend that game. You have played a blinder this time round, only because that particular hunch was correct, but watch out for markets turning sharply back up on you before you pluck back the courage to get fully back in yourself. And don't forget to count the divi income, plus tasty re invested divis effect, you have said goodbye to by going 100% into cash, in your future reckoning.

This is my nth market crash, the first being in the 70s(and that was a really bad one, dwarfing what we are seeing today). Following the advice of the experienced investors among my family and friends throughout those decades, as another simple investor, I have stayed invested in all of them. What I did in all of them, and doing now, is to rearrange portfolios quite a bit, because some holding with no better future prospects(imho) have held up much better than other shares which have (imho) better underlying future prospects but dived badly. Will I get some of these swaps wrong, you bet, but all I need is to get more right. I certainly managed that in the past crashes, so maybe I will manage it again. In addition I am deploying much of my spare resources into the market, did quite a bit of business on both aspects today. Because instant online trades were often not on offer, I put in limit orders, altering some as the day progressed, and all triggered by today's close. I have about 30% of my spare deployable ex market resources left. Many of my friends are doing just the same. None of us will catch the bottom(although so many seem to with hindsight!), but in five odd years time this high turbulence will be a glitch on the charts, and our portfolios XIRRs will likely back to where we like them to be.

Each to their own.

Good luck to all (mostly about avoiding that virus, in particular if your health is already poor)

Bagger

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Re: Is anyone panicking yet ?

#290268

Postby colin » March 12th, 2020, 7:52 pm

Bagger46 wrote:
I disagree.

This is my nth market crash, the first being in the 70s(and that was a really bad one, dwarfing what we are seeing today).

Bagger

Dwarfing what we are seing today? How do you know that when you have not yet lived through the Coronovirus crash of 2020!

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Re: Is anyone panicking yet ?

#290276

Postby monabri » March 12th, 2020, 8:20 pm

"Coronavirus: PM says more to lose loved ones before their time
The UK prime minister has said the public should be prepared for more lives to be cut short due to the spread of coronavirus."

Talk about an irresponsible comment!

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Re: Is anyone panicking yet ?

#290278

Postby JohnB » March 12th, 2020, 8:25 pm

BJ's comment is entirely correct, much better than Hancock talking about tens of thousands of infections when it will be millions.

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Re: Is anyone panicking yet ?

#290295

Postby dspp » March 12th, 2020, 9:17 pm

JohnB wrote:BJ's comment is entirely correct, much better than Hancock talking about tens of thousands of infections when it will be millions.


In the UK, likely tens of millions. How severe the consequences of each infection will be, how many will be correctly attributed, and how many will cause death, and over what timescale remains to be seen.

regards, dspp

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Re: Is anyone panicking yet ?

#290319

Postby Pipsmum » March 12th, 2020, 10:26 pm

I will leave everything where it is. Partly because it's stuck in loss anyway. ISA is 41.36% down, SIPP is 13.53% down and the Fund & Share is 31.30% down as of today. Then the flutter money section got stuck too, so any volatility fun got stymied by a tight stop loss that didn't get set off when I wasn't watching. Quite cross about that, but hey ho. Hargreaves's stop losses and sell limits don't always get triggered. I've noticed that on more than one occasion. Don't know why. There might be a better broker for volatile penny stocks. Please say if you know one.

If I had the money, which unfortunately I don't, then I would drip buy into the exact portfolio that I have now, just as a twin and then watch what happened with interest. Pie in the sky idea. However if the lurg gets me as well, then one won't need any money inside a wooden box.

As for loo roll. Asdas shelves were naked The assistant, who happens to be a friend of my daughter, so could chat honestly, said that every time a pallet comes out, it gets mobbed and doesn't even reach the shelves. What is everyone doing with so much? They won't be able to move inside their own houses. It'll soon be time to have to use a flannel and a wash bucket like times of old. Think terry nappies....


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