zico wrote:My view is definitely "A" (My timing call didn't work out) rather than "B" (The rest of the world is wrong and I'm the only one that's right).
Since my big mistake in mid-March, I've actually bought more than I've sold, going for a more-or-less weekly drip-feed approach, where possible after significant daily changes (on the assumption that nobody really knows what's happening so that (say) a 2% change in one day is almost certainly based on changes in sentiment rather than actual new data).
I bought in at 3 separate times when FTSE was 5,600 then 5,400 then 5,600 selling all those at 6,000.
I've since bought in at 6,000 and 6,100 selling 50% of these at 6,450.
In addition, I've continued with monthly drip-feeding into the markets (60/40 World trackers/FTSE trackers).
Weekly drip-feeding can feel a bit like the opposite of having a strategy, but I'm seeing it as a way of being able to smooth out market fluctuations in a particularly volatile time for the markets.
OK, so the result for you
to date across this episode has been better than my few short quotes earlier might have suggested, although also presumably(?) somewhat/materially worse than if you'd taken no action at all. An obvious response to that would be that "it's still early days", an argument that can always be used, but setting that issue aside I think if operating an active strategy then it's always useful to loosely benchmark it against the do-nothing alternative so as to keep tabs on whether you're actually adding value or detracting from it.
One thing we do know across these past few months - because we've had trading updates from exchanges, brokers and spreadbet firms etc confirming it - is that investors en masse became incredibly active, trading with a frequency possibly greater than ever previously seen, the expenses of which swelled those middlemen's coffers but at a considerable net loss to investors in aggregate. The headwind of those costs, added to the difficulty of consistently nailing timing calls, should make people question whether this activity is really worth it unless they can show they have a durable edge.
zico wrote:I'm still a lot more pessimistic than the current market sentiments, and find it incredible that the Dow is only 8% off its all-time high, but I am also mindful of the saying "economists have successfully predicted 9 of the last 5 recessions"!
I think the view you express there is pretty much still largely the consensus opinion, paraphrased as:
"I'm very surprised by how fast and by how much the market has rallied - it appears very disconnected from the economy and the real-world".
I'd say that markets have rallied hard
despite that largely consensus view, with investors "disbelieving" in the rally, and sentiment remaining pretty poor: clearly not anywhere near as poor as a couple+ months ago, as economic data slowly begins to either get worse at a lesser rate or begin improving such as we had last week, but still poor in absolute terms.
Cast your mind back to the equities bull market that existed for the previous decade. From its commencement in 2009 and for much of its duration it was widely considered as the "most hated bull market in history", such was the perceived disconnect between "price" (as in the level of the main indexes) and the "real world economy". Comments such as it's all down to the Fed, ZIRP, QE, it'll all end in tears, blah, blah. Yet, despite periodic volatility, it kept rising, scaling that wall of worry, until eventually (10 years later!) the US economy in particular began to look pretty healthy, by which time the index level had risen by ~400%...
These past few months seem an analogue of that, albeit at pace, and by extension it would not be a total surprise if that situation was to endure: the market climbing a wall of worry arising from a widespread belief of there being a severe disconnect between equity prices and the real world economy. Along with eventual slowly improving economic data, that scepticism and disbelief is part of the fuel that helps drives sustained market moves: investors are slowly converted from outright sceptics to reluctant believers, and reflect that conversion in their own market positioning, leading to slow but sustained buying pressure over time - "unloved" rallies that continually defy expectations.
Keeping an unbiased outlook is a good habit for investors to practice, but if you are going to be biased then I think it pays to be biased towards optimism and being open to better than expected outcomes. Markets have, over the long term, tended to better reward people exercising that outlook than those who are biased towards worse than expected outcomes, despite the seemingly enduring appeal of the latter. Further, you can do that without needing to be trading in and out, sucking up time and mental energy, and generating fees for others. The do-nothing "default" option I mentioned in my first para above.