Out of the market after 35 years

[terminal7]

An update

As I noted previously, I had just sold all my shares portfolio on 3 March. The exposure at my age (74) was too great given my future heavy dependency upon a personal pension pot built up over 35 years. The market was then at some 6600 (I had already taken a hit in the previous 3 months of some 10%). For a few days I was in cash not sure of what to do whilst starting to see the carnage on the market over the coming days. I did then invest the bulk of the cash in long gilts. The result has been an approximate 6% gain over some 6 weeks. If I had just left the portfolio alone I would have been today a further 25% down - this clearly reflected the nature of the shares in the portfolio. Of course if I had reinvested into the market around the end of March, I would have been hugely in profit. I will stay as I am given little expectancy of dividends with most shares for the immediate future and content to squeeze some returns out of gilts etc. I may decide to go into drawdown at 75.

I am surprised as to why the market is only some 10% lower today than on 3 March. With massive debts occurring in the public and private sector plus the start of large-scale redundancies, I am at a loss to explain the 20% market rebound in the last 3/4 weeks. The health situation looks at least as bad worldwide (in the UK it is difficult to get a handle from an obfuscating government) and the financial situation still looks precipitous.

Now I do accept that markets often look ahead as much as 18/24 months, however I cannot see any economic light at the tunnel indicating that we will be back to the pre CV19 situation anytime soon.

T7

[dealtn]

An update

As I noted previously, I had just sold all my shares portfolio on 3 March. The exposure at my age (74) was too great given my future heavy dependency upon a personal pension pot built up over 35 years. The market was then at some 6600 (I had already taken a hit in the previous 3 months of some 10%). For a few days I was in cash not sure of what to do whilst starting to see the carnage on the market over the coming days. I did then invest the bulk of the cash in long gilts. The result has been an approximate 3% gain over some 6 weeks. If I had just left the portfolio alone I would have been today a further 25% down - this clearly reflected the nature of the shares in the portfolio. Of course if I had reinvested into the market around the end of March, I would have been hugely in profit. I will stay as I am given little expectancy of dividends with most shares for the immediate future and content to squeeze some returns out of gilts etc. I may decide to go into drawdown at 75.

I am surprised as to why the market is only some 10% lower today than on 3 March. With massive debts occurring in the public and private sector plus the start of large-scale redundancies, I am at a loss to explain the 20% market rebound in the last 3/4 weeks. The health situation looks at least as bad worldwide (in the UK it is difficult to get a handle from an obfuscating government) and the financial situation still looks precipitous.

Now I do accept that markets often look ahead as much as 18/24 months, however I cannot see any economic light at the tunnel indicating that we will be back to the pre CV19 situation anytime soon.

T7

Not sure I understand your reference to Dividends. The fact you mention them, in the context of "little expectancy of dividends with most shares..." suggests they are an important consideration to you, yet you are now invested in an asset class with a tiny yield.

The markets look ahead a lot more than 18/24 months. In fact equities are "perpetual" discounting company earnings, or cash flows, depending on your thinking, out ad infinitum. You don't need to think "we will be back to the pre CV19 situation anytime soon" to be consistent with equities trading at these levels, or indeed higher.

[nimnarb]

I only just read this thread and having been buying and selling shares for over 50 years and with coming up shortly to a year on from the OP's first post interested to hear from T7 and others how you have fared. Did T7 get back in near the bottom? Or stuck to his guns which I deeply respect(not all the time on edge) Others followed him or stayed the course and did not panic and have reaped the benefit? Up to today at least?

For my part living across the pond, I just had enough at roughly the same time as Terminal except my circumstances were different, I really thought the world was collapsing(plus not a Trump fan) and had no idea that the Fed would basically just print money here and as the Chairman said, "do what it takes!" And having held the likes of Amazon, Apple and Microsoft for many years(many) I did panic, preservation of money and all that. What did I do, brought the lot and more back a few weeks later and within 3-6 months was showing all time highs constantly but was very early into SaaS companies from late 2017 at prices in Companies that have since been 20 plus baggers and I brought them back at such higher prices and even then many have tripled and quadrupled. However my capital gains tax bill for 2020 will be horrific and basically it serves me right.

Lessons learnt. If the fundamentals of any Company you have a profound and utter understanding of, plus being a disruptor in their industry, don't trade, don't sell, just hold it. As over the long term, depending on your horizon, they will do very nicely.

However, I brought last year Pelaton(fitness company, huge demand in the UK as well) and have a big increase and yet they announced their latest qtr yesterday and although the figures were impressive but reading between the lines and listening to the CC they have huge shipping problems getting the product to the customer, I have learnt not to wait to see what happens(in others words the 'what if' scenario)so immediately sold out last night after hours and they are taking a hit today and used that money accordingly elsewhere. Now if things change, I might dip my toe back in.

Don't price Anchor. How many times have you looked at a Company hoping it would come down to what you want to pay for it and watch it run away from you. I looked the other day and most of my gains have come from stocks that keep going up that I brought well over $100.00 to start with. Don't sell your winners. Sometimes there is a reason why a Company is cheap.

Anyway, this was more of a post seeing in particular if T7 had any regrets in selling and is enjoying life or indeed how the ones that held firm are doing. We can always look back in hindsight but I believe also that occasionally once a decision is made, its better to stick with it and not look back regardless as either way it normally won't do you any good.

[Itsallaguess]

..or indeed how the ones that held firm are doing.

I held on throughout with my income-portfolio (52% Investment Trusts / 48% single-share holdings), and did some buying around April time with some funds that I always like to have available in case of opportunities that might arise.

I could have bought more, but I'm content with the purchases that I did make, and happy that I held on for the subsequent recovery.

Without discussing capital amounts in detail, I hope the snapshot chart of my overall holdings below portrays some of the systemic shock seen around February and March of last year, and the subsequent spasmodic recovery in capital values -



I won't pretend that there weren't some very concerning moments, but having done exactly the same through the financial crash of 08/09, I'm happy to have an approach that I can live with, and that I don't have many problems replicating when these inevitable market problems return in their new flavours.

I think the key thing for me personally is carrying a relatively large cash holding that's available to use for opportunistic purchases during these periods, and then making sure to act on that premise when markets take a large tumble. That process allows me to stay well away from thoughts of selling anything, and allows me to continue carrying existing holdings whilst looking for some bargains in the rubble of the time. I'll spend some time now rebuilding most of that cash reserve, which will eventually turn into a large chunk of my post-retirement cash reserve when I eventually finish work.

I know that carrying that cash will carry a cost, but the benefit of doing so has proven worthwhile a number of times now, both mentally and also from an investment-opportunity point of view, and I'm content that the price of me continuing to generally carry such an amount is worth doing so for me personally, for those various and worthwhile reasons.

From an income point of view, I'm still working and so don't rely on any investment returns for day-to-day living at this stage (and have also been steadily re-investing that portfolio income as well, during the past year), but having tracked my portfolio income for many years now, I'm pleased to say that had I been relying on the income from it during the past year or so, then the dip in dividend-income was well within any safety margins that I've formulated, which was also pleasing to see in itself. One of the few 'benefits' of having gone through these types of market slumps a couple of times now is that we at least get an opportunity to test the 'shock-absorbers' with large and real-world 'bumps'...

With all the above said, if the vaccine situation hadn't been as swift and as promising as it turned out to be, then I may well have made the wrong decision to hold on, and we could have been in a much deeper and more prolonged global slump for many, many years, so as with all things, there absolutely is a huge slice of luck involved in any of these types of decisions, of course...

Cheers,

Itsallaguess

[terminal7]

Nimnarb - Well quite a long story of re-investment in funds and some shares (and some sleep).

Firstly, what would have happened to my early 2019 share portfolio in 'do nothing' scenario. As of 4/2/21, I would have been some 15% down overall - clearly this would have reflected the components of the then portfolio. As it turned out there would have been some real dogs with large to major losses (Card, First Group, Renewi, RPS and J Wood) and only one star (Flutter).

As has been noted previously, I sold lock stock and barrel and after a brief period of cash reinvested initially in long gilts. I quickly regretted getting out of Flutter and got back in May 2020 as well as doubling up in gambling shares by reinvesting heavily in William Hill (overall after consultancy this is the sector that I have a deepest knowledge). In the summer, I took a more considered view and started to switch to a number of funds with a bias to international corporate bonds and an above average weighting to Asia and the Pacific - ie Schroder Long Dated Corporate Bond and TM Cerno Pacific. Since late Autumn 2020, I have re-entered the share market and have taken holdings in several potential recovery stocks such as Cineworld and Capita. Also, after some research I have also bought shares in AJ Bell, Coca Cola and Sirius Real Estate.

Overall, my pension pot has shown about a 10% plus growth since the sell off. In effect, I calculate that the value of my portfolio is broadly at the level it was early 2021.

Of course, I may well have made some of the changes to the original portfolio irrespective of the pandemic - just too difficult to provide a view of this.

I would again emphasise that my decisions were based on my age and expectancies of a need to provide a steady income post drawdown as well as acting as a main shareholder in the bank of mum and dad.

A lot has happened since the original posting and I trust that my fellow Fools have been able to navigate their way through choppy seas. I am aware that several posters were critical of my Private Jones attitude (taking my writing style too literally at times) - nevertheless my strong view is that 'sitting through a crisis' at a high income earning stage of life is completely different to a situation when personal revenue streams are significantly dependent upon unstable share assets.

T7

[terminal7]

early 2019 share portfolio

- of course should have read 2020 portfolio!

T7

[Itsallaguess]

..nevertheless my strong view is that 'sitting through a crisis' at a high income earning stage of life is completely different to a situation when personal revenue streams are significantly dependent upon unstable share assets.

I completely agree that personal circumstances are likely to quite rightly flavour many of the investment views and decisions that we make as we each navigate our own investment journeys, and I've mentioned on more than one occasion both here and back on the Motley Fool boards that we should often be careful when reading much of the investment-related discussions on these types of community sites, because whilst there's often lots written about what people might be doing or thinking, there is usually very little information provided as to how aligned people might be with the type of situation that you rightly mention above...

Cheers,

Itsallaguess (still working, and who tries to mention that fact whenever I think it might be relevant to any particular discussion at hand...)