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When should we get greedy?

Investment discussion for beginners. Why you should invest your money, get help getting started
JDot
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Re: When should we get greedy?

#290206

Postby JDot » March 12th, 2020, 4:44 pm

the American economy slowed from 7.2% real GDP growth to −2.1% contraction, while inflation (by CPI) jumped from 3.4% in 1972 to 12.3% in 1974.

The effect was worse in the United Kingdom, particularly on the London Stock Exchange's FT 30, which lost 73% of its value during the crash.

Thanks for the clarification!
So more important than the falling stock markets, we may have to worry about keeping our jobs, homes and feeding our families. This is shaping up to be another historic event, like the 08 great recession. Shops closing, travel restrictions, school, universities and workplace, forced shop closures on the high street (think Italy), this time will be different for sure.

I was hoping for an ordinary recession this time with a chance to benefit from the rebound. I have read fortunes can be made during times of great financial crisis.

I will keep up to date with other posters on here throughout this crisis,(It provides comfort that I'm not alone in this as well as motivation.) I aim to keep up my plan of steady buying even if they announce the world is ending tomorrow.

What will be will be! I'll probably try and put away a hundred quid each payday as cash buffer for emergency spending, with the rest is going into income ITs.

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Re: When should we get greedy?

#290208

Postby scrumpyjack » March 12th, 2020, 4:48 pm

Bear markets end when there is total unremitting gloom everywhere and everyone has given up hope.

Don't think we are near that point when lots of posters are still talking about not missing an opportunity to buy shares cheap.

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Re: When should we get greedy?

#290209

Postby TheMotorcycleBoy » March 12th, 2020, 4:52 pm

So I've not seen an event like this in my days as a private investor since we've only been investing since March 2018.

What I'm curious about is what happens to trading volumes as stuff like this pans out. By "stuff" I'm talking about Black Swan events that shock the markets like this (e.g. DotCom bubble, CreditCrunch).

Presumably we have sporadic crazy buying and selling e.g. in the market opening when folks first read news, and panic sell. Then I guess the volumes are high - and sometimes trading gets temporarily suspended etc. e.g. by circuit breakers on the US markets so the radio tells me. But I'm curious, is there generally a time where actual retail trading slows right down? That is, the time when the fearful have sold up all and the slightly more stable folk have slowed down their spending sprees, and realised that "this things gonna take it's time to pan out" let's just drip money in a little slower now. Presumably the institution side of things e.g. asset managers, pension funds will continue to trade at their usual rates. However, as I mentioned, does retail trading volumes fall somewhat after the initial panickers are gone, and the gratuitous raiders are all spent up? And does this have an effect on overall liquidity?

(On the subject of the OP, I was *possibly* a little over eager last week, taking a leaf from TJH's the "time to buy is now". I'm definitely trying to pace myself now - I've been eye-balling Visa (NYSE:V) for a few weeks now. They have peaked earlier this season at $214. A fortnight ago, they blipped down to $169. I've limit orders over the past couple of days at $170 and missed them. Chuffed about that now, they are about $162 as I type.)

Matt

JDot
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Re: When should we get greedy?

#290226

Postby JDot » March 12th, 2020, 5:22 pm

scrumpyjack wrote:Bear markets end when there is total unremitting gloom everywhere and everyone has given up hope.

Don't think we are near that point when lots of posters are still talking about not missing an opportunity to buy shares cheap.

Hi Scrumpyjack

Your comment made me think of a phrase I heard an American woman say back in the day on youtube.

It went "Bulls make money, Bears make money, and greedy pigs get slaughtered". Which highlights my level of expertise when I kick off the thread with when should we get greedy?

Thanks for the reality check! and please forgive me for my naivety.

I shall endeavor to temper my eagerness and excitement.

tikunetih
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Re: When should we get greedy?

#290456

Postby tikunetih » March 13th, 2020, 10:52 am

tikunetih wrote:The lump was divided into four tranches, with a calendar schedule agreed to get it invested; the schedule will be followed unless in the meantime certain target index (S&P500) levels are reached due to further sharp falls, in which case the calendar schedule is accelerated.


FWIW, the second tranche was deployed this morning, triggered by levels hit in US markets last night, which had fallen ~27.5% since the all-time highs 4 weeks ago. The purchase is an OEIC with daily pricing, so today's purchase will capture yesterday's US lows.

The purchase isn't seeking to predict a low, simply capturing what are viewed as attractive prices taking account of the account's investment horizon. The remaining two tranches will be deployed either following the planned schedule, or successively if/when market indexes reach trigger points at lower levels.

Note:
(i) the riskiness/volatility of what's being purchased here is in accordance with the account's investment time horizon;
(ii) and its riskiness is in line with what we believe to be the account holder's volatility tolerance;
(iii) with regards (ii), the account holder also knows - because I've shown them - that in extremis (Great Depression) markets can keep falling by huge percentages after they've already fallen by huge percentages, but also that such occasions are outliers, and our plan here, being pragmatic, isn't predicated on a statistically unlikely "worst outcome" occurring.

A second account I oversee also made an equivalent OEIC daily-priced purchase today. This account has a similar balanced risk remit to the new account described above, with a planned investment horizon for today's purchase of ~11-14 years. This account is by now quite a large one, and makes 2 regular monthly purchases (ISA + pension) plus irregular lump sum investments as funds become available; today's purchase was funded by a lump sum deposit made yesterday prompted by the prices on offer appearing attractive in view of the planned investment horizon.

In summary: it pays to have a plan, which is robust and well thought through, and then to stick to that plan when the going gets rough, without being distracted.

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Re: When should we get greedy?

#290533

Postby bluedonkey » March 13th, 2020, 3:36 pm

Looks like the dead cat bounce/sucker rally has petered out today.

JDot
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Re: When should we get greedy?

#290547

Postby JDot » March 13th, 2020, 4:24 pm

bluedonkey wrote:Looks like the dead cat bounce/sucker rally has petered out today.


This is total madness!

I mean we're having 10% swings in a day here, absolute crazy volatility.

The guys who are making money at the moment are the sophisticated traders who short sell etc and the stockbrokers.

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Re: When should we get greedy?

#290554

Postby dealtn » March 13th, 2020, 4:42 pm

JDot wrote:
bluedonkey wrote:Looks like the dead cat bounce/sucker rally has petered out today.


This is total madness!

I mean we're having 10% swings in a day here, absolute crazy volatility.

The guys who are making money at the moment are the sophisticated traders who short sell etc and the stockbrokers.


Really?

How much money did the short sellers make today? What about day traders, must be so easy in these volatile markets to make money and not stop yourself out, let alone cover a wider than normal bid-offer spread.

And those stockbrokers must be rolling in it with reduced trading volumes.

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Re: When should we get greedy?

#290561

Postby JDot » March 13th, 2020, 4:57 pm


Really?

How much money did the short sellers make today? What about day traders, must be so easy in these volatile markets to make money and not stop yourself out, let alone cover a wider than normal bid-offer spread.

And those stockbrokers must be rolling in it with reduced trading volumes.


Here is a piece I've pulled from The Guardian regarding this.

https://www.theguardian.com/business/20 ... t-collapse

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Re: When should we get greedy?

#290565

Postby dealtn » March 13th, 2020, 5:06 pm

JDot wrote:

Really?

How much money did the short sellers make today? What about day traders, must be so easy in these volatile markets to make money and not stop yourself out, let alone cover a wider than normal bid-offer spread.

And those stockbrokers must be rolling in it with reduced trading volumes.


Here is a piece I've pulled from The Guardian regarding this.

https://www.theguardian.com/business/20 ... t-collapse


Lol.

So you link to an article on a single fund that nowhere describes itself as a short seller to prove your point. This "sophisticated trader", to use your words, has been pursuing this strategy since 2012 the article states. It can't have been either sophisticated, or successful, being a short seller over that time.

Much more likely, given the article is about the VIX, and mentions volatility and options in a number of places, is the possibility it's pursuing, er, an options strategy, and has benefitted from a long vega (or volatility) position.

Can't see any mention of all those super rich stockbrokers either.

Still, never let the facts get in the way of your conclusions, eh?

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Re: When should we get greedy?

#290568

Postby JDot » March 13th, 2020, 5:11 pm

dealtn wrote:
JDot wrote:

Really?

How much money did the short sellers make today? What about day traders, must be so easy in these volatile markets to make money and not stop yourself out, let alone cover a wider than normal bid-offer spread.

And those stockbrokers must be rolling in it with reduced trading volumes.


Here is a piece I've pulled from The Guardian regarding this.

https://www.theguardian.com/business/20 ... t-collapse


Lol.

So you link to an article on a single fund that nowhere describes itself as a short seller to prove your point. This "sophisticated trader", to use your words, has been pursuing this strategy since 2012 the article states. It can't have been either sophisticated, or successful, being a short seller over that time.

Much more likely, given the article is about the VIX, and mentions volatility and options in a number of places, is the possibility it's pursuing, er, an options strategy, and has benefitted from a long vega (or volatility) position.

Can't see any mention of all those super rich stockbrokers either.

Still, never let the facts get in the way of your conclusions, eh?



Article is dated 9/Febuary/2018 :)

The guy's fund was set up in 2012.

Oh, and stockbrokers make money via commission on both the sell and buy-side of the trade so it does not really matter which way the market goes for them either.

Examples Charles Schwab(SCHW) (market cap 36 billion) TD Ameritrade (AMTD) (market cap 15.5 billion).

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Re: When should we get greedy?

#290573

Postby dealtn » March 13th, 2020, 5:28 pm

JDot wrote:
dealtn wrote:
JDot wrote:
Here is a piece I've pulled from The Guardian regarding this.

https://www.theguardian.com/business/20 ... t-collapse


Lol.

So you link to an article on a single fund that nowhere describes itself as a short seller to prove your point. This "sophisticated trader", to use your words, has been pursuing this strategy since 2012 the article states. It can't have been either sophisticated, or successful, being a short seller over that time.

Much more likely, given the article is about the VIX, and mentions volatility and options in a number of places, is the possibility it's pursuing, er, an options strategy, and has benefitted from a long vega (or volatility) position.

Can't see any mention of all those super rich stockbrokers either.

Still, never let the facts get in the way of your conclusions, eh?



Article is dated 9/Febuary/2018 :)

The guy's fund was set up in 2012.

Oh, and stockbrokers make money via commission on both the sell and buy-side of the trade so it does not really matter which way the market goes for them either.

Examples Charles Schwab(SCHW) (market cap 36 billion) TD Ameritrade (AMTD) (market cap 15.5 billion).


Even better. You link an article that is 2 years old to "prove" who you claim is making money today.

Yes stockbrokers make money from commission. So less trading volume is better for them somehow?

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Re: When should we get greedy?

#290578

Postby SheikYaManii » March 13th, 2020, 5:42 pm

bluedonkey wrote:Looks like the dead cat bounce/sucker rally has petered out today.

and to cap it all I took the weather forecast too literally and put the washing out to dry and guess what, it rained.
Some days you just can't win.

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Re: When should we get greedy?

#291456

Postby GoSeigen » March 17th, 2020, 7:12 am

GoSeigen wrote:
swill453 wrote:
GoSeigen wrote:It's looking to me like there may be another leg down. Looking at options, VIX is going ballistic: I've been buying Sep straddles on the way down and they are all in profit at all strikes this morning. Interesting situation.

I think I understood about 10% of that paragraph :-)

But it's ok, I don't think I want to know any more.

Scott.


Here's the start of that move down (S&P futures down 3.5% in NY afternoon trading).

A straddle is an options trading strategy which profits from either a big move in the underlying share price or a rise in implied volatility. If straddles are in profit it implies that there is a heightened expectation in the market of an imminent big underlying share price move.

GS


The persistence of this bear drop and the ridiculous over-reaction of people and governments to coronavirus has caught me by surprise. September implied vol is at an amazing 55. I've been writing puts against my short futures positions and still hold the call leg of the straddles so hoping for a huge bounce.

Yesterday was interesting with some pretty indiscriminate price moves, platinum down 27% for example -- just a day after I bought some :-(. I can't believe the beating banks have been taking and have added to my positions.

Overall the portfolio looks battered but one has to grit teeth and buy in these situations.


GS

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Re: When should we get greedy?

#291475

Postby redsturgeon » March 17th, 2020, 8:28 am

GoSeigen wrote:
GoSeigen wrote:
swill453 wrote:I think I understood about 10% of that paragraph :-)

But it's ok, I don't think I want to know any more.

Scott.


Here's the start of that move down (S&P futures down 3.5% in NY afternoon trading).

A straddle is an options trading strategy which profits from either a big move in the underlying share price or a rise in implied volatility. If straddles are in profit it implies that there is a heightened expectation in the market of an imminent big underlying share price move.

GS


The persistence of this bear drop and the ridiculous over-reaction of people and governments to coronavirus has caught me by surprise. September implied vol is at an amazing 55. I've been writing puts against my short futures positions and still hold the call leg of the straddles so hoping for a huge bounce.

Yesterday was interesting with some pretty indiscriminate price moves, platinum down 27% for example -- just a day after I bought some :-(. I can't believe the beating banks have been taking and have added to my positions.

Overall the portfolio looks battered but one has to grit teeth and buy in these situations.


GS


The major stock markets are down about 30% from their peaks (was that really only a month ago!) Do you think it is prudent to be buying yet? The impacts of coronavirus have not really been felt yet in the US where it really matters. I fully expect at least another 30% drop from here now. The recession is already baked in and the is nothing short of finding a miracle cure in the next week or so will stop that (I take that back, even if they find a cure in the next week I think we are still going into recession). The bear has arrived, we need to change our thinking. There will be some short blip on the way down but I'd look at those as selling opportunities (if I had anything to sell...I don't)

It is time to be fearful and not greedy.

John

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Re: When should we get greedy?

#291519

Postby colin » March 17th, 2020, 9:43 am

JDot wrote:With the recent market falls, funds and shares are offering high dividend yields and low price to earnings ratios. When do we know when the best time to pull the trigger is, and buy buy buy?


Jonathan.

Macron's promisses of Coronavirus easing seems to have caused a pause for thought in other European markets , talk is about a susspension of capitalism via massive borrowing so maybe we are close to bottom?

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Re: When should we get greedy?

#291533

Postby gryffron » March 17th, 2020, 10:11 am

bluedonkey wrote:In the 694 days between 11 January 1973 and 6 December 1974, the New York Stock Exchange's Dow Jones Industrial Average benchmark suffered the seventh-worst bear market in its history, losing over 45% of its value. ...
The effect was worse in the United Kingdom, particularly on the London Stock Exchange's FT 30, which lost 73% of its value during the crash.

Also worth pointing out in this discussion though that they both rebounded VERY quickly afterwards. FT30 Marking up nearly 100% in the following year. And only taking 3-4 years to get back to pre-crash levels.

Which shows that correctly calling the bottom is both very difficult, and very profitable if you get it right.

Personally, I think there are still too many unknowns for the bottom to have been reached in the current crisis. More than anything else, the market hates uncertainty.

Gryff

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Re: When should we get greedy?

#291535

Postby JDot » March 17th, 2020, 10:17 am

colin wrote:
JDot wrote:With the recent market falls, funds and shares are offering high dividend yields and low price to earnings ratios. When do we know when the best time to pull the trigger is, and buy buy buy?


Jonathan.

Macron's promisses of Coronavirus easing seems to have caused a pause for thought in other European markets , talk is about a susspension of capitalism via massive borrowing so maybe we are close to bottom?



Like everyone else,I'm feeling some serious financial pain at the moment. I feel very nervous with the way the world is dealing with these crisis. Also I am very concerned with the direction and speed the markets are moving.

Add to this no access to loo rolls or hand wash and you have disaster potential disaster in the making. I wish I invested in some iron pants before buying stocks. I really hope we are near the bottom now

. And thanks for he reply!

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Re: When should we get greedy?

#291536

Postby Itsallaguess » March 17th, 2020, 10:23 am

gryffron wrote:
Also worth pointing out in this discussion though that they both rebounded VERY quickly afterwards.

FT30 Marking up nearly 100% in the following year. And only taking 3-4 years to get back to pre-crash levels.

Which shows that correctly calling the bottom is both very difficult, and very profitable if you get it right.


If a market doubles in the year following a bottom, and then only takes 3-4 years to get back to pre-crash levels, doesn't that also show that investment success can be found without necessarily hitting the 'buy' button at the absolute nadir of a market?

Gradually drip-feeding into these types of situations, especially after some initial very steep falls, has always made the most sense to me, and is much preferred to paralysed-inaction whilst looking forwards for the one signal that can only ever actually be seen in the rear-view mirror...

Of course 'the most gains' might theoretically be seen from those buying at the lowest point, but that's not to say that 'good gains' can't be delivered using other methods that don't necessarily do the same....

Cheers,

Itsallaguess

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Re: When should we get greedy?

#291543

Postby JDot » March 17th, 2020, 10:31 am

Thing is I got greedy too early in the correction. Now I don't have have many liquid funds left to participate with any further meaningful purchases.

I'm going to have to drip feed scrapings from each paycheck in the future. That is If I manage to keep my job in the current climate.


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