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When should we get greedy?
Posted: February 28th, 2020, 9:47 am
by JDot
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.
Re: When should we get greedy?
Posted: February 28th, 2020, 10:09 am
by tjh290633
You don't. There is a saying, "The time to buy is now". While the market is falling, if you have the cash available, there is no harm in buying. It will rise above this level in due course.
While the current panic continues it is likely to fall further. When it turns, it may be sudden and go past the point where you might have bought, without stopping. If you see what you think is a bargain, like a big oil company yielding over 10%, then why not grab some?
TJH
Re: When should we get greedy?
Posted: February 28th, 2020, 10:14 am
by JDot
I'm looking at Henderson far east income yielding over 7.5% at the moment.
Re: When should we get greedy?
Posted: February 28th, 2020, 10:19 am
by YeeWo
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?
Nobody knows the exact bottom, but on the assumption that COVID19 doesn't wipe-out humanity (and I don't think it will), if you feel you have an understanding of a business that you've long admired and the SP is looking very cheap then Now is as good a time as any.
From my existing holdings the following had "issues", were cheap before this crisis and have just gotten cheaper : G4S (possibly), Imperial Brands, Rolls Royce, Standard Chartered, Vodafone.
The following are being battered by cyclical issues brought on by COV19
BP, British Land, HSBC, Intercontinental Hotels, Rio Tinto, Royal Dutch Shell.
I've held all the above on a multi-year basis and as such if the price falls appropriately and I have cash will add........
Re: When should we get greedy?
Posted: February 28th, 2020, 10:33 am
by JDot
I already own them in my hyp. My thinking is the funds have divi reserves of up to 1 year so income is pretty safe from cut at these levels.
Re: When should we get greedy?
Posted: February 28th, 2020, 10:49 am
by Gan020
Snorvey wrote:There's an absolute ton of cash out there and it's all coming out if stocks and into fixed interest and cash assets. And central banks around the world are armed and ready with even more liquidity ready to be put to use.
Are we sure it's being put into fixed interest not pulled out?
Re: When should we get greedy?
Posted: February 28th, 2020, 10:51 am
by scrumpyjack
Snorvey wrote:Here's my primitive analysis fwiw
Again, assuming Covid19 doesn't kill us all......
There's an absolute ton of cash out there and it's all coming out if stocks and into fixed interest and cash assets. And central banks around the world are armed and ready with even more liquidity ready to be put to use.
So at some point, it won't be worth buying fixed interest anymore because the yield will be so low/price will be too high and it will just be too risky. When this happens there will be no more buyers. (it was getting towards that before this crisis imho!)
At around the same time, it won't be worth selling stocks anymore and there will be no more sellers. That ton of cash will start to drip back in to stocks for a very short time before the tap is opened fully.
That's what will happen. It has every other time.
Yes but is it true to say money is coming out of stocks? For every seller there must be a buyer, all that has changed is the price level at which trades are done.
I do agree though that when (hopefully) we get to the point that the Covid-19 panic subsides, the market will swing very very quickly. It is dangerous to try to time the market as what usually happens is that private investors panic at the moment of maximum gloom and sell just before the turn round. Conversely when PIs are all super optimistic about shares, and your taxi driver is giving tips, that is the moment to sell!
Re: When should we get greedy?
Posted: February 28th, 2020, 10:54 am
by UncleEbenezer
Snorvey wrote:At around the same time, it won't be worth selling stocks anymore and there will be no more sellers. That ton of cash will start to drip back in to stocks for a very short time before the tap is opened fully.
That's what will happen. It has every other time.
The problem with stocks is that *if* we end up with extensive quarantines and lockdowns (as China has done), it affects not merely share prices but also their real values. Like trade wars, whether it be Trump or Stuttley lashing out. And China matters!
Maybe this could be the time all that flood of money feeds through into something else. Even consumer prices?
Re: When should we get greedy?
Posted: February 28th, 2020, 10:58 am
by AleisterCrowley
I have recently (pre virus...) been putting surplus cash into VWRL to achieve global diversity.
As the market always moves the wrong way for me personally, I guess the global pandemic is entirely my fault.
I'm planning on dripping more money into VWRL over the coming months, smallish chunks
Re: When should we get greedy?
Posted: February 28th, 2020, 11:06 am
by fca2019
Just to drip feed amounts in as could be a bear market, rather than a correction, better not to be greedy imo.
Re: When should we get greedy?
Posted: February 28th, 2020, 11:57 am
by Gan020
Snorvey wrote:Gan020 wrote:Snorvey wrote:There's an absolute ton of cash out there and it's all coming out if stocks and into fixed interest and cash assets. And central banks around the world are armed and ready with even more liquidity ready to be put to use.
Are we sure it's being put into fixed interest not pulled out?
Well it's going somewhere. Either into cash or, looking at the plummeting 10 year Gilt Yield (0.424%), into fixed interest.
Yes, sorry. I should have been clearer. Government gilts do imply it's going into there. But corporate bonds look the opposite.
Re: When should we get greedy?
Posted: February 28th, 2020, 12:41 pm
by dealtn
Gan020 wrote:Snorvey wrote:Gan020 wrote:
Are we sure it's being put into fixed interest not pulled out?
Well it's going somewhere. Either into cash or, looking at the plummeting 10 year Gilt Yield (0.424%), into fixed interest.
Yes, sorry. I should have been clearer. Government gilts do imply it's going into there. But corporate bonds look the opposite.
Er, it's not going anywhere. For every seller there is a buyer, and they are transacting at the same price. Every pound going out is being replaced by a pound going in. All that is happening is re-pricing.
Re: When should we get greedy?
Posted: February 28th, 2020, 1:35 pm
by Bubblesofearth
dealtn wrote:
Er, it's not going anywhere. For every seller there is a buyer, and they are transacting at the same price. Every pound going out is being replaced by a pound going in. All that is happening is re-pricing.
This often causes confusion so it's maybe worth expanding the point., i.e. that re-pricing can, and often does, happen without a single trade taking place. The most extreme example I can recall was black Monday 1987. After the huge fall on Wall St the London market opened heavily down because market makers re-priced stocks at the open at a level where they felt there would be roughly equal interest from buyers and sellers. There were a lot of comments at the time about where all the money had gone and what it had been put into whereas all that had happened was a dramatic repricing.
BoE
Re: When should we get greedy?
Posted: February 28th, 2020, 2:25 pm
by fca2019
My guess the bounce back will happen after a few weeks, when move into spring and the weather warms up, the cases of colds flu and this virus will subside and markets will revert to where they were.
Re: When should we get greedy?
Posted: February 28th, 2020, 2:39 pm
by monabri
Re: When should we get greedy?
Posted: February 28th, 2020, 4:01 pm
by johnhemming
I am not sure markets will revert. I think some stocks will be lower because of impact. Other stocks which have been sold substantially without good reason will bounce back as things get warmer. The danger of this virus will remain, however, for winters to come.
Re: When should we get greedy?
Posted: February 28th, 2020, 4:09 pm
by scrumpyjack
johnhemming wrote:I am not sure markets will revert. I think some stocks will be lower because of impact. Other stocks which have been sold substantially without good reason will bounce back as things get warmer. The danger of this virus will remain, however, for winters to come.
But by then we will probably have a vaccine.
Re: When should we get greedy?
Posted: February 28th, 2020, 4:18 pm
by AleisterCrowley
It will have probably mutated into something harmless by then.
Or 1000% more lethal...
Re: When should we get greedy?
Posted: February 28th, 2020, 4:48 pm
by monabri
There will be "mucho cuedos" for the first company to develop a vaccine. However, if it was a choice of two companies to invest in, I'd probably go for the unsuccessful one no doubt!
Re: When should we get greedy?
Posted: February 28th, 2020, 5:04 pm
by johnhemming
I would expect some more useful medical procedures to be around. However, I would not expect everything to revert to essentially the same.