ASX investors brace for lost decade

How many shares did you start with?

How many shares do you have now?......

 

And recently pushed through 21,000

Dow closes above 21,000 as stocks post best day of 2017 after Trump's speech

ASX200 is up 20% over the last 12 months also

 

I am interested in the prediction of a lost decade. Any time a market starts breaking records I get nervous. ASX is not breaking records yet but it feels not too far away. I have my concerns.

 

So if we had a lost decade does that mean it is a good time to buy?

And yes - the accumulation index is what is important. The dividends is where you make money. Capital growth is just paper money.

 

Dollar cost averaging is finance's closest thing to a free lunch isn't it

Especially in Australia, compounding dividends is like the booster rockets on the shuttle

Looking at it from another perspective though (Cuffelinks, or Montgomery to be precise)

Chasing dividends often overlooks growth

 

Updates in blue

 

L

Lucky you didn’t get so upset you sold out at the bottom! But that is a while to wait to get that doubling in two years.

 

Interesting post from @TMNT

Would you mind telling me what you learned from the experience?
Eg would you just never invest in shares again? Or would you keep a higher proportion in fixed interest or offsets and DCA it over a period of time, and if so, would you DCA over 12 months like many who DCA or would you do it over a number of years? Anything other thoughts or conclusions?

 

Lump summing a major amount into the market when euphoria reigns has a higher probability of regret.

Those averaging into the market well before the crash and since will have little to complain about.

In fact some of us dream of opportunities like those presented during major crashes.

Psychology is the key, not intellect. Make sure you know yourself.

 

what i learnt???

hmmmm....I feel a bit burnt so I probably dont trust shares as much as I used
what I learnt
- History is not a indicator of future
- dont do what the herd does
- shares are far riskier than property, eg a blue chip could easily drop 50% over 5 years, real estate will never,
-for shares, its definitely NOT "its not when you buy, its how long you have it"
- I suck at shares

 

Appreciate the response.
That's very similar to how I felt also after seeing the GFC.
What I feel has changed for me is understanding how the market works, having a strategy, and being prepared with a plan in advance, changes everything. Although I might be talking out of my ass since it has been only the last 9-12 months that I have been learning about it.
Anyway, thank you for the response.

 

I've been curious but not yet asked you - would you mind if I asked what percentage equities to fixed interest you have/had in the first few years of retirement to manage SOR risk?

 

no worries at all

having a strategy, planning etc. etc are all important in all investments,

however (im no share expert), with real estate, it generally follows cycles, and the macro economy,

but with shares, not sure how you can plan or predict or rely on anything since share price, can change noticeably in a few days, or even lose 50% over a couple years based on multiple factors all relating to the company, the market, competitors and many others

 

that too, but even if tenants go broke, you can find another one, your LL insurance will cover it, but the value of the house wont change too much,

with blue chip shares, you might get you 5-7% dividends, but whats the point if the price halves (take Bhp between 2012 and 2016, it almost halved!)
for a company to double its share price, it has to improve its position in the market,
with real estate, for the most part it follows the cycle of growth/fall without changing anything

hence why people making their SMSF funds all with shares to me is dangerous, and to me it feels like theyve followed the advice of financial advisors with an agenda or following the herd

 

Buy an index fund.

 

Assuming the investor likes BHP, that is when you buy more of the things.

There have been more "Ups" than "Downs" in share markets but for some odd reason most people only remember the "Downs."

 

At ages 55 & 58 it currently varies between 85 - 90% equities. If the dreaded sequence risk event occurs we’ll take advantage of it to be back over 90% equities.

If one’s portfolio is large enough to easily live off its natural yield and then some AND ONE HAS THE STOMACH TO ENDURE THEIR PORTFOLIO BEING DECIMATED DURING A CRASH then there’s little need to be holding much fixed interest / cash.

At the moment we’re around 15% term Deposits / cash. But that’s a significant amount given the size of our portfolio.

Rather than fearing it we relish the opportunity of a nasty SOR event. Just wish it would hurry up and happen.

Interesting reading the previous posts about how the GFC impacted others. In our case it allowed us to retire a number of years earlier than planned as we took advantage of GFC opportunities. It’s also why I’m such an advocate of investing in shares for INCOME as by focusing on the income much of the scary volatility disappears. In our situation by also owning a sizable amount in LICs which can smooth dividends it was almost a case of “what GFC!”

 

And being greedy oh how I remember the downs. As you know SK these are wonderful opportunities to turbo charge one’s wealth creation albeit it can feel uncomfortable (sometime extremely uncomfortable) going against the crowd at times.

 

REITs ... 90% down during the GFC. These can be a highly volatile asset class even more so than equities overall. Fine as part of an equities portfolio but as the major component the ride might be a very rough one at times. Not for This fella and I’ve got a very good ability to withstand major volatility. But of course we’re all different so perhaps ignore my ramblings.