Just went 95% cash in Super - Share Market Correction

Hi All

Just went mostly cash in super...I reckon that there is more to come in terms of a correction in the global markets.

What are others thoughts.

I reckon this is going to cause carnage for a lot of retirees....around the world...

 

I won't be moving my plan. If it drops a lot I will tip in some extra cash. I am keeping an eye on VAS and VGS with a view of buying outside of super. I have no idea at what point to buy in but I have cash ready to go

 

So how much loss did you take before you sold? (just asking %)

cheers,
Inertia

 

Busting The Myth Of Market Timing

 

About 3%.

 

Interesting article! Ties in with jason zweig's book im currently reading : Your money & Your brain. Classic book really gets into behavioural finance and suggests a plain and simple dca approach over the long long term in order to fight off those inner demons and neurons in that highly strung melon between the ears!

@SatayKing did you have a similar approach in building up the lic portfolio back in the early accumulation days or did you scrutinise every investment in order to get it right for your head???? Curious as i believe the more i speak and interact with the old school investors and plain vanilla dca program over 20 to 30 years seems to get the job done! That is forced savings and dividend income based on market returns! Easy as so it seems!

 

And now you will have another decision to make. When to get back in. And when you do can you give me a cast iron guarantee the market will not drop further?

It's one of the annoyances with me about superannuation. Account-based pensions based on assets which fluctuate in price from year to year let alone in minutes. If you have heaps in super it isn't too bad but smaller amount? Hurt time.

Which is why if it is at all possible to have income producing assets outside superannuation where price fluctuations do not have such a great impact on dividend stream.

 

Agreed....but in my case I am prepared to take the 3% hit now.

I reckon this is the start of the malaise...a couple of reasons:

1. US market is overvalued
2. The uncertainty of the Trump policies and the trade war with China is causing grief.
3. I see the US economy being less relevant...the impact on the global economy is going to be a huge transition. For example as Oil gets traded in Yuan it will get interesting...
4. The dominance of the USA is on the wane economically, China will be the largest economy within 2 years.

It will be interesting what happens to US assets including housing.....I reckon like here there will be a correction.....not only shares but also property....

 

I thought long and hard about this sort of strategy. I am a mathematician by trade.

Then I took a long cold shower. No selling for me, just buying more as it falls more.

 

I've said previously on this forum when the GFC hit big time, I was packing death. Same with the nasty little events in the 1990's and the 2000 issue and more and more. Somehow I just kept at it. Really felt like tossing the whole thing in and run away at one stage. However, and don't ask me why because I don't know why, I stuck with it. And not big amounts went in either due to timidity on my part.

I have emotions about seeing share portfolios dropping like a rock the same as any other person. Now I don't even look at share fluctuations. Have cash, hear the market ain't "good" so I look at what I hold (in terms of cost-basis) and go from there. So hard to keep that discipline though.

 

My super has been in cash since end of January this year, when the mini correction started.

Of course I think I have missed a whole bunch of bounces I think it is bear for some time especially with interest rate rises.

My focus is to continue to work to pay off my debt .....

 

My plan it to get in when the market comes off...I might not predict the exact bottom..but I am ok with near enough. Just by doing this ..on say a amount of 500k you could get a 20% bounce up..I did this in early 2009.....and it shot up significantly....each to their own.

 

A colleague of mine sold all his shares about 6 weeks ago and is expecting a stock market crash, he has been trading for 18 years and has done really well

 

We have been direct share investors since 1991. It is hard to ignore the noise but we have never timed the market and sold everything and gone to 100% cash. We do "tidy up" periodically and make sure we have enough cash to cover commitments. We have moved to pension phase in SMSF this year so for the first time have cash and near cash investments that will cover at least 5 years of compulsory withdrawals excluding dividends. We are still 80%ish invested outside of super - which is a level we have always be at.

 

I have been considering doing exactly this.

I already cashed out all my shares on the last mini crash a couple of weeks ago (mine are mostly tech stocks) and while I missed the bounce, all but one are now lower so worked out so far.

I agree, I think we're going lower. But who knows???

 

Won't cash out as I'll trigger CGT on my holdings (haven't yet lost all the gains from the past 3 years). I figure this is just noise and in 20-25 years time there'll be laughter to be had.

In super I am rebalancing more into equities progressively over the next 6 months. Going from a 65-35 equities/Fixed income split to 100-0. (Now at 72-28). I am happy I had dry powder there.

Yes I can see the writing on the wall that there is not much fun to be had, but it's a long term game of patience, and I missed the buy-of-the-century-run-up in 2009 / 2010 by being in cash. Poor form making the same mistake twice so not going to happen again.

 

May not be bad timing @sash - but what is going to be the prompt for you to get out of cash back into equities? That bit is equally important!

We also got out 2-3 months ago subscribing to the theory global markets were overvalued.

 

Well done to your colleague @mickyyyy. Trading is a hard game and not a lot make it.

I gather he has shown you the books and tax returns?

 

So he will loose nearly half his capital in tax. I took 60k profits in sept when small cap stocks went crazy high. That's enough to pay tax on. better to take a 10 or 30% hit with a correction and be there for the recovery, then donate to the government and miss the recovery. If you have good sound, well run buisnesses with little debt , good cashflow and growth potential the share price on a particular is irrevelant. You wont make much if you give up half your profit every time the world is coming to an end. About twice a year.