Thoughts on my investment Strategy

Some days the market gives you a lift, other day's it gores you in the nether regions (emoji)





Bulls attack by bringing their horns upward, whilst Bears attack by swiping their paws downward

 

No. I'm not in the habit of laughing at others or deriding what they do from an investing aspect. I was simply curious about what you actually expected the market to do. You present a dichotomy to some degree and I have seen it before with others.

"I want to invest in the share market."

but

"Only when it drops xx%, I'll get in...." "Oh, it's high and so too risky, so I'll wait because it'll drop xx% because I think it will or somebody told me that'll happen." to "S hit and derision, I knew I should have done it last month and now I've lost xx% of growth." And all variations, combinations and permutations of those thoughts. Usually it leads to many doing nothing I feel but sit and watch.

And in the meantime with the sit and watch brigade, their cash is getting little income compared with dividends, the income from the cash is taxed at a person's marginal rate - and there is the effect of inflation.

Still, I'm not knocking them. If they cannot overcome the perceived fear then they cant. End of story. I can only hope at the end of their span of investment opportunity, they are able to accept the position they may be in was one of their own making. But I doubt it.

Yep, 'fraid so.

 

Great insights yet again @SatayKing ! I recall a much earlier post in regards to tipping funds into argo for example 5k every year at beginning of the year set and forget no market timing just getting it done and obtaining the income stream over a very very long time! A very sensible approach for the majority to follow to ignore market news and timing and just be a long term accumulator of shares!

 

I bought some VGS today so the market is bound to drop soon.

 

I bought VAS today.

@Big A don’t lose hope. I also am known to have bad timing with purchases

Cheers
Oracle

 

@Big A believe me when I tell you the stupid things I’ve done over the years in regard to investing would make you look like an expert in comparison. I still do stupid thing occasionally. So never feel anything you post here will have others thinking less of you.

 

Thanks for the support guys. I don’t take myself to seriously and try and add a bit of humour to my posts occasionally.

I mean if I was reading someone’s post and they said they will give the market one last chance to do what they wanted it to do, I would be thinking this person should probably not be investing in equities full stop.

But yeah I’m done with the timing thing. Started moving the funds around today to have them in the BT panorama platform cash account ready to deploy by weeks end. Will do a lump sum buy in with about 50% of the remaining cash. Which is about 1/3 of what was there before I started moving some into property trusts. Will pick up VAS, VGS , Hyperion aus fund and Magellan global fund. That’s what I have also set up as the monthly purchase plan which will also start on the 1st of December.

Now the outstanding 50% cash I will hold for another month or so. I’m waiting for a new charter hall fund that should be coming. Once i see what that has to offer I will make a decision. If it looks attractive and the stock market is still doing what it’s doing, then in the new property trust is where the cars will go.
If there is any decent drop, at least 10% or more then I will put that cash into equities.

still also have the regular syndicate mortgage fund come up that I can put money in offering 8% yields. Personally if equities offer a better buy in opportunity I would move money out of the mortgage funds as they mature and into equities. The mortgage funds have been a good option. I have spread capital across 20 different loans. So they mature and return the capital every month or 2. Then I decide whether to put it back into a new loan or move the cash into something else.

 

Love your honesty @Big A and am enjoying your journey. For disclosure I bought PMC and VAS today.

 

@Big A

Have you had a read of jlcollinsnh.com/stock-series/ at all?

Its a good read overall

Part 1 includes There’s a major market crash coming!!!! and Dr. Lo can’t save you.

I like Market crashes are to be expected and The market always recovers (if it didn't we'd all be in the ****)

 

Liked these quotes

Cheers,
Oracle.

 

Thank you @Redwing . I will have make some time to read this series.

 

I must admit that I'm guilty of trying to time the market too, although not as much as you. These are a couple of things you might find useful, if you haven't seen them already:

Even God Couldn't Beat Dollar-Cost Averaging – Of Dollars And Data
How to Perfectly Time The Market

 

Thanks @MarkW . I have read so many write ups that back the theory of dca and its benefits. And it’s not that I don’t believe in it.

problem is when you are hearing that the market is going to turn at any moment, a little voice in your head tells you maybe I should just wait it out a little longer. I mean what if the market does turn next week. Why not just wait another week just in case that is the week.

For example in the indices thread @Phar Lap has just made his forecast of a market downturn come 3rd of December. And this is not having a dig at Phar lap. He has made this forecast based on theories he believes in and follows. But as soon as I read this predication I immediately thought maybe I should just hold of for another 2 weeks and see what happens come 3rd December. I mean it’s only 2 weeks.

But I shall not wait another 2 weeks. I am sure Phar lap is an intelligent person and is making his predications with the best intentions and to the best of his ability.

But a few weeks back I had a chance to buy in at 6480. I have watched the market move back up to 6800 when I was waiting for it to go to 6000. The predictions were that the market would be at 6000 in October. Then the drop would come in November. Now it should arrive in December. Next month the predication could be for a turn down in January. In January the predication will be ............

Now eventually one of these predications will be right. But for me if a predication can not pin point a shift within a 3 to 6 month time frame then I’m not sure how useful it is. Because in that 3 - 6 months we could see a move up of just as much as we are expecting to see down. So anything more than that and it’s a 50 / 50 predication. I don’t make financial decisions based on 50 / 50 odds.

Even after knowing all this, there is still that little niggle in the back of my mind that I could go back in this week and next month is the one.
And I’m sure that niggle will be there every time I drop a lump sum into the market.

So as I write this I’m thinking to myself, what if I put in say $500k tomorrow and next week the market drops. Would I be upset that the market dropped? Funnily enough when I think about it , it’s not that the market dropped that would bother me. It’s that I didn’t get that $500k in at a better price. I missed that extra possible return had I bought at a cheaper price. I hate to feel like I lost that bet.

I know it’s a silly way to look at it. As long term I will be winning regardless of that short term result of that purchase.

Though I have thought about this and in order to work around this physiological problem of feeling like I was on the end of a losing bet,if the market does turn after going in, I will use the cheap debt that I have access to and double down with another lump sum purchase.

As bizarre as some of what I just said might sound. This is how I rationalise my decisions and my thought process. Hence the problem with overthinking every move and decision.

 

What if after you dropped the cheap debt in, it goes down another 30% over 3 years? Not having a go at you but I feel having a systemic approach is the best way rather than doubling down like you would at poker.

 

I don't think it's silly at all. I have the same thoughts. The amounts I'm investing are much smaller than the amounts you're talking about, and if I was investing the amount you have, there's no doubt I'd be even more cautious than I am now.

 

While that’s a possibility, my aim is not to buy in at the lowest possible point. While that would be ideal it’s not likely I will be picking that exact point. But if I do another buy in at say 10% then go again at say 20%. If it keeps going and I have access to more capital, then go again at say 30%. If it keeps going and I am out of ammo then so be it. While I didn’t buy the absolute bottom I at least grabbed a good chunk at different levels of discount compared to today. And after the downturn , when the market starts going back up, each purchase at the different discount level will have outperformed the prior purchase.

I am trying to maximise my results and looking for an edge to add to my performance. Not expecting to get the absolutely perfect buy in and performance result.

 

@Big A if you don't mind me asking, what's your investment horizon? That is, how long do you expect your capital to be invested for? Personally I found once I started ignoring the capital and focusing on the return it all clicked.

 

For ever. That’s the horizon. My plan is based on inter generational wealth building.

I know what your going to say next.

if my time frame is that long, then what happens in the short term performance of this lump sum or the next will have a minimal impact on the long term performance.

While i understand that, from a physiological aspect, this amount is still significant right now and a bad result short term would still annoy me and feel like a bad result. This is regardless of the long term result.

Unfortunately that’s just how my mind is programmed and why I have these different strategies and processes to be able to still commit to investing but feel like I have some control / plan to make me believe that I am optimising performance.

I know that whether I just kept it simple and did non of this or added some complexity like I am doing it still better than not investing in equities at all. And if this makes me feel like I’m going to get a better result, wether true or not then so be it.

Maybe with time and experience I will see that such strategies are futile and provide no improvement in performance. Or I might be here in years to come telling you all how much better my gains have been deploying such strategies.

 

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Not buying was a mistake of omission. I’m sure you have found that annoying. A mistake of commission is actually buying and then the market falls. Your mistakes of commission will **** you off much more. We feel them far worse than mistakes of omission, that’s the psychological theory and I can certainly vouch for it. My portfolio might drop a large amount on a bad day But all I will really be annoyed about is the opportunity cost on the 25K parcel I transacted yesterday – doesn’t make sense but it seems to be how I(we) work.

The strategy to win the war requires a preparedness to lose many battles along the way, even though each battle loss does hurt and for a competitive bugger it hurts a lot. You don’t have the control over markets that you might have in other facets of your life, so success actually largely hinges on becoming a good loser. Don’t try and get even – just move on and fight the next battle that the strategy dictates and then the next and the next……… until in the end the winning strategy overwhelms the randomness of individual battle outcomes.

Your honesty in reflecting on the emotions that drive you should serve you well.

I hope this happens for you, but you can bet there will be some pain in the arse like me here to argue luck of single outcome vs law of large numbers.

 

Top post @Big A

As mentioned in one of the earlier post I bought VAS yesterday. No matter how much I know DCA is a winning strategy I still get tempted to time the market. I think there is a value investor in all of us and that is what makes us want to always buy things at a discount to what it was selling at in the immediate past.

I often try to remind myself of these quotes from Buffett

I am no Buffett but one thing I do know is for me equities in form of index fund are a wonder company.

Every time I look around and see

- Someone enjoying an iPhone or searching on Google
- Shoppers queuing up at Woolworths, Bunnings,
- Auction clearance rates hitting new highs I know most likely big 4 banks will be getting more business
- Chinese economy growing 6%. Great. More demand for iron ore! BHP, RIO, Fortescue cost of production 12-15 US dollars a tonne and selling at 90 US dollars a tonne. Talk about profit margins

I know I own a piece of each of the above and many many other wondering companies. I want to buy them as much as I can as often as I can. I cannot get enough of it.

I hope in pursuit of lower equity prices before jumping in you don't give up on equities.

Cheers,
Oracle.