Why Super And Growth Assets Like Shares Really Are Long-Term Investments

Because it doesn't pay a dividend.

 

In 2007 i also was able to sell it but i still think buy and hold makes sense as you would be paying taxes on the gains since then. The real question I would appreciate a response is, the market has been record highs in dec, nov, sept and so on for almost the whole of last year. what made you not pull the trigger then? Thanks a lot

 

I don't start selling as soon as it hits a record high but the longer it stays there or the higher it gets the more nervous I get and the urge to start taking money off the table gets stronger.
That's the part that I'm in control of but there is luck involved as well. A fair chunk of the money that I took off the table in Feb was in a geared fund. I sent the request to remove the funds, they take a week or ten days to process and the money hit my account on the Monday of the week that the market first dropped. That fund was down 50% a few weeks later. I could have sold any time last year and I'd still be pretty happy now. I use a geared share fund to grow capital quickly and then harvest and store in LIC's and ETF's long term. The LIC's and ETF's are the core and I wouldn't sell those just keep accumulating albeit at a lesser rate at market highs.

Willy

 

Well all you need to do is look at your annual returns vs the market over an extended period. If you’re below it you’re probably doing something wrong. If you’re above it, you’re obviously doing something right so these data means nothing anyway and you should keep doing what you’re doing

 

What methodology do you use to pick market highs?

 

I'm about on par with the market.
I sold out completely just before the GFC but started dollar cost averaging in a bit too late and missed a lot of the bounce. I've also been overweight in banks which hasn't done me any favours. On the positive side 15% physical gold has helped as has the geared share fund sold at the peak. I've also held more cash than normal for the last 5 years, which I'm glad to have now but it's been a drag on returns. After the GFC experience I'd never sell out completely again but it also taught me a valuable lesson about having the discipline to take money off the table. Which is why I now keep a core that I'd never be tempted to sell and a portion that I'm happy to trade in and out.

Willy

 

It's very technical.

If things seem too good to be true....get out!

To be honest, I think the use of geared share funds for my "trading" portion helps me to have the necessary discipline to sell at around the right time. Because when things are good, the returns are almost unbelievable and you just want to bank the profit because you know that in a downturn those geared funds get smashed completely. If the geared fund has been returning 40-60%pa it's time to head for the hills. I've been using them in this way for about 25 years and you just cant afford to be complacent.

Willy

 

@Willy

Let us know when you jump back in

 

In the late 1960s the US tried to have both guns and butter. It fought the Vietnam war abroad and launched the welfare state at home. They couldn’t afford it, so they printed and borrowed.

For centuries, all currencies (except for a few short lived “experiments”) had been based on gold. After WWII the US had lots of the world’s gold, and other countries had too little. After the Bretton Woods agreement of 1944, other countries based their currency on the US dollar, which in turn was based on gold. But in the late 1960s the US was printing too much money to be able to back its currency with gold, and were running out of gold. So in 1971 President Nixon closed the gold window. No longer could other nations exchange fistfuls of US dollars for gold. It affected the whole world.

After 1971, all currencies in the world have been entirely paper affairs. Free of the constraint of convertibility to gold, governments could print as much as they wanted, subject only to the new constraints of inflation and trade balances. This gave the money printers, asset shufflers, and banks the upper hand economically. Why work, if you can just manufacture money or know when to buy or sell on borrowed (i.e. newly manufactured) money?

Real workers suffered. Bargaining power flowed to the money men. Hardly anyone knows this today, yet it shapes our social and economic landscape.

Wentworth Report

 

Total wimp. Only went into the shallow end. No conviction at all.

 

This is actually very applicable.
Because if you sold at an all ords of 7000, you can shut your eyes and jump in head first at 5500 and your a mile in front. It's a known outcome.
It's deciding to sell at 7000 and not knowing if you'll be able to buy back in cheaper or how long you'll have to wait to buy in cheaper is the hardest part.
And yes I have started to re enter but not with as much conviction as this young bloke just yet.
Once I'm fully invested again I'll let you know what I've averaged in at and we'll see if it's under 7000.

Willy