I've been asked this question (and similar ones) lately by a few people... What is the best thing to do during a market crash? Obviously the sp has dropped, but it looks like it will probably continue to drop for a while. At the same time, they have large positions on the market, looking for long term capital gains. Would it be better to sell everything now, go fishing and buy back in later, or just keep everything there, brace, hide in the bathroom and brave the storm? I'm a little bit on the fence with this one - I'm too new and too young to have gone through a major correction/crash with any kind of capital on the market. :(
dhukka
10th-August-2007, 11:29 PM
I've been asked this question (and similar ones) lately by a few people... What is the best thing to do during a market crash? Obviously the sp has dropped, but it looks like it will probably continue to drop for a while. At the same time, they have large positions on the market, looking for long term capital gains. Would it be better to sell everything now, go fishing and buy back in later, or just keep everything there, brace, hide in the bathroom and brave the storm? I'm a little bit on the fence with this one - I'm too new and too young to have gone through a major correction/crash with any kind of capital on the market. :(
It's difficult to say without knowing the specific stocks people hold or their particular investment philosophy.
My advice is for everyone to panic and sell at whatever prices they can get forcing the All Ords below the 5000 mark so we can pick up some bargains. :p:
explod
10th-August-2007, 11:46 PM
I sold all of my positions today but one and brought into one.
All the markets are now in a down trend. I am a trend follower but I always make sure that any company that I trade has good fundamentals before entering.
There is a lot of debate about the future of markets, there is enormous technical and fundamental advice and it takes years to learn properly.
The best advice I can give are these two points and if they are followed you will survive. Never ever enter a trade if you are in any way uncertain. The greatest of them all Warren Buffet preaches that he has never invested in anything that he did not totally understand. Till you do dont. Second follow the trend. Now when I say that, not only does the stock I trade have to be in the right trend, the business that that company is in has to be in the correct trend also. And the economic environment has to be right
also.
If you have it to follow these simple rules well and dont get taken in too much by others, listen but follow common sense you can make it.
Now the stock I brought into was Transurban, reason, the tollways will be little effected by the big econimics, people have to travel to work etc. Ex-dividend it is down a bit by that and the market. It is just breaking up from what I call the trading channel. There is a rumour that some deal may take place whereby they may join up with Eastlink which will also be positive.
Just knowing what others do may help I hope,
One man who was a great Australian investor by the seat of his Pants was Rene Rivkin and probably the greatest thing I learnt was his saying "When in doubt get out" and that is what I did today and the markets can do what they like but I am fairly safe and will sleep well tonight
fourth
11th-August-2007, 12:08 AM
[I'm here to learn]
I hear many mentions of people shorting at this time. Is shorting just like normal charting but in reverse? Beginners don't often have to learn in a falling market so I guess this is an opportunity ;)
canaussieuck
11th-August-2007, 12:14 AM
[I'm here to learn]
I hear many mentions of people shorting at this time. Is shorting just like normal charting but in reverse? Beginners don't often have to learn in a falling market so I guess this is an opportunity ;)
Yes, basically a short is a bet that the market will fall, where as a long is a bet that the market will rise. This is a great time to be paper trading.
Cheers,
Smurf1976
11th-August-2007, 01:59 AM
I have kept stocks in business that I understand, are fundamentally sound, in a strong growth trend driven by fundamentals that are not likely to change (short of a major economic collapse). Also, I have no leverage on these stocks and it is my intention, regardless of what happens with their price in the meantime, to hold them until at least 2012.
On the other hand, I wouldn't be holding a broad market index fund through this.:2twocents
kennas
11th-August-2007, 02:06 AM
Sell specs and get set to buy quality stocks once the dust settles. For those with cash there will be some great opportunities IMO.
wayneL
11th-August-2007, 02:16 AM
Find a helicopter flying about and stand under it. :D
theasxgorilla
11th-August-2007, 02:40 AM
Find a helicopter flying about and stand under it. :D
Don't forget to take some wheel barrows...cos you're gonna need lots of money the way this is paning out :)
wayneL
11th-August-2007, 02:47 AM
Don't forget to take some wheel barrows...cos you're gonna need lots of money the way this is paning out :)
How about something like this: :D
These markets, so far, are really a slide and not a crash. It could become known as the Great Slide, if it continues.
What to do. After the 1987 crash, an aquaintance of mine committed suicide after backing gold stocks, as in the 1973-75 great bear market when gold stocks doubled. . Gold stocks fell even further in 1987 than the main market, around 75%.
My losses were so great, it took me until 2004 to get my money back. Since then I remain around 70% to 80% in cash. I have transferred about 25% of my cash into US Bonds this week.
explod
11th-August-2007, 08:08 AM
These markets, so far, are really a slide and not a crash. It could become known as the Great Slide, if it continues.
What to do. After the 1987 crash, an aquaintance of mine committed suicide after backing gold stocks, as in the 1973-75 great bear market when gold stocks doubled. . Gold stocks fell even further in 1987 than the main market, around 75%.
My losses were so great, it took me until 2004 to get my money back. Since then I remain around 70% to 80% in cash. I have transferred about 25% of my cash into US Bonds this week.
Sorry about your aquantance, there were a number of suicides on Wall Street at that time, corrections are very serious business and the markets are not for the unwary.
The addage, "when in doubt, get out" should be broadcast from the rooftops.
Would be pleased to know why you chose US Bonds as a defensive investment (so inferred). During the crash from 1929 to 33 even Government Bonds became virtually worthless. Many well off families from the Yarra River to Lansell Road, Toorak owe it to their Forefathers being long gold at that time. Most US Bonds are private and not backed by the Government. A bit differrent to here in AUS. but if liquidity really dries up, then there can be big problems.
In 1987 there were plenty of warning signs from both the fundamental and technical side to see that gold was retreating
tech/a
11th-August-2007, 08:24 AM
What to do during a market crash?
(1) Dont guess it if you dont know how to read the market get out of it.
(2) Preserve capital at all costs.
(3) Shorten timeframe.
(4) Deminish risk.
(5) Be decisive,procrastination will kill you.
(6) Be on the RIGHT side of market bias,not your own.
When in serious or painful doubt turn off the computer liquidate all positions and forget there is a market for a few months.
kennas
11th-August-2007, 08:35 AM
(1) Dont guess it if you dont know how to read the market get out of it.
(2) Preserve capital at all costs.
(3) Shorten timeframe.
(4) Deminish risk.
(5) Be decisive,procrastination will kill you.
(6) Be on the RIGHT side of market bias,not your own.
When in serious or painful doubt turn off the computer liquidate all positions and forget there is a market for a few months.Tech, are these guidelines for 'traders' or 'investors'.
Does Buffett get completely out of the market, or does he just move assets around, if at all?
I have inherited a 'time in' the market philosophy of investing, which a few here might find surprising, but is the cornerstone of my 'investing'. I'm still holding a few stocks which I think will be great value in the long term.
Pager
11th-August-2007, 08:41 AM
Depends on your approach or timeframe.
If you’re a short term trader then it doesn’t matter if the markets going up or down, what you want are volatility as that equals good profits.
If you’re a systems trader then follow your rules regardless, if your system is any good it will have you out of any major move in the wrong direction.
If your an investor with a long term time frame then look at the long term picture, sometimes that means holding through extended periods of weakness.
Cheers
Pager
Sir Burr
11th-August-2007, 08:45 AM
(1) Dont guess it if you dont know how to read the market get out of it.
(2) Preserve capital at all costs.
(3) Shorten timeframe.
(4) Deminish risk.
(5) Be decisive,procrastination will kill you.
(6) Be on the RIGHT side of market bias,not your own.
When in serious or painful doubt turn off the computer liquidate all positions and forget there is a market for a few months.
How do these relate to Techtrader?
I'm guessing Techtrader covers...
(1) yes
(2) yes
(3) no
(4) no
(5) upto the trader
(6) not sure?
dhukka
11th-August-2007, 08:47 AM
I have kept stocks in business that I understand, are fundamentally sound, in a strong growth trend driven by fundamentals that are not likely to change (short of a major economic collapse). Also, I have no leverage on these stocks and it is my intention, regardless of what happens with their price in the meantime, to hold them until at least 2012.
On the other hand, I wouldn't be holding a broad market index fund through this.:2twocents
That's it smurf, spoken like a true long term investor. Nothing to worry about if you are invested in sound businesses that you understand at reasonable prices.
dhukka
11th-August-2007, 08:50 AM
Does Buffett get completely out of the market, or does he just move assets around, if at all?
Buffet is not in the slightest bit interested in the daily gyrations of the market. As always he will be looking for stocks that are under-priced relative to their intrinsic value.
kennas
11th-August-2007, 08:58 AM
Buffet is not in the slightest bit interested in the daily gyrations of the market. As always he will be looking for stocks that are under-priced relative to their intrinsic value.I suppose this is my point. ASF is not all about tech analysis and day trading, there are 'investors' here too. I, for one, arrived here as an 'investor', but realised some trading was required in the short term to make a living. I think the 'investors' out there may be a little confused with the doom and gloom prognosis, although I'm leaning that way myself.
Or, am I right off the rails? :confused: I think there might be a balance... Or, am I going to lose my shirt?
(the noise out there is making it very hard to see clearly!)
noirua
11th-August-2007, 09:08 AM
Would be pleased to know why you chose US Bonds as a defensive investment (so inferred). During the crash from 1929 to 33 even Government Bonds became virtually worthless.
Hi, Mainly because I think the US Dollar will gain strength against the Aussie Dollar, Euro and British Pound. Interest rates are set to move lower over the next 12 months in the US. (US Bonds rose between 0.2% and 0.5% on Friday alone and the US Dollar rose between 0.4% and 0.7% against the Aussie, Euro and BP) Interesting comments about US Bonds which I was not aware of, still, we live and learn.
noirua
11th-August-2007, 09:19 AM
Buffet is not in the slightest bit interested in the daily gyrations of the market. As always he will be looking for stocks that are under-priced relative to their intrinsic value.
Warren Buffet is still listed third richest person in the world with US$52 billion, behind Bill Gates and Carlos "Slim" Helu. It must be difficult to sell with his large exposure, maybe that's why he says, hold for ever.
dhukka
11th-August-2007, 09:21 AM
I suppose this is my point. ASF is not all about tech analysis and day trading, there are 'investors' here too. I, for one, arrived here as an 'investor', but realised some trading was required in the short term to make a living. I think the 'investors' out there may be a little confused with the doom and gloom prognosis, although I'm leaning that way myself.
Or, am I right off the rails? :confused: I think there might be a balance... Or, am I going to lose my shirt?
(the noise out there is making it very hard to see clearly!)
Kennas you sound like the one who is confused. True investors wouldn't be confused at all. This board is dominated by technical analysis and traders not investors and if you look at the threads that show the most panic I think you'll find the posters are mainly traders.
CFD
11th-August-2007, 09:22 AM
I think long term investors, by investing for the long term will go through many periods when the market will gain 2 - 3% in 2 or 3 days and also many times when the market will lose the same in 1 or 2 days.
Over the longer term there are more of these up days than down days. If you did not believe this then you would not be a long term investor.
tech/a
11th-August-2007, 10:22 AM
Sir Burr[/B];189854]How do these relate to Techtrader?
I'm guessing Techtrader covers...
(1) yes
(2) yes
(3) no
(4) no
(5) upto the trader
(6) not sure?
AND in response to Kenna's
Techtrader as posted on "The Chartist' is an exercise in a long term trading System. As such it will be traded until it "blows up" (Trades outside its blueprint ).
Some including myself have adopted it and hybrids of it as a longterm trading method.
I personally have taken the decision to close ALL positions in my Longterm methods at Trading below 6170 on the XJO.
This is clearly NOT within the system guidelines.
So why did I do it.
(1) Firstly a 22% D/D on my systems (The average maxD/D found in testing) would mean a very substantial capital loss on unrealised profit for me personally,I dont wish to give that amount back.
(2) My analysis and those of some of my respected peers indicate that at this time it is highly likely that this COULD occur. If I'm wrong I lose a little potential profit,if I'm right then I minimise my actual losses.
(3) The decision was made on a majority of stocks which have been held over 12 mths and in July well away from tax time,something I can defer for a maximum period.
I maybe right OR wrong,but for me in my circumstances I figure regardless of what happens in the markets this decision I have made puts me in the least risk catagory.
I still hold short term trades and have 4 open currently,adopting my own advice above.
prana
22nd-December-2007, 08:05 AM
I regard myself an investor.
I buy when traders give up their positions at ridiculous prices, and I try and disregard the reds in my portfolio due to the irrationality - I own businesses. For me, it really is "When you cry, you buy - when you laugh, becareful" I don't sell unless the company has lied about something, or management gives misguidance or something drastic has happened that changes the underlying business proceeds, or it was a cyclical play to begin with.
Traders gain from momentum, investors build when the momentum is in the wrong direction, that's how I see it (pretty controversial first post, sorry)
nioka
22nd-December-2007, 02:05 PM
Neither of the answers are correct in all situations. Some shares I have sold some I hold and some I bought. One size does not fit all. Only a lemming has one answer.
Garpal Gumnut
22nd-December-2007, 02:13 PM
During a proper crash, that is when all is lost and even Rupert M is scrabbling to save himself as he was in the eighties, go to the following link
ive managed to sell all positions (except 1, no prizes for guessing) at or near record highs (no resources) and now sit back and wait for this "slide" to run its course. hopefully the central banks, economists etc out there stop playing with the problems, let the markets determine the values, so we can find the true base to begin building up our portfolios again. the longer they play with rescue packages, the longer recovery will take. also moved all super out of shares and into boring but still earning bonds for the same reason.
