# Should I be worried?



## ML91 (Dec 5, 2015)

New to investing, I put my savings into mutual funds early December and obviously I've lost some money. People are saying it's the start of the bear market so should I pull out and hold my cash or assume the low risk mutual funds hold large companies that may not take a great hit?


----------



## none (Jan 15, 2013)

My advice is suck it up and accept the risk you accepted when you signed up.


----------



## ML91 (Dec 5, 2015)

I'm willing to do that but if most are saying it will continue to drop then wouldn't the logical move be to sell now and wait a bit before buying again? What is your personal plan during this time?


----------



## none (Jan 15, 2013)

ML91 said:


> I'm willing to do that but if most are saying it will continue to drop then wouldn't the logical move be to sell now and wait a bit before buying again? What is your personal plan during this time?


The biggest obstacle to a successful financial plan is you. Come up with a well thought out plan and stick to it. Always remember to ignore your gut. Your gut is an idiot.

The people who invested immediately before the financial crisis have gotten all of their money back and then some - IF they stuck to their plan of asset allocation and rebalancing. Buying High and selling low is the worst thing you can do.

If you have a good plan then stick with it.

If it makes you feel any better I bought all of my Canadian equities when the TSX was at 15400. It's pretty bad. Of course, I also changed half of my CAN $ into USD when they were at par. You win some you lost some.


----------



## james4beach (Nov 15, 2012)

ML91 said:


> New to investing, I put my savings into mutual funds early December and obviously I've lost some money. People are saying it's the start of the bear market so should I pull out and hold my cash or assume the low risk mutual funds hold large companies that may not take a great hit?


The first thing to remember is that nobody can predict what the stock market will do. The stock market is, by its nature, volatile and unpredictable. It might keep going up for the next 10 years or 20 years straight. It could go down for 10 years. Heck, it could even go down for 30 years like the Japanese stock market did.

I think the first thing you should do is make sure that you have _realistic_ expectations about what the stock market does. A good way to help get realistic expectations is by looking at some long term stock index graphs. Here is the S&P 500 from 1980 to today. The chart has price annotations that show high and low points
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=1980-01-01&en=(today)&id=p41553905137

Here's the NASDAQ
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&st=1980-01-01&en=(today)&id=p13539570809

I think you should look at that and digest the historical example for a while. Here are the general lessons that I take away from it:

1. American stocks have tended to go up over time. Caveat is that others, like Japan's Nikkei, have not.
2. Notice that periods of declines have been as bad as -50% to -80%

At the end of the day, all stock investing is a gamble. You're gambling and hoping that the stock market goes up over time. But even while going up, the stock market can suffer significant losses. So you should be prepared to accept that your investment may decline 50% or even (in case of something like NASDQ) 80% drop, before it ultimately goes higher.

Time horizon is also important. Some people invest in stocks but need the money soon, like in 5 or 10 years. The bad news is that stocks can fall and stay depressed for a period like 5 years. Therefore to successfully invest in the stock market you need to be looking out at least 10 years, and probably more like 20 or 30 years.

Based on this knowledge of risk, I determine how much money I'd like to throw into stocks. For example if I were to invest $50,000 in a stock index, I should be prepared to accept that I could (temporarily) lose in the ballpark of $35,000. Perhaps I would be staring at that loss for many years. But by holding on for 10 to 20 years, I will ultimately see a higher balance. Am I prepared to see my account decline by that much?

The answer guides how much money I'm willing to put into the stock market.


----------



## fatcat (Nov 11, 2009)

ML91 said:


> New to investing, I put my savings into mutual funds early December and obviously I've lost some money. People are saying it's the start of the bear market so should I pull out and hold my cash or assume the low risk mutual funds hold large companies that may not take a great hit?


i would think of two things, first, cash management, do you have enough money to meet obligations ? ... second, do you have a long time horizon, like at least 5-10 years or more ... if you are under 40 you are going to have a very long time horizon

if both of those things are covered (no need for cash and long horizon) i would absolutely sit tight

if you panic and sell, you make a classic newbie mistake of selling at a loss good stocks that will come back


----------



## Moneytoo (Mar 26, 2014)

james4beach said:


> For example if I were to invest $50,000 in a stock index, I should be prepared to accept that I could (temporarily) lose in the ballpark of $35,000. Perhaps I would be staring at that loss for many years.


This example assumes that you invested a lump sum in the beginning and never add to it. What helps me stick to my plan and don't worry about an impending crash/correction/bear market are regular contributions. But as none keeps pointing out, the decision must come from the head. To accept one's limitations (like inability to time the markets) - and control the emotions. Which is very hard for beginners to do...


----------



## james4beach (Nov 15, 2012)

Regular contributions or not, stock investors also have to pray to the stock market god that Japan doesn't happen:
http://stockcharts.com/h-sc/ui?s=$NIKK&p=D&st=1980-01-01&en=(today)&id=p23520134003

29 years with zero gains, and counting. Doing regular contributions in Japan didn't help. In the end, you _pray_ that stocks go up and that's still something that is never guaranteed.


----------



## none (Jan 15, 2013)

That's why you diversify in multiple indexes - that solves the problem.


----------



## Moneytoo (Mar 26, 2014)

james4beach said:


> 29 years with zero gains, and counting. Doing regular contributions in Japan didn't help. In the end, you _pray_ that stocks go up and that's still something that is never guaranteed.


Well that's why I'm exploring the alternatives, as I believe mutual funds and indexing are a good start (to train one's discipline and emotions), but I wouldn't want to be stuck with them as the only alternative for years of bad returns. 

But I bought my first mutual fund 20 years ago, first index fund about 15 and first ETF almost two, and now I think I'm somewhat ready for the truth: Trading and Market Myths | Truth or Skepticism 

But we all are different. I lived through two crashes (without bonds or GICs) already - and didn't even notice them, so feel comfortable with high allocation to equities. You lived through one - and are the opposite. OP should _pray_ for the crash early on to gain experience and to know for sure his risk tolerance - IMO of course


----------



## james4beach (Nov 15, 2012)

I actually invested through two crashes -- both 2000 and 2008 (and I actively traded the latter). I've had stock exposure this whole time. I survived, but I saw friends & coworkers get wiped out and they no longer have any money to invest.


----------



## brad (May 22, 2009)

ML91 said:


> New to investing, I put my savings into mutual funds early December and obviously I've lost some money. People are saying it's the start of the bear market so should I pull out and hold my cash or assume the low risk mutual funds hold large companies that may not take a great hit?


Unless I missed it, nobody seems to have asked the single most crucial question in this equation: when you do need the money?

You said you put "all your savings" into mutual funds, but what were those savings for? Were they for short-term needs, things you'll want to buy in the next 5-10 years, or were they for a more distant goal like retirement?

The answer to that question determines whether you should be worried or not. If these are long-term investments (e.g., for retirement) and you won't need the money until 20-30 years from now, I wouldn't worry. If you'll need some of that money in the next five years or less, you probably should have kept your money in a savings account.


----------



## ML91 (Dec 5, 2015)

brad said:


> Unless I missed it, nobody seems to have asked the single most crucial question in this equation: when you do need the money?
> 
> You said you put "all your savings" into mutual funds, but what were those savings for? Were they for short-term needs, things you'll want to buy in the next 5-10 years, or were they for a more distant goal like retirement?
> 
> The answer to that question determines whether you should be worried or not. If these are long-term investments (e.g., for retirement) and you won't need the money until 20-30 years from now, I wouldn't worry. If you'll need some of that money in the next five years or less, you probably should have kept your money in a savings account.


I won't need the money for about 6-7 years as that's when ill put a down payment on a house. I put 80% of my funds in very low risk Mutual Funds as I am unsure of my risk tolerance. Hopefully in 7 years time its not below then ill be content.


----------



## none (Jan 15, 2013)

Fair point about time horizon.

I do think the 'when do you need the money' is a little strict.

Do you REALLY need (for example the 10K?) Or is somewhere between 8000-12000 after 7 years (or whatever) be all right?


----------



## ML91 (Dec 5, 2015)

none said:


> Fair point about time horizon.
> 
> I do think the 'when do you need the money' is a little strict.
> 
> Do you REALLY need (for example the 10K?) Or is somewhere between 8000-12000 after 7 years (or whatever) be all right?


At that time I may not NEED the money but most likely will need some if it at least, I'm in a good financial position now due to living at home with minimal expenses


----------



## none (Jan 15, 2013)

ML91 said:


> At that time I may not NEED the money but most likely will need some if it at least, I'm in a good financial position now due to living at home with minimal expenses


Well there you go. If you NEED the money put it in a high interest account. If you are willing to be flexible and take some risk you can even go 100% equities. It just adds to the uncertainty (which goes both ways) of how much money you'l have after seven years.

savings account: 10,700
100% equities: 6000 - 19000 ( or something, I made those #'s up).


----------



## Rusty O'Toole (Feb 1, 2012)

I would like to take the opposite view which is that we are in year 7 of a bull market and the uptrend seems to be running out of gas. Last year the S&P went noplace and this year is already worse.

I know I am asking for a barrage of tomatoes by saying this, all I can ask is that you take them out of the can.

Have a look at this chart.

http://canadianmoneyforum.com/showthread.php/65650-Could-this-chart-make-you-a-fortune


----------



## Moneytoo (Mar 26, 2014)

Run, OP, run as fast as you can - Here There Be Tygers! lol


----------



## dogcom (May 23, 2009)

Charts might matter Rusty if this is the signal from the Fed that the game is over. At this point the dollar, geopolitics, gold and the bond market is the show and the stock market is the slight of hand to make us think good things are happening.


----------



## lonewolf (Jun 12, 2012)

ML91 said:


> New to investing, I put my savings into mutual funds early December and obviously I've lost some money. QUOTE]
> 
> If I put all my savings into the market I would be worried which would be good because the worry would cause me to sell so perhaps I was maxed out with 2% of my money was invested. 2% is my max for playing the market


----------



## 4n2t0 (Dec 8, 2015)

I'm in a similar situation. I started a small (40K) ETF portfolio (40% VAB, 15% VCN, 45% VXC) January 1st and I've already lost 1K. I'm not really worried though but that's probably because my time horizon is much longer (20-30 years). My only regret is that I only have $4500 worth of room left in my TFSA. I'll wait a little longer and buy more units of each ETF until I'm maxed out. I wish I had a crap load of money because I'm getting giddy at the possibility of a "crash". After reading a few good books (most of the books on this list http://canadiancouchpotato.com/resources/) I came to realize that "crashes" are just another opportunity to make money.


----------



## My Own Advisor (Sep 24, 2012)

Crashes are absolutely the time to make money...or just after. The challenge is training your investing brain to buy when others are running from the building.

It's not easy when you see your portfolio in the red...getting deeper by the day in this market!!


----------



## Just a Guy (Mar 27, 2012)

First off, like lending money to friends, never invest any money you need to get back. Treat invested money like spent money, as in a car...you still have something, but getting cash back is difficult and you may get less if you need it in a hurry. The bonus is, it really isn't gone, but it helps to think of it this way.

Next, once you've invested, quit looking at its value on a regular basis. You had no issue driving the car off the lot and immediately losing 30% of its value, so why is an investment different? I look at my holdings once or twice every couple of months. I watch the market in general, looking for deals...a strategy very similar to my real estate strategy. I've always got some idea of how the market is doing in general, but once I've made a purchase that I know was a good deal, I don't spend time worrying about it, I look for the next one. 

Next, buy stuff you understand. If a company makes widgets, and I don't have a clue as to what a widget is, how would I know if people want them. Also avoid fads and "the hot stock of the day", these have either already made their money, or they'll flame out long term. Of course "the market can remain irrational longer than you can remain solvent", so don't be upset if you "miss out" on one of the deals...better than getting burned. (Think dot coms, Enron, world com, nortel, brex, etc). Remember, there are reasons no one wanted a yugo, even though they were cheap.

Finally, think longer term. Most cars lose their value for the first several years...eventually though, they turn around and start increasing in value...but it didn't happen overnight. The markets are not a get rich quick tool...if you pick a fairly conservative strategy, and invest in stable companies, chances are it will increase over time.

If you think of investing like this, it's a lot easier on you...if you don't, you'll probably get ulcers and go crazy on the rollercoaster ride from hell...


----------



## james4beach (Nov 15, 2012)

My Own Advisor said:


> Crashes are absolutely the time to make money...or just after.


That's overly simplistic. A lot of novice investors have lost a LOT of money trying to invest during bear markets.

Here are some ways I've seen novice investors lose while trying to "catch the falling knife" in a bear market. There's far more to this than just discipline and hopefully someone will read this before they try to catch the falling knife:

1. They invest, are skittish, and freak out and sell later (probably at the ultimate bottom). When they first enter, they think they have caught the bottom but the market surprises them with steeper losses than they ever imagined. This is due to overconfidence of investors and the tendency of Mr. Market to know your pain point, and exceed it. Catching a falling knife requires nerves of steel and good worst-case-scenario planning.

2. You can't buy just anything. You have to choose the right investment. Did Nortel investors buy the bottom and make money? How about investors in Bear Stearns, Wachovia, tech bubble stocks, etc? I think the only way to pull this off is to buy an index ETF. And even then, you have to be savvy and buy the right index ETF. You can lose a lot of money if you buy an assetless ETN, a leveraged 2x or 3x ETF, an exotic ETF containing derivatives, etc. So this requires good research and a firm knowledge of what you're buying. Not all ETFs are created equally. I've seen plenty of horrible ETFs in my life. For example, XTR which I've warned about for years.

3. Their overall money situation gets tighter than they thought possible. This is due to job loss, poor prospects for a new job, family who needs money, tighter credit, or even a pension that collapses. That's the interesting thing about bear market. Bad things tend to happen during bear markets... that's why it's a bear market. See this article: Bear Markets are Dangerous


Regarding #2, examples of the "right things to buy" I feel confident recommending are: RBC Monthly Income Fund, another big bank's index fund, XIU, XIC, ZCN

So you see, it's not quite right to say you just suck it up and buy into a crashing market. There are so many factors beyond your control, and lots of tricky decisions to make. You need to leave huge margins of safety which means tons of emergency cash lying around. Once you lose your job, or your pension looks uncertain (e.g. collapsing Nortel pension) it doesn't matter how bravely you bought the crashing market. If you need cash, you need cash.

That's why bear markets exist. It's precisely because so many participants are forced into liquidation, deleveraging and can no longer afford to take risks.

If you're going to buy into a scary scenario, you'd better have a TON of cash on hand, so that you can't get squeezed out of your position.


----------



## james4beach (Nov 15, 2012)

P.S. my allocation to stocks is 8% of my net worth. My long term goal (approx 5 years) is to increase it up to 30% but I have no desire to increase it beyond that.

I currently think we're in a global bear market, and I don't see any hurry to buy. It takes many months for bottoms to form. A return to a bull market is characterized by sharp rallies across many asset classes, and I don't see any sign of this happening. At the very least I'd want to see a rally in commodities.


----------



## My Own Advisor (Sep 24, 2012)

Totally agree James, you don't just buy anything in a crashing market. The context was, bear markets are a good time to buy equities in general.

I 100% agree with your CDN equity choices of XIU, XIC, ZCN, etc.


----------



## 4n2t0 (Dec 8, 2015)

james4beach said:


> 2. You can't buy just anything. You have to choose the right investment. Did Nortel investors buy the bottom and make money? How about investors in Bear Stearns, Wachovia, tech bubble stocks, etc? *I think the only way to pull this off is to buy an index ETF*. And even then, you have to be savvy and buy the right index ETF. You can lose a lot of money if you buy an assetless ETN, a leveraged 2x or 3x ETF, an exotic ETF containing derivatives, etc. So this requires good research and a firm knowledge of what you're buying. Not all ETFs are created equally. I've seen plenty of horrible ETFs in my life. For example, XTR which I've warned about for years.


Your #2 is the reason I'm not worried, the only difference being that I chose to go with Vanguard. My financial situation also helps. I own my home and I do not need the 40K. As soon as it was invested I thought of it as "lost" money.


----------



## jaybee (Nov 28, 2014)

james4beach said:


> I actually invested through two crashes -- both 2000 and 2008 (and I actively traded the latter). I've had stock exposure this whole time. I survived, but I saw friends & coworkers get wiped out and they no longer have any money to invest.


Then you and your co-workers are shitty investors. Simple as that.


----------



## ML91 (Dec 5, 2015)

james4beach said:


> That's overly simplistic. A lot of novice investors have lost a LOT of money trying to invest during bear markets.
> 
> Here are some ways I've seen novice investors lose while trying to "catch the falling knife" in a bear market. There's far more to this than just discipline and hopefully someone will read this before they try to catch the falling knife:
> 
> ...


Your post is very informative and interesting but when their is the start of a bear market (such as nowish) wouldn't it make more sense to sell my mutual funds, accept my 2% loss, wait a few months as it will most likely continue to lower since I'm sure we can agree this is NOT the bottom, and eventually buy back in say in 6 months? I understand the concept that new investors buy in sometimes, market drops and they pull out but in my case I will buy back in - just later on so I can watch the market drop, minimize my losses, and when its lower go in with even more cash...


----------



## Janus (Oct 23, 2013)

ML91 said:


> Your post is very informative and interesting but when their is the start of a bear market (such as nowish) wouldn't it make more sense to sell my mutual funds, accept my 2% loss, wait a few months as it will most likely continue to lower since I'm sure we can agree this is NOT the bottom, and eventually buy back in say in 6 months? I understand the concept that new investors buy in sometimes, market drops and they pull out but in my case I will buy back in - just later on so I can watch the market drop, minimize my losses, and when its lower go in with even more cash...


You can do that, but you just have no idea whether you'll be buying back in at a higher or a lower price. 

(disclaimer: I'm mostly in cash.)


----------



## Pluto (Sep 12, 2013)

ML91

1. I think you should learn the difference between price and value in stocks. Have a look at some youtube videos re: Warren Buffett and similar minded value investors. 
2. If you can handle just breaking even in 3-5 years, don't worry. Contrary to popular opinion, we are heading into a bear market. 
3. Mutual funds are typically bloodsuckers as their MER is too high with usually no premium performance to justify it. 

The right thing you did was consider stocks as a wealth building approach. The wrong thing is putting your savings in a mature bull market with plans to buy an house with the money.


----------



## Pluto (Sep 12, 2013)

Rusty O'Toole said:


> I would like to take the opposite view which is that we are in year 7 of a bull market and the uptrend seems to be running out of gas. Last year the S&P went noplace and this year is already worse.
> 
> I know I am asking for a barrage of tomatoes by saying this, all I can ask is that you take them out of the can.
> 
> ...


Only fools will throw the tomatoes.


----------



## Moneytoo (Mar 26, 2014)

For the bears:

«But retail investors are still the likely ones to buy for a rally in the interim–it is “RRSP” and “401k” season after all. I see retail “Advisors” still pushing stocks. That is likely the fuel for a bounce–but not much from there.»

http://www.valuetrend.ca/short-termed-bounce

(Personally, I believe the worst is over and OP will be selling near the bottom - like many before him... now or later - doesn't matter )


----------



## james4beach (Nov 15, 2012)

Retail investors are too small to count. I really don't care what they're going to do in RRSP/401k season, other than being good contrarian indicators.

The most dominant factors are the Federal Reserve and their QE / ZIRP programs, and then large institutions. But all those institutions look to the Fed for their market direction guidance. You might not have noticed, but in the absence of any fundamentals for traditional-style investing, all institutions now hang on the word of the Federal Reserve. What will the Fed do? Will they tighten? Will they leave rates at zero? This is the current obsession... because *the Fed has the greatest impact, by far, on the stock and bond markets.*

Historically, there has never been so much fixation on the Fed's decisions as there has been in the last couple years. This really speaks to the fact that the Fed controls the market, and their monetary policies are the basis for ALL investing now.

Currently the Fed is in a tightening mode. They have not expanded QE (which is like withdrawing the drug) and they've even raised rates above ZIRP. The Fed * is * the market, so this matters a lot.


----------



## Moneytoo (Mar 26, 2014)

Yeah, yeah - I get my share of "scary tales" from my husband, here's today's one: Sell everything! 2016 will be a 'cataclysmic year,' warns RBS 

Sometimes I really believe that "ignorance is bliss". This mutual fund, Fidelity True North (don't remember what series, let's say B) was a core holding in my daughter's RESP from before 2000 till the end. Sold the last portion of it in April 2014 - a few months before I had to make a final withdrawal and close the account. And if I didn't join this forum right before that and read all the advices about staying in HISA if you need the money in up to 10 years (because the markets are, you know, oh so scary and unpredictable ) - would've sold in July, right at the top... lol

But, then again, I'm the lucky one, because if I needed to withdraw the money in 2008-2009 yada-yada-yada...


----------



## 4n2t0 (Dec 8, 2015)

Pluto said:


> The right thing you did was consider stocks as a wealth building approach. The wrong thing is putting your savings in a mature bull market with plans to buy an house with the money.


7 years ins't the shortest of time horizons (no doubt it would be advantageous if longer). I'm no guru, far from it indeed, but I'd be willing to bet that at some point within the next 7 years he/she will be in the positive. Could I be wrong? Sure, but so could a person with the opposite feeling.

You can never find that crystal ball when you need it...


----------



## ML91 (Dec 5, 2015)

Moneytoo said:


> (Personally, I believe the worst is over and OP will be selling near the bottom - like many before him... now or later - doesn't matter )


You actually think it won't go any lower? I'm with Pluto, I think it's just beginning and will drop significantly more. 

And Pluto, I'll take a look at some videos, do you have any specific ones to watch that discuss the difference between price and value?


----------



## Moneytoo (Mar 26, 2014)

ML91 said:


> You actually think it won't go any lower? I'm with Pluto, I think it's just beginning and will drop significantly more.


And what did you think in December, when you bought it - that it'll go higher in a month? 

I've joined this forum in March'14, and got my share of exactly the same warnings. One day the bears and the doomsayers will be right. I hope it's this year as my husband and I have a few more years of agressive saving & investing, so will be buying more for less. Long term, the optimism wins - so I'm the optimist 

Ask James how his friends and co-workers lost all their money in the crash. By staying put in broad-based mutual funds and ETFs - or by buying at the top, selling at the bottom, making risky bets and getting called on margins? Most of my friends and co-workers had group RRSPs, making monthly deposits, and if you asked them about the crash, they most likely would've asked back, "What crash?" 

But yes, maybe it is better for you to sell now - and stay out of the markets until you have your own views and an investing strategy that doesn't wake you up at night as they say


----------



## ML91 (Dec 5, 2015)

Moneytoo said:


> And what did you think in December, when you bought it - that it'll go higher in a month?
> 
> I've joined this forum in March'14, and got my share of exactly the same warnings. One day the bears and the doomsayers will be right. I hope it's this year as my husband and I have a few more years of agressive saving & investing, so will be buying more for less. Long term, the optimism wins - so I'm the optimist
> 
> ...


To be honest I was a) looking long term and b) didn't fully understand the state of the market like I thought I did. Not that I am some professional a month later.. 

I just find everything slightly confusing, especially as a new investor that some people on here think the worst has happened while others believe the opposite..


----------



## 4n2t0 (Dec 8, 2015)

ML91 said:


> To be honest I was a) looking long term and b) didn't fully understand the state of the market like I thought I did. Not that I am some professional a month later..
> 
> I just find everything slightly confusing, especially as a new investor that some people on here think the worst has happened while others believe the opposite..


I feel for you but understand that no one on here can tell you with any degree of certainty what the market(s) will do. Believe in your plan! If (and it seems to be a big if) you've gauged your risk tolerance properly you should be more confident then you appear. You're in a low risk mutual fund, that's a far cry from an ultra risky stock portfolio. If your uneasiness doesn't subside over time I would suggest that investing might not be for you and that your attention be turned towards GIC's. They pay very little (2.5% ish) but it's guaranteed!


----------



## Moneytoo (Mar 26, 2014)

ML91 said:


> To be honest I was a) looking long term and b) didn't fully understand the state of the market like I thought I did. Not that I am some professional a month later..
> 
> I just find everything slightly confusing, especially as a new investor that some people on here think the worst has happened while others believe the opposite..


Every time the markets go red, people who bought recently (without a solid plan) are getting jiittery - here's a similar thread on another forum: http://forums.redflagdeals.com/now-time-stop-investing-mf-1901099/ 

I started the Couch Potato portfolio in my RRSP with TD e-Series - and sold everything two months later because the correction was coming and The Third World War was starting and I don't remember what else (May'14) Then I made a bunch of silly purchases because somebody recommended them (here or on BNN) Looking back a year later, I realized that if I just stayed with e-Series - I would've done much better (and they outperformed again this year: http://canadiancouchpotato.com/2016/01/11/couch-potato-portfolio-returns-for-2015)

Ideally, I'd like to retire in 7 years at 55 (will be 48 this year) So my investing time horizon is similar to yours - and I know the feeling of being utterly confused and trying to listen to people who sound so smart and knowledgable... just to realize that nobody really knows what's gonna happen, and the only thing you can do is to come up with a plan that makes sense to you - with a clear understanding of the worst case scenario and what it would mean to you. Only then you can stick to it...


----------



## Pluto (Sep 12, 2013)

4n2t0 said:


> You can never find that crystal ball when you need it...


Yes you can. It just isn't as precise as most desire, so they become cynical about it. It has to do with Value. If the value isn't there, one will do poorly in the intermediate term. If one just waits until the value is presented, one will do much better.


----------



## brad (May 22, 2009)

ML91 said:


> I just find everything slightly confusing, especially as a new investor that some people on here think the worst has happened while others believe the opposite..


I think that these differences of opinion are largely related to people's different investing time frames.

There are people here who are living from their investments right now. For many of those people, a downturn in the market represents a crisis.

There are people here who won't need to live off their investments until 20-30 years from now. For those people, a downturn in the market represents a buying opportunity.

That's why it's really important to state your timeframe up front. Lots of discussions on this forum are people talking past each other because they have different assumptions about "investing" and investing timeframes. Some people assume all investing is to make money you can live off right now, or money you're going to use to get rich quickly, or money you're going to use to retire at 35. Others assume all investing is for retirement. And other people assume something in between. If the timeframe and purpose of your investment aren't stated up front, people will jump in with advice based on their assumptions rather than your facts.


----------



## Pluto (Sep 12, 2013)

ML91 said:


> You actually think it won't go any lower? I'm with Pluto, I think it's just beginning and will drop significantly more.
> 
> And Pluto, I'll take a look at some videos, do you have any specific ones to watch that discuss the difference between price and value?


Not off the top of my head. It has been a while since I viewed them. 
General market conditions can be summed up in this: gdp vs wilshire:
http://www.gurufocus.com/stock-market-valuations.php
My opinion is keep your powder dry until the blue line is well below the green line. Then buy index funds or shares of high quality companies.


----------



## 4n2t0 (Dec 8, 2015)

...............


----------



## SN1 (Nov 27, 2015)

ML91 said:


> New to investing, I put my savings into mutual funds early December and obviously I've lost some money. People are saying it's the start of the bear market so should I pull out and hold my cash or assume the low risk mutual funds hold large companies that may not take a great hit?


If you do decide to sell, you've only had the funds for 30+ days, so the sale will most likely be subject to a penalty. I believe the typical holding period for mutual funds these days is 90 days.


----------



## Moneytoo (Mar 26, 2014)

Really like this guy:

«Sentiment has actually turned to become a bit more bullish since my update on the blog noted above. Smart money is buying (65% bullish) , dumb money is selling (38% bullish). This is up from dead-even 50% on both sides a week ago.

...

The chart above (courtesy www.freestockcharts.com) suggests that, were secular trend patterns to continue, we should be in a bull market for at least 2020. Bull markets have ranged from 7-17 years in length since 1880. 

...

My outlook remains: Near termed bull (days) rally, mid-termed bear (correction), long termed bull (secular bull market).

As such, I expect to sell in the coming days on a rally (assuming there is one….) then to buy back in at a later date and price point that has yet to be determined.»

Bull, Bear, Bull

(The last part is easier said than done for beginners  I'm staying put as "mid-termed bear" would be perfect for me - but will consider selling in 2020 lol)


----------



## Pluto (Sep 12, 2013)

ML91 said:


> I just find everything slightly confusing, especially as a new investor that some people on here think the worst has happened while others believe the opposite..


confusion is to be expected - nothing wrong there. That's because for someone new, everything is too abstract. Experience will put some flesh on the abstract bones. 

Interestingly, nobody know what mutual fund you bought and what it contains except that it is very conservative. Plus, if you are saving and buying more shares as you go along, you may do all right because sure as shooting, there will be a significant bear market during your time frame which will give you the opportunity to get a better average price. However, a lot of actively managed mutual funds are run by overpaid bozo's. So if you add more money over the next few years you might want to consider an exchange traded fund.


----------



## gibor365 (Apr 1, 2011)

Pluto said:


> Not off the top of my head. It has been a while since I viewed them.
> General market conditions can be summed up in this: gdp vs wilshire:
> http://www.gurufocus.com/stock-market-valuations.php
> My opinion is keep your powder dry until the blue line is well below the green line. Then buy index funds or shares of high quality companies.


As per this link market is still positioned for positive return ... still better than majority of HISAs
_As of today, the Total Market Index is at $ 19440.9 billion, which is about 107.6% of the last reported GDP. The US stock market is positioned for an average annualized return of 1.8%, estimated from the historical valuations of the stock market._


----------



## gibor365 (Apr 1, 2011)

> I expect to sell in the coming days on a rally (assuming there is one….) then to buy back in at a later date and price point that has yet to be determined... The last part is easier said than done for beginners


 Such strategy is not for me  If I sell , I'd be very confused when to buy back, esp if markets will be heading down...


----------



## Moneytoo (Mar 26, 2014)

gibor said:


> Such strategy is not for me  If I sell , I'd be very confused when to buy back, esp if markets will be heading down...


I was actually surprised when my husband, who didn't want to part with his cash "at the top" and wanted to wait for a correction or better yet bear market, has told me last night (I was expecting a "told you so!" lol) that he's glad that I convinced him to start buying in 2014, otherwise he'd stay in cash till the next top as he'd be too scared to jump in when the outlook looks grim... But after seeing some of his holdings deeply in the red, some coming back, others going down, yet his overall account still in the green (albeit flat since last year) - hopefully now he'll be able to buy on the way down, up and at the bottom (or at least won't be asking me not to lol)

As you know, I love experimenting with timing the markets, usually with new contributions. And sometimes it works, sometimes it doesn't, but until I have my own system, convictions and/or strategy, like Pluto and James - I will not be selling the entire portfolio or even a part of it (even though I was tempted to sell VTI, convert USD to CAD and repurchase a CAD-hedged US ETF instead - "after the bottom" of course... But for all I know, hedged products are not working when CAD goes up - and the bottom was yesterday lol)


----------



## Pluto (Sep 12, 2013)

gibor said:


> Such strategy is not for me  If I sell , I'd be very confused when to buy back, esp if markets will be heading down...


No need to be confused gibor if you have handle on Value and Quality. 
If your buy list is composed of Quality companies what's to be confused about? 
If you are a buyer of Quality you want prices to be falling when you buy. 

The way you talk is like this: You are shopping for a brand new car and the very car you want is on sale for a limited time. Because you have been watching the market for such cars, you know it is good value. Then you say you are too confused, and decide to wait until the price is higher. Plus, you reason, since the low price for the car is a limited time offer, that's timing the car market, and you can't do that, so better wait for a higher price. 

The only reason to be confused in a falling market is if you do not know Quality and Value. Study Buffett and Munger. Oil is in big dodo right now, so what is Buffett doing? buying oil stock. 2009 financial crisis what did Munger do: he bought big in his favorite financial stock. If you identify quality companies, and a crisis comes along, the odds of getting value are greatly improved.


----------



## Pluto (Sep 12, 2013)

gibor said:


> As per this link market is still positioned for positive return ... still better than majority of HISAs
> _As of today, the Total Market Index is at $ 19440.9 billion, which is about 107.6% of the last reported GDP. The US stock market is positioned for an average annualized return of 1.8%, estimated from the historical valuations of the stock market._


If you are happy with 1.8%, go for it. If 1.8 is the expectation, then it is obviously not a good time to be a buyer of stocks. I'm getting 2.5 on short bonds with no where near the risk of stocks. I'll keep my money in those bonds until the expectation for stocks is much higher.


----------



## lonewolf (Jun 12, 2012)

My Own Advisor said:


> Crashes are absolutely the time to make money...or just after. The challenge is training your investing brain to buy when others are running from the building.
> 
> It's not easy when you see your portfolio in the red...getting deeper by the day in this market!!


 The retail investor will repeat history & buy all the way down in this bear market. The market headed a lot lower after the 1929 crash. The first crash in the bear market might only take us to the 09 lows. A series of crashes I think will take us to around 1000 on the DJI with strong support around the lows of the year 1974


----------



## Moneytoo (Mar 26, 2014)

lonewolf said:


> The retail investor will repeat history & buy all the way down in this bear market.







You're right, I should stop listening to people who invest other people's money for a living... 

*Stan Wong, Director of Wealth Management and Portfolio Manager, The Stan Wong Group, Scotia Wealth Management

FOCUS: North American Large Caps and ETFs

MARKET OUTLOOK:*

_Looking ahead, the pace of U.S. monetary policy (interest rate hikes) and the uncertainty of the upcoming presidential election could cause further market nervousness. From a fundamental perspective, valuations now appear more reasonable with the S&P 500 Index currently trading at a forward price-earnings multiple of 15.5 times, and an expected full-year 2016 earnings per share (EPS) rise of approximately 7 percent. From a technical perspective, equity markets are oversold, giving investors a near-term buying opportunity in anticipation of a relief rally. In our portfolios, we continue to seek opportunities in large-cap, high quality North American companies with strong earnings and positive growth attributes. We prefer U.S. equities over Canadian equities (along with the U.S. dollar over the Loonie) as the commodity-heavy (and challenged) S&P/TSX Index continues to trend downwards. European equities also appear attractive with the region’s economic conditions improving and valuations relatively low._

http://www.bnn.ca/News/2016/01/14/Top-Picks-from-Stan-Wong-Facebook-Nike-and-Visa.aspx


----------



## ML91 (Dec 5, 2015)

Pluto said:


> confusion is to be expected - nothing wrong there. That's because for someone new, everything is too abstract. Experience will put some flesh on the abstract bones.
> 
> Interestingly, nobody know what mutual fund you bought and what it contains except that it is very conservative. Plus, if you are saving and buying more shares as you go along, you may do all right because sure as shooting, there will be a significant bear market during your time frame which will give you the opportunity to get a better average price. However, a lot of actively managed mutual funds are run by overpaid bozo's. So if you add more money over the next few years you might want to consider an exchange traded fund.


I should mention at this point: 40% of my MFs are http://www.scotiabank.com/ca/en/0,,802,00.html

And the other 60% is http://www.scotiabank.com/ca/en/0,,804,00.html

As of today ive lost 1% TOTAL so as of now I'm pretty happy as things could be worse. Regardless, I think there is a $50 fee for me to transfer money between institutions but I think I might sell my mutual funds sooner than later then transfer the money from Scotia to Questrade and buy ETFs through Questrade. Unless maybe I could buy ETFs through iTrade (Scotia)?


----------



## 4n2t0 (Dec 8, 2015)

ML91 said:


> I should mention at this point: 40% of my MFs are http://www.scotiabank.com/ca/en/0,,802,00.html
> 
> And the other 60% is http://www.scotiabank.com/ca/en/0,,804,00.html
> 
> As of today ive lost 1% TOTAL so as of now I'm pretty happy as things could be worse. Regardless, I think there is a $50 fee for me to transfer money between institutions but I think I might sell my mutual funds sooner than later then transfer the money from Scotia to Questrade and buy ETFs through Questrade. Unless maybe I could buy ETFs through iTrade (Scotia)?


LMAO, you went from being nervous/worried about your conservative mutual fund portfolio to buying ETF's? Oh boy...

I lost 1% while writing this response, lol, and I'm loving it. I just placed a few limit orders to buy more VAB/VCN/VXC. Happy shopping to all!


----------



## ML91 (Dec 5, 2015)

4n2t0 said:


> LMAO, you went from being nervous/worried about your conservative mutual fund portfolio to buying ETF's? Oh boy...
> 
> I lost 1% while writing this response, lol, and I'm loving it. I just placed a few limit orders to buy more VAB/VCN/VXC. Happy shopping to all!


When did I ever say I was worried or nervous? I lost more today but don't care and the only mistake I really made is buying mutual funds with a bank due to high fees. I'm gonna stick with mutual funds or ETFs regardless but will shop for better fees


----------



## 4n2t0 (Dec 8, 2015)

ML91 said:


> When did I ever say I was worried or nervous? I lost more today but don't care and the only mistake I really made is buying mutual funds with a bank due to high fees. I'm gonna stick with mutual funds or ETFs regardless but will shop for better fees


What's the title of this thread again?


----------



## Moneytoo (Mar 26, 2014)

4n2t0 said:


> What's the title of this thread again?


Well he asked if he SHOULD be worried, doesn't necessarily mean that he IS worried (which would be perfectly understandable for someone who just started out - heck, I keep reading articles from the level-headed analysts and listening to "motivational videos" like this one: Three investing tips during this market turmoil to help control my emotions )


----------

