# When is a good time to invest in this correction



## Butters (Apr 20, 2012)

What tools or plans do you guys have to invest at times like these. 

I imagine DCA of $200 a month strategy would be fine

But I've parked half my cash on the side and half at the markets. I started invest about a year ago and now I'm starting to see red in some of my positions now

I'm wondering when I should deploy the other half of my cash

I think we need this trend to reverse

It's way better to join the ride up than trying to predict the bottom

You could miss out on 5% or so following the trend up
But this strong downward trend could last months and be much greater than 5%


1. DCA
2. Trend reverse
3. ????


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## newfoundlander61 (Feb 6, 2011)

Tough call, I currently buy on fridays $500 per week in the Mawer Balanced Fund MAW104. No changes for me, buying extra is a crap shot as it may go much lower or the correction could finish any time. I am just sitting tight no change to my current plan.


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## CPA Candidate (Dec 15, 2013)

When it ends... and the blood loss seems to be intensifying. I made the mistake of buying a few names in the past couple weeks and have been quickly been shown the error of my ways. This isn't your normal dip.


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## 1980z28 (Mar 4, 2010)

now until the reserve of cash is gone

then hit the leverage funds

cost average


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## Woz (Sep 5, 2013)

What’s changed from a year ago to make you change your mind? 

A year ago the TSX was at 12,930 and the S&P500 was at 1,698. We’re now at 13,744 (+6.3%) and 1,838 (+8.2%, +16.8% if you factor in the USD appreciation).

If you thought the market was too expensive a year ago and decided it’d be better to hold cash then shouldn’t you think the same today?


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## Butters (Apr 20, 2012)

Yes very good plan. DCA at its best. 

But I'm not totally in the market. 

I would like to see 5 consecutive days when the market flatlined or goes up. 

A nice break in the downward trend. 

Anyone else have any plan like that? How to count the good days and guess the bottom is past us?

5 days seems like enough?
Say up 1% up .5% down .5% up 1% up .5% or something like that

Something with less violatity. Not these -200 or more days. 

I think the selling will contunie next week also


Woz. I was new and just trying out the market. Doing half in the market half in cash.
If the market ever gave up a 40% drop I could double all my positions
2000-2007/2008 now we are again about 7-8 years from last crash wand before it 7-8 years 

When the s and p goes up 200% since last crash it's a bit scary to drop all your marbles in at the top

With the 10%+ correction we've had this past month I'm looking for an entry point that is not at the high. 

Again. I'm new and was just doing half and half. But now that there is a opportunity here I was to be more invested. 

Don't gear this post to me. 
What methods do you guys have to predict the end?
I'd rather not catch the falling knife
Does 5 days of gains seem fair?


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## Pluto (Sep 12, 2013)

Woz said:


> What’s changed from a year ago to make you change your mind?
> 
> A year ago the TSX was at 12,930 and the S&P500 was at 1,698. We’re now at 13,744 (+6.3%) and 1,838 (+8.2%, +16.8% if you factor in the USD appreciation).
> 
> If you thought the market was too expensive a year ago and decided it’d be better to hold cash then shouldn’t you think the same today?



Answer to your question: Yes. Its too soon. 


I'm starting to wonder if this correction can turn into a bear market ie > 20% decline in the major indexes. 
Some questions arise. Is it possible to have a bear market without significant interest rate increases? Gee, anything is possible. 
Germany econ is bad, China slowing & could do the unthinkable and go into recession, UK on the edge, OIL plummeting disrupting markets meaning panic could spread, how will fight against EBOLA effect economy? If we think negative, there is lots to be concerned about. 

What's positive? US unemployment has been dropping rapidly....oh, but wait, good economic news is sooner or later, bad for stocks.

I might add that some months ago the view was expressed that the Alibaba ipo could weaken the stock market by virtue of an oversupply of stock ie not enough committed money to go around. Interestingly, this correction commenced right after the ipo. Also how are stock buy backs doing? are they slacking off?


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## 1980z28 (Mar 4, 2010)

pulled 100k out today

will add another 30k

and wait who knows

just picking away

cos,fts,td


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## Butters (Apr 20, 2012)

Fts is my golden gem!
I has barely got hurt by this sell off which makes me think the others will turn around soon
I can't believe the banks are down 3% today. Above 4% yield for banks is a buy. But the market right now is too violate to buy IMO. Need 5 days of reset. 

You pulled 100k out of stocks? And are considering adding 30k back shortly?

I totally agree alibaba helped this. Many mutual funds had to sell other stocks to make cash to buy alibaba. 
Then panic set in. Now the selling has reached the point of no return. 



Anyone do something like 10% down add 30% in
20% total down add 60% in
30% drop go all in
50% drop leverage the house


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## Blush (Jan 9, 2014)

*MAW104 vs ETF Balanced Portfolio*



newfoundlander61 said:


> Tough call, I currently buy on fridays $500 per week in the Mawer Balanced Fund MAW104. No changes for me, buying extra is a crap shot as it may go much lower or the correction could finish any time. I am just sitting tight no change to my current plan.


Hey fellow newfoundlander. Interested in your post on MAW104. I'm 51 with a govt defined pension plan and thinking about getting rid of bonds and switching my portfolio to mawer 104. I want a "set it and leave it" plan for the next 10 ys....trying to rebalance yearly is time consuming and I don't have the knowledge. 

My balanced etf portfolio is as follows....thinking of switching to Maw104? THoughts? 

iShares S&P/TSX Capped Composite Index ETF (XIC) 20% MER 0.05%
iShares High Quality Canadian Bond Index ETF (VAB) 30% MER 0.12%
Vanguard US Total Market (VUN) 20% MER 0.15%
iShares MSCI EAFE IMI (XEF) International equity 20% MER 0.20%
ZRE, real estate 5%, MER 0.55%
XEC, ishares, emerging markets, 5% MER 0.25%


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## cainvest (May 1, 2013)

SheaButters said:


> Fts is my golden gem!
> I has barely got hurt by this sell off which makes me think the others will turn around soon
> I can't believe the banks are down 3% today. Above 4% yield for banks is a buy. But the market right now is too violate to buy IMO. Need 5 days of reset.
> 
> ...


Want a couple of reasonable indicators of when to buy, watch the 50 and 200 SMA.


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## 1980z28 (Mar 4, 2010)

30% sell

readjust

leverage one house

own 2236 shares of fts

Most NEWFIES own fts


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## Pluto (Sep 12, 2013)

SheaButters said:


> A nice break in the downward trend.
> 
> Anyone else have any plan like that? How to count the good days and guess the bottom is past us?
> 
> ...


You are doing pretty good and having 1/2 in cash was a great idea. I wouldn't be in a rush to spend it. 
Its a day by day assessment as to when to conclude the down trend has ended. 
A concern about your 5 day break in the trend is you could end up buying the dead cat bounce, otherwise known as a suckers rally. It's always a judgment call. 

One of the best ways is to look at whats on your shopping list and determine a price that you determine is good value. Buy then. This works if your judgment of value is correct. It doesn't mean you get the bottom, it means that you didn't over pay and eventually you will be in the black. this also assumes you buy quality stocks. If your buy list is filled with very risky, lower quality stocks, it wont work well. For example, Canadian big banks are considered quality partly because they survive and grow after severe downturns. Also if they yield 5% that is usually considered very good value. If they yield more it is excellent value. Over the last year or so, their value has been questionable. 

In sum, my answer is two fold: 1. You can look at the technicals and try to determine a bottom, and/or 2 you can just look at how the value is for what you want to buy. If the value isn't good or better, then maybe its best to nibble but not go all in.


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## Pluto (Sep 12, 2013)

SheaButters said:


> Anyone do something like 10% down add 30% in
> 20% total down add 60% in
> 30% drop go all in
> 50% drop leverage the house


I think if you do that you will do well.


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## Butters (Apr 20, 2012)

Thanks for the helpful info Pluto!
We are over 10% down now
But I don't feel like dumping 30% in would be a good idea

I have about 9k in stocks
I have about 15k cash
And 40k HELOC room
Also saving about 1.5k a month


I think in going to stick mainly to ETFs and big banks

I don't have much US

So I'll probably start with a large piece of VFV.to to start
Or maybe do 10k gambit and buy BRK.b in my TFSA anyone recommend this? Then I can dollar cost average VFV say $100 a week (free ETF with questrade). 


I've been fooling around with random stocks for the past year, learnt lots. Holding BNS, FTS, T, 
KO which cost me $40 out of my profit from exchange fees (now I know gambit) in my rrsp

LRE, TPH, FN in my TFSA (got lucky with CFN)
Still up overall but sinking fast!




Cainvest we are below the 200 MA for most index and most stocks. 


When the 50 touches the 200 would that be a good time to start putting some money in?

And watch out for the cat bounce?


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## cainvest (May 1, 2013)

SheaButters said:


> Cainvest we are below the 200 MA for most index and most stocks.
> 
> When the 50 touches the 200 would that be a good time to start putting some money in?


When and how much depend on many individual factors, investing time frame, $ amount, investment areas, etc.
I'm just looking to top up on a few indexes, S&P500 and TSX mainly, so I'll wait for the 50 to cross below the 200 MA before I move on anything, likely even wait to cross the 300.


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## Jon_Snow (May 20, 2009)

I have some dry powder at hand, though less than usual, having deployed some of it 3 weeks ago... three weeks early it appears. :frown:

Anyway, I'm content to let our cash build up for the next several months - a combination of dividends (which hopefully won't get cut) and my wonderful BIF fund which pays out a guaranteed 5k monthly should allow me to bank 6k every month. If markets are still depressed in the Spring, I may be ready to buy then.

I get cranky in these type of markets, so daily/hourly checking of investments is stopping.


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## AudiS4 (Sep 11, 2013)

I am sitting on a reasonable cash position right now. I could buy anytime. I am 38 years old and this is retirement money I am talking about. I am talking about buying XIC or the banks. So if I have a 20 year horizon really do I need to worry about timing this?


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## cainvest (May 1, 2013)

AudiS4 said:


> I am sitting on a reasonable cash position right now. I could buy anytime. I am 38 years old and this is retirement money I am talking about. I am talking about buying XIC or the banks. So if I have a 20 year horizon really do I need to worry about timing this?


No concerns over twenty years really, of course that depends on how far down it goes and how long it takes to come back.


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## My Own Advisor (Sep 24, 2012)

Also depends if you are planning to live off your capital in retirement. If you are, you want to sell high and buy low. 

If you aren't worried about living off your capital in retirement, just the income from the capital, then you're only concerned with buying low, in large quantities and often. Think O&G stocks lately. Time to load up.


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## Pluto (Sep 12, 2013)

SheaButters said:


> When the 50 touches the 200 would that be a good time to start putting some money in?
> 
> And watch out for the cat bounce?


Depends. I don't think you can tell this far in advance. In 2000 and 2008 when the 50 crossed below the 200 it was just the beginning of a really big sell off. Right now we have some talking heads - bless their souls - offering soothing words such as this is just a correction, not a full blown bear market. could be true. But I think it is something that needs to be assessed on a day by day basis. There is nothing obvious stopping it from developing another leg down after a rally. When in doubt, and the good to excellent value is not present, it's better to wait and see what happens.


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## newfoundlander61 (Feb 6, 2011)

I too am in receipt of a govt defined pension plan and originally purchased this fund Jan 2 2014, before that I had the CIBC Balanced Index. Many members here do use ETF's and yes they are cheaper overall for mer's. With my current broker (CIBC) I cannot buy ETF's without paying a trading fee so my current plan to use a one fund portfolio is fine for me. I don't need an RRSP due to my pension which is indexed and will go up when I hit 60 (currently 53 years young). My plan is to keep going with $500 per week until I reach the max allowed for my TFSA by year end this year and then next year divide the number of weeks in the year into the allowable limit of $5,500 currently and continue auto purchases at a lower amount to stay within the limit and top up in December if I am a little short. All distrubutions are reinvested to by additional units. For me this works, don't worry about market corrections and just keep it going. The amount of fees when buying add up after a few years but so does the fund MER but its under 1% which for a balanced fund is quite low. If you go ahead and do this wait until the market recovers so your ahead enough to do the rebalance. For me earning 4-8% per year over the long term is just fine with my pension as a cushion. Don't need to take more risk for double digit returns, not my risk profile. Fund is only down 0.07 today so its pretty stable in corrections.

http://www.ndir.com/FF/articles/NQ42004-2.shtml

http://fundlibrary.fundatastaging.com/features/reports/page.asp?id=14914


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

Today it turns out, would not have been a good time to buy Netflix. That is the trouble, the answer to your question is obvious, but only when it is too late. Nobody knows what the market is going to do tomorrow, nobody. Anyone who says different is kidding you or kidding themselves.


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## Butters (Apr 20, 2012)

Rusty O'Toole said:


> Today it turns out, would not have been a good time to buy Netflix. That is the trouble, the answer to your question is obvious, but only when it is too late. Nobody knows what the market is going to do tomorrow, nobody. Anyone who says different is kidding you or kidding themselves.


down 118.59 (26.44%) in after hours... maybe not a good time, LOL


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## ChrisR (Jul 13, 2009)

SheaButters, how long is your time horizon?

If your horizon is measured in decades (20 or 30 years plus?) then this... I don't even know what to call it... ripple, or maybe half a ripple, is just noise. Actually, when you look back at this 10 years from now, it won't even be noise... more like a smooth line on a graph. You'll need a magnifying glass to even find it!

I know it's tough to imagine, but If you have 9k invested right now, and you're saving 1.5k a month, then the money you have invested now will be nothing more than noise on a your graph when you look at it 30 years from now. Don't sweat it! The important thing is to keep investing. Over long periods of time you risk way more being out of the market than being in it.

As for the question of how long to watch before making a decision based on the trend you see? 5 days? forget about it. I would say bare minimum is 5 years. But I'd be way more inclined to base my decisions on 10, 20 or 30 years of data if it's available to me.


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## Underworld (Aug 26, 2009)

I'm smiling at that 15k cash I have in the bank. I was saving up for a downpayment for a rental, but if the markets go crazy I may throw some money that way.


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## daddybigbucks (Jan 30, 2011)

My opinion and just a guess, but I would hold off for a while. Everyone is licking their lips right now and as soon as we have a couple normal or up days, people will buy. The market will surge forward THEN the big sell off will occur.
I hope to be at 20 % cash by then.


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## My Own Advisor (Sep 24, 2012)

Should make those 2014 financial predictions that kcowan is running more interesting now 

I wonder how much it might drop today?

I'll say -150 points.


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## garreTT (Aug 28, 2013)

My Own Advisor said:


> Should make those 2014 financial predictions that kcowan is running more interesting now
> 
> I wonder how much it might drop today?
> 
> I'll say -150 points.


Seems like quite the opposite at 11:00 AM.


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## Butters (Apr 20, 2012)

It started low though. 

Big swing

Is this the cat bounce or back to normal steady eddy?


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## the-royal-mail (Dec 11, 2009)

Pretty well all of my stocks are headed up since mid-morning. There were some deals to be had. I just stayed the course. Hope the upward momentum continues.


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## Jon_Snow (May 20, 2009)

This is looking like my biggest day of gains (on paper) ever... but after the oil rout, gonna take a few more of these to get back to even.


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## cainvest (May 1, 2013)

SheaButters said:


> Is this the cat bounce or back to normal steady eddy?


Only time will tell ... come on correction!


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