Why are you in the Share Market?

[Mickey]

I occasionally ask myself the question "why am I in the share market?". Have I got the cohones to hang in there during significant downturns?" My answer is "I'm in the share market to help create wealth for my wife and I for our retirement". I'm not all in by any means - I have about 20% of my investments in the Share Market but it is still a substantial amount. I'm probably best described as a Value Investor but I do have a little bit of Trader in me, which creates an interesting tension. However, I find the latter more of a 50/50 game, which has beaten me more times than I've won - so at times I do have to remind myself to pull my head in and focus on the long game.

Warrent Buffett wrote "unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market". Easy said for a man with such wealth but I'm pretty sure he's right. There's less riskier places to invest and so each person must do their own risk analysis and decide what's best for them. The Market has tested my fortitude many times - that's for sure!

There's a thread on the NZX Forum - "Black Monday", which has continued since August last year and is currently discussing current Market events. My wife and I were on holiday in the States during August last year, which is when this thread commenced. I remember watching some of the carnage unfold on CNBC at the time and the only thing I really thought about at the time was that I was missing out on a few good buy opportunities - not how much my portfolio had dropped. Perhaps it was my frame of mind at the time - I was on holiday, the weather was great, the beers were cold, comfortable with my portfolio at the time or that I was too relaxed but not once was I concerned about how much my portfolio was down.

The Market is mostly driven by human emotion - that I'm sure of. There are definitely head winds for the Markets right now and the potential for a number of bad things to happen. I'll admit - I'm a little nervous about what I've been reading and with most of my portfolio in a sea of red, I again challenged myself as to why I'm in the Share Market and whether it's the right place for this level of investment. After considering the risks, reading lots of news items, studying the companies I've invested in and scanning the comments in the Sharetrader Forums - I've decided that it is. My portfolio errs on the side of defensive but that feels about right for me for current conditions and where I'm at in my life. I'll probably continue to top these up and collect the dividends but would divest of any share that fails to meet my requirement for increasing dividends and cash flow. I suspect there might be 1 or 2 that might fit into that category following the upcoming round of company reporting - the next couple of weeks will tell.

I'd be interested in why others are in the Share Market and what type of investor they see themselves as and any key learnings from your experiences that you might like to share.

Good luck with your investing and/or trading :)

Discl. I've been in and out of the NZX Market since the 80's. I still make mistakes. Currently holding AIR, CEN, GNE, NZR, SKL & SPK with at least another 10 on my watchlist.

[unhuman]

Because I don't like property.

[fungus pudding]

I occasionally ask myself the question "why am I in the share market?". Have I got the cohones to hang in there during significant downturns?" My answer is "I'm in the share market to help create wealth for my wife and I for our retirement". I'm not all in by any means - I have about 20% of my investments in the Share Market but it is still a substantial amount.


Good on you for starting an interesting thread. Interesting because I know a lot of investors, although very few are share investors. I have asked many what they hope to achieve, and so many cannot answer, or provide the vague - to make a buck - sort of comment.
But my question to you, which you may not wish to answer, is 20% of what, and what is substantial? Understandably figures are seldom mentioned, but it is always relevant. e.g. 20% of 100k is substantial, but not beyond recovery for many people if it all goes bad. 20% of 1 mill. is also substantial and may well be beyond recovery to someone approaching retirement. So age range (time to intended retirement), and amount invested plus % of total provides a much better picture of risk in particular; of course many disagree.

P.S. On second thoughts I suspect very few would disagree - although many would not provide such info:

[Mickey]

But my question to you, which you may not wish to answer, is 20% of what, and what is substantial? Understandably figures are seldom mentioned, but it is always relevant.
Thanks FP. Yes, it does feel a little uncomfortable discussing personal finances in a public forum but if it helps, then I'm at the higher end of your range and have approximately 7-8 years before I retire.

[fungus pudding]

Thanks FP. Yes, it does feel a little uncomfortable discussing personal finances in a public forum but if it helps, then I'm at the higher end of your range and have approximately 7-8 years before I retire.

Thanks and best of luck. 7 or 8 years is nowhere near as long as the 7 to 8 years from 0 to 8. That's when it's an eternity between Santa Clauses. At this end you can start marking off the days till the pension. :(

[macduffy]

This may be the place to post this timely reminder.

http://www.fidelity.com.au/insights-centre/education/market-slumps-happen/?utm_source=Trending+on+Livewire+%22The+Morning+Wi re%22&utm_campaign=bde5935a25-Trending+on+Livewire&utm_medium=email&utm_term=0_1911ffeed5-bde5935a25-82636925&mc_cid=bde5935a25&mc_eid=9f402457b0

[Valuegrowth]

Very useful link. Thanks.

We are in the stocks market to make capital gain. However, we make mistakes and so we make losses as well. More we study on stocks more we can make capital gain. These days there are many noises in mass media and markets. Still there are winners and they are managing their portfolio better than some fund managers.

[Buffett Jr]

I'm in the stock market because of several reasons;

- I feel I can do better than term deposit rates (prior to buying my Auckland rental property) and now feel I can do better than the 5% mortgage rate.

- I enjoy business, personal finance and strangely enough accounting figures. Researching stocks is therefore a good fit.

- I like picking winners that do better than the market average.

HOWEVER...

I've recently decided that I'm simply going to invest into low cost index funds. In January I did a new year resolution as such to remove clutter and unnecessary stress from my life to focus more on what's important to me. Over the last six years of picking individual stocks, taking into account the cash sitting waiting for opportunities I've practically broken even with buying an index but I've spent on average 1-2 hours every day researching stocks, the economy, etc.

So I'm still in the stock market, but not individual stocks any more and couldn't be happier.

[Valuegrowth]

We have to enjoy the life as well. Stock market is not everything. However, I like picking individual wining stocks in the market. We learn lot of things by doing research. For me investing in stocks is more interesting than keeping money in the bank. Everybody has their own passion.

I prefer individual stocks to index funds or any other funds. In other words, mostly, I like businesses which can survive in good and bad times.