How Serious is this Bear ?

[Beagle]

Disappointed with how your portfolio has gone this quarter or this month ?
Relax, you're not the only one. Its been the worst December on the US markets since the Great Depression in 1931 ! https://www.nzherald.co.nz/business/...ectid=12181082
That's the worst in 87 years ! Many people don't realize that the US tax year ends on 31 December so I expect a lot more tax loss selling between now and then to reduce tax bills.

We now have a slight majority who think this is all a fairly benign situation. I disagree and as always, am happy to follow my own instincts and be very defensive.

[Baa_Baa]

DOW testing the rising Trend line from ... the low during GFC 2009!

[Baa_Baa]

Colin Twiggs weighs in on confirming "the Bear market" has arrived, but it's not the economy causing it. http://tradingdiary.incrediblecharts...onomy-gold.php

[Joshuatree]

Thanks BB.Makes sense but how many people have worked that out with all the positive graphs there as well as low low unemployment?

[skid]

I’ll continue to use the stock market as my savings account and buy every few weeks as I’ve done since I started investing 2016. As more data comes in it does feel like this correction will lead to a bear and perhaps it’s smart to take some money off the table but I would rather use it as an opportunity to buy cheaper shares. The longer and more violent the bear market is the better off I’ll be at the top of the next cycle.

For many here with decades of wealth accumulated and are closer to retirement this isn’t very wise. For the younger posters a bear market is really a great opportunity and should be welcomed as long as we keep employed of course.

when you say ''cheaper shares''...do you mean cheaper than yesterday....or cheaper than tomorrow?

[Beagle]

I vacillated between options 3 and 4. I voted for option 3 but the more this goes on the more I am leaning towards this heavy large bear with real teeth and claws doing sustained and significant damage.

[allfromacell]

when you say ''cheaper shares''...do you mean cheaper than yesterday....or cheaper than tomorrow?

Cheaper than yesterday certainly, but cheaper than tomorrow? I don't believe that any person with any degree of certainty can answer that. What I can say is the stock market moves in cycles, there are periods of expensive shares when the market is full with euphoria and periods of cheaper shares when it is plagued with fear.

My strategy as outlined above is simple, I'll continue to buy the same sized parcels throughout. When we look back at the top of the next cycle I'll be able to say I bought a lot of 'cheaper' shares and likely have a nice average. Like i said before most posters here have decades of wealth accumulated and don't have the same amount of time should probably plan to preserve capital.

[percy]

We live in interesting times. ANZ Bank has predicted the OCR will be cut to just 1% in 2020.
How does this compare with the interest I receive from the following shares? The figures are from Craigs and they are gross yields.
.................................................. .....2018.........................2019............ ....Share price when complied.
TRA.Turners Automotive Group .............9%...........................9.8%.... ...................$2.40
GNE.Genesis Energy.............................8.8%........... ..............9%..........................$2.51
HGH.Heartland Group Holdings...............8.3%....................... .8.8%......................$1.50..[current sp $1.36 makes the yield even higher]
MEL.Meridian Energy..............................8%..... .....................8.1%........................$ 3.22
SPK.Spark......................................... ....7.6%........................7.6%.............. ..........$4.27

With the OCA reducing, will buyers concentrate on the above high yielding stocks.?

[Beagle]

Yes and No Percy. Defensive high yielding shares like the utilities and some REIT's have already been strong outperformers in recent weeks and I expect that to continue (e.g I bought shed loads of ARG a few weeks ago for $1.07 and am already up over 10% plus a dividend) and many other defensive shares have been outperformers.

Unfortunately vehicle companies, retailers and financials have historically been very poor performers in a bear market so their ability to pay the dividends Craigs is forecasting will be in doubt.

You're absolutely right to highlight the risk to people's future returns on cash and short term deposits. Thanks for that. I might have a look at further boosting my investment in utilities in early 2019.

[Biscuit]

Good post. This coming year or so could provide outstanding opportunities for younger people to buy very good quality shares at an outstanding price. I hold over 50% cash and will look to deploy some of that as soon as I see decent evidence of green shoots appearing. The poor GDP number this week could be just the beginning. Somewhere near 50% chance of a recession in 2019 or 2020 in my opinion and it could be a tough one.

If the bear really bites, is cash ($NZ) the best place to wait it out? Last time around, $NZ took quite a hit against $US as flight to quality kicked in. $US then gold?