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Thread: Rookie mistakes

  1. #11
    Guru justakiwi's Avatar
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    Didn't think this day would ever come but ... I agree with you. Guess there really is a first time for everything

    So what now? Again you don't have to take my advice and I don't express anyone should but consider the options: 1) hold cash earning 0% REAL returns? = NOPE 2) invest in junk bonds or gov't debt? = NOPE 3) buy NZ real estate? = Maybe if you have the cash 4) buy cryptocurrencies? = NOPE unless you enjoy gambling. Gee there's not a lot left to choose? So my advice, buy more shares before you miss more potential gains.

  2. #12
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    Quote Originally Posted by justakiwi View Post
    Anyone regret anything they did or didn’t do, investment-wise, over the Covid/lockdown period? In hindsight, my one regret is that I stopped my regular weekly orders temporarily. It did mean I was able to pick up larger (for me) parcels of shares in a couple of holdings, but it also meant I missed out on the opportunity to add to my other holdings at very discounted prices. I should have kept my regular small orders going and used savings to buy the “extras”
    I think you did exactly the right thing Justakiwi. I bought a few shares in what appeared to be a dip, before it collapsed into a correction. My purchase prices I decided on two or three months previous to 'the dip'. So I thought I was getting a good deal. However, when the dip turned into a correction my purchases didn't look so clever.

    The problem here is that businesses are designed to be capital efficient through a normal business cycle. But when you get what is described as a once in a generation event, what might have been adequate capital in a normal downturn can suddenly appear very inadequate. This situation can require a sudden capital raising to fix. And when share prices are down, that can mean a massive dilution of shares for existing shareholders. Suddenly those post crash all time low share prices can turn out to be not so cheap. I got around this purchase price dilemma by waiting until a company reported on the effects of Covid-19 before buying any more shares in that company. If you didn't do that, then as an investor you were really flying blind into a potentially catastrophic investment black hole.

    With hindsight you can look at a share price tracing a squiggly line downwards before the worm turns and it squiggles back up again. You can then identify the low point as the price you should have bought your investment at. But at the time, the path of the share price worm could have gone either way. IOW you could not have identified what turned out to be the bottom at the time. So actually trying to pick the bottom in a super-crisis will involve a massive uncontrolled unfathomable risk of a sort that is far too great for an ordinary investor to take on. All of this risk is hidden and forgotten in a with hindsight share price graph. I would say you did exactly the right thing by halting your share purchases while the smoke from the mega market shock cleared.

    The only exceptions to my 'not to buy in a mega-crisis' rule would have been to buy 'basic needs' companies that carried very little debt at prices that were actually cheap on earnings metrics.

    SNOOPY
    Last edited by Snoopy; 24-06-2020 at 09:18 PM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  3. #13
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    SBQ thanks for your thoughts. Briefly there is no right or wrong, black or white but a multitude of grays inbetween and i dont fit your investment strategy/risk/reward/timeframe etc etc etc and you sure dont fit mine.
    My point is different strokes for different folks we all have our own unique needs and strategies that work for us. Im totally happy with my set up which is high in cash, atp protecting my gains is waaay more important then "having" to be in the mkt chasing gains at generally ridiculous PE's, thats a lemming like cliff recipe imo.
    Sure but relative to what bonds can earn , justifies this if you like risk maybe. Zigging while others zag is fine with me.Your risk is not mine etc etc.

    On top of this as winter approaches in USA etc what third and 4th waves maybe, an election that could have huge impact,Taxes going up and truly horrible reporting results reflecting the true financial costs of lockdowns. We will see how things pan out, good luck all every which way.
    Last edited by Joshuatree; 24-06-2020 at 09:23 PM.

  4. #14
    Reincarnated Panthera Snow Leopard's Avatar
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    Quote Originally Posted by justakiwi View Post
    ....In hindsight, my one regret is that I stopped my regular weekly orders temporarily....
    Yes, that was a bad move.

    The simpliest thing any long term share investor can do is to invest regularly in a range of shares (often via a fund or funds) independent of the state of the market.

    A bit of Dollar Cost Averaging on a Diversified Portfolio is a good base on which to build.
    om mani peme hum

  5. #15
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    [QUOTE=Snow Leopard;824685]Yes, that was a bad move.

    The simpliest thing any long term share investor can do is to invest regularly in a range of shares (often via a fund or funds) independent of the state of the market.

    A bit of Dollar Cost Averaging on a Diversified Portfolio is a good base on which to build.[/QUOTE
    Normally good strategy. Just don't start today. These times are not normal.

  6. #16
    Reincarnated Panthera Snow Leopard's Avatar
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    Quote Originally Posted by Snow Leopard View Post
    Yes, that was a bad move.

    The simpliest thing any long term share investor can do is to invest regularly in a range of shares (often via a fund or funds) independent of the state of the market.

    A bit of Dollar Cost Averaging on a Diversified Portfolio is a good base on which to build.
    Quote Originally Posted by ynot View Post
    Normally good strategy. Just don't start today. These times are not normal.
    Some people can be remarkably slow on the uptake.
    om mani peme hum

  7. #17
    Guru justakiwi's Avatar
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    And you wonder why newbies get confused

    But seriously, I appreciate both your posts and points of view. I find it really interesting that seasoned, experienced investors frequently have significantly different perspectives on things. Knowing that actually makes me feel better/more confident as it shows that sometimes there are no black and white, rights and wrongs. Much of it is just calculated risk on the day.

    Thanks for all the comments people

    Quote Originally Posted by Snoopy View Post
    I think you did exactly the right thing Justakiwi.

    Quote Originally Posted by Snow Leopard View Post
    Yes, that was a bad move.

  8. #18
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    Quote Originally Posted by justakiwi View Post
    And you wonder why newbies get confused

    But seriously, I appreciate both your posts and points of view. I find it really interesting that seasoned, experienced investors frequently have significantly different perspectives on things. Knowing that actually makes me feel better/more confident as it shows that sometimes there are no black and white, rights and wrongs. Much of it is just calculated risk on the day.
    Actually I agree with Snowie as regards to dollar cost averaging into funds ( e.g. Kingfish) with a widespread shareholding in a correction. My caution was against buying a 'specific share' ( e.g. Heartland Group Holdings) in a time of major disruption without knowing the impact on the business outlook for that 'specific share'.

    SNOOPY
    Last edited by Snoopy; 25-06-2020 at 09:08 AM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  9. #19
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    I agree, my comments have wandered somewhat from the heading "Rookie Mistakes". $ cost averaging through thick and thin is a winner long term.

  10. #20
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    Quote Originally Posted by Joshuatree View Post
    I agree, my comments have wandered somewhat from the heading "Rookie Mistakes". $ cost averaging through thick and thin is a winner long term.
    While I agree $ Cost Avg works very well, it has not done well in the years from 1999 to 2009 (known as the lost decade). Hence my reaction to the new investors in recent years that waiting for the crash may of been a better approach.

    We've seen a dip today in the US market and we will see many more. One thing about $ Cost Averaging is that you do get the benefit of staying invested in the market. Buffet has always said the odds are always against you if you stay out of the market and to time when to stay out is no different to gambling at the casino. Just buy the index ETF and forget about it in 20 or 40 years time (if you have that many years to wait).

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