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What Lessons Have You Learned?

(5 posts)

  1. Tom
    Member

    Given the most recent market downturn, do you have any hard-earned lessons that you'd like to share? Are there things you got right, or things you got wrong?

    Posted 6 months ago #

  2. SOUTHBAYSTEVE
    Member

    First, being a business owner and seeing consumer behavior first hand, there are plenty of clues as to which direction the economy is headed before the economists and analysts provide their insights and analyses. They have to wait until they have collected the data before they have any clue as to what is happening. We are the grass roots data observers and know months before what is coming. I went to bond funds in September of 07 when the Dow was at 12,000. If you want specifics, I explained it in my blog www.fundswitchers.wordpress.com.
    Second, the psychological factors are causing more speculative investment decisions and increasingly putting fundamentals a distant second. Unfortunately, fundamentals are the foundation of valuations and investing will always come back to that. Understanding these two will usually cause one to exit the asset class of choice earlier. The buyback point will also be more difficult. The lesson to be learned is, "You will never get out at the top and you will never get back in at the bottom". Be satisfied with avoiding most of the declines and capturing a portion of the upside.

    Posted 4 months ago #

  3. roughbert
    Member

    A lot of these mistakes are so obvious with hindsight!

    I reside in the UK. My biggest recent mistake - there have been others - was to buy US ETFs through a UK online broker. When the time came to get out - OK, perhaps a little past time - I had to wait for the next trading day to sell them - and it hurt! That lesson is learnt and I'm setting up an account with a UK broker who allows me to trade through the US market day.

    In fact even ETFs listed on the London Stock Exchange, if based on US indices, will present similar problems to the trader.

    Posted 4 months ago #

  4. SOUTHBAYSTEVE
    Member

    Hey RB, I am very curious as to your "investing" time frame. It sounds like it is very short term. Not to criticize, but unless the market is in a solid uptrend day trading types generally don't do well. That has been well documented. And unless you have some pretty sophisticated analytical tools I would expect that you are at a disadvantage to the pros. My experience is the short term trading is a guessing game. That is why I have a longer term view. I find that looking at the changing market influences over weeks and months provides a better outcome. Using this approach allows me to get 20% - 50% returns over the indexes. It also reduces the volatility substantially. I would also be interested in knowing what asset classes or sectors you work in. My website, www.fundswitchers.com, is really geared for investors with much less expertise.

    Posted 4 months ago #

  5. roughbert
    Member

    SBS, we live in changing times.

    You are correct, my view is short-term.

    Recently I have wanted to get out of oil and of BRIC. I don't think I'm alone in that.

    I am averse to holding equities whose value is dropping merely in order to avoid a transaction!

    Posted 4 months ago #

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