Forum Topics Reality Bites
Pmonkey
Added 7 years ago

You are absolutely correct in everything you have said Bear 77.  I hear it, know it, and have created a portfolio with all those aspects in mind, though I may own a few more risky ones than desired.  I think we both have many years of experience (let's just say I was born before the end of WWII) and have felt the wrath of the market several times in the past.  My main problem is, since I feel so good I have this fanciful belief I will live forever and that the companies I have invested in, with their wonderful stories and potential, will have a happy ending.  I'm comfortable with this strategy (delusion?) as some companies I invested in at the same stage turned out well in the long run.  One must have patience and the time to exercise it.  Here's to living forever.  

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Bear77
Added 7 years ago

Salut !!

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Bear77
Added 7 years ago

Sorry about the sentence construction there in my last post.  Didn't read well.  No "edit" button available either.  However the message is actually quite short and simple.  We're near the very end of a long bull market and the risks of entering a bear market are very real.  Try not to have most of your portfolio set up to fall harder and further than the rest of the market will.

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Pmonkey
Added 7 years ago

All of us paricipating here in Strawman have different investing philosophies and experiences.   I have learned that when one takes on more risk for growth, and markets react like they have, emotions will be severely tested.  Experience has taught me that precipitous falls like those of the past few days are usually short-term portfolio costly.   Once you accept they're only paper losses (as of today), and had you not logged into the internet, all would be sweet with those wonderful long-term investments you've investigated and put your hard earned money into.  The key to all this is how you allow your emotions to process market negativity.  Happily, palpitations have been notably missing as I've seen large sums wiped from some of my risky holdings.  I accept that it's part of a process I signed up for.  Having and keeping faith in ones decisions is key to sleeping well at night and living thorugh testing times.   I plan adding a fresh post a few months from now to upadate everyone on my emotional and financial state.  I expect it to report all is in good helath.  Good luck to all investors, and enjoy the personal journey. 

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Bear77
Added 7 years ago

Longer-term thinking is certainly the key to longer-term outperformance in this game @Pmonkey. Those that don't have the stomach for large falls should either stay out of the market (which is inherently risky) or play at the safer end (the larger ETFs and very high quality LICs). Just be wary of throwing the farm at higher risk companies Pmonkey. By that, I mean that if you mostly invest in companies with heaps of promise but very little in the way of a track record of consistent profitability and sensible capital allocation by management, now, towards the end of the longest US bull market in history, because when the bear market arrives (and bear markets ALWAYS follow bull markets, so it's definitely coming), those companies usually get smashed MUCH harder than the more established ones with track records. Companies on PEs of over 40 - or with no earnings at all - so no PE is possible because there is no E - are priced on positive sentiment - which in turn is often based on positive momentum. Sentiment - and momentum - can turn on a dime - and will. What we have seen earlier this week really is nothing compared to what's coming, based on past experience (and the history of the market). There's nothing wrong with allocating a proportion of your portfolio to the riskier end of the market, but not 100% of your portfolio. Not even 50% of your portfolio, unless you have a VERY long investing horizon, a lot of patience, nerves of steel, and a cast-iron stomach. Companies that are priced for perfection are usually only priced that way when they have EVERYTHING going right for them. And that rarely lasts. Gravity is real. Sensible valuations will come first. And when we're in a bear market, and people are exiting the market in droves, some of these companies are going to start actually looking cheap. And that's when the value-investors time will come. Make sure you have some cash available for times like those.

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