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Good time to buy into Managed funds ?

 
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Old 03-11-2008, 08:57 AM   #11
Sim
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Originally Posted by crc_error View Post
Although Sim will argue Warren buffett can't be compared to the normal investor, I disagree with this.
No - actually I argue that you can't just trot out Buffett's latest words of wisdom and use them in every situation.

I wasn't suggesting that Buffett is wrong - I was suggesting that your continued claims about "this is what Buffett is doing" is inappropriate without understanding and explaining WHY he is doing them. You've done a much better job in your recent post.

I was complaining about your one-line posts that claim "Buffett is buying" or something to that effect - I think you need to put it into context and understand the bigger picture.

If you are buying for the long term (as Buffett is), and you have the ability to choose good quality stocks which should see good earnings growth over the long term (as Buffett does), and you are not highly leveraged (I assume Buffett isn't), then I think you should do well by buying now and holding for 10+ years.

It depends on your goals and your timeframes for investing. One strategy does not suit everyone - so you need to qualify your comments to explain (in general terms) what your strategy is. In your case (and Buffett's) it is buy and hold long term - so I have no problems with what you suggest ... just make sure you understand that not everyone has the same approach or the same goals.

If I was saving a deposit on a house I would not be investing that money in the market right now!
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Old 03-11-2008, 09:13 AM   #12
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Hi Sim, I have always suggested buying stock over the longer term. 7 years plus. Thats my time frame for investing. I don't consider myself as a trader, or short term speculator. Generally these type of trades I have lost money far to many times. I also don't believe I personally can achieve better results trading, than longer term quality buy and hold. Once you consider the additional CGT paid, and brokeage, I think most investors will be better over the longer term if they buy and hold.

But yes, your correct, each person needs to determine what their time frame is, and what they plan to do with the money over the short, medium and longer terms.

My goal is to accumulate enough assets which will give me a nice dividend income stream to support my lifestyle over the longer term, so I actually never plan to sell.

This is why I will maintaine my regular investment plan, and encourage anyone who isn't in the market to seriously consider getting in NOW.
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Old 03-11-2008, 10:27 AM   #13
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This is why I will ... encourage anyone who isn't in the market to seriously consider getting in NOW.
Why now ? Is it because you think the market has bottomed ?

Isn't that timing the market ?
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Old 03-11-2008, 10:42 AM   #14
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If you were trying to time the market, you would have got in when I called the bottom last month. Which seems it could be proved to be a close call to the bottom.

IF you think your confident in picking the bottom, then yes TRY to time the market.. but the fact remains a regular monthly investment plan through all climates will be a more practical choice for many people.

Just because the market is falling, stopping this regularly investment journey, or even selling up during these times usually proves to be a very costly mistake for amateur investors. Usually because they fail to re-enter the market until its to late.

I didnt try to time the market, I continued to hold/build my investments all year, but was not scared to buy more in October.

The world isn't going to end!!

But yes, if I held out and tried to time the market - and was successful, I would in a better position today..

But I would like to know if anyone here did time the market and re-entered at the right point when the knife was falling?
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Old 04-11-2008, 08:25 PM   #15
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As I predicted earlier this year http://www.invested.com.au/79/87-crash-here-31351/, I expected the all ords to come down to 4000, where it will find support, and comes back to its longer term uptrend. We are almost there now. I would be avoiding resources, but stick to stocks with higher dividends, not stocks with "future earnings" priced into them.
I'm still sticking to my monthly contribution into my selected managed funds.

I would also avoid gearing at this time.

Warren Buffett is buying now! he is in a spending spree!
How do you find stocks that don't have 'future earnings" priced into them?
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Old 04-11-2008, 08:51 PM   #16
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stick to higher yielding stocks.

But I would say most of the market now would have reduced the future earnings expectations.. even resources which typically were quite expensive and factored lots of future earnings.
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Old 12-11-2008, 09:24 PM   #17
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If I was saving a deposit on a house I would not be investing that money in the market right now!
Yeah! Smart people like me did that end of calendar year 2007
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Old 13-11-2008, 08:03 AM   #18
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If you have the time frame for it, NOW is always the best time to buy

If you have the right time frame (although I tend to agree with crc_error - I hold my investments for life as I dont intend on using the capital of my investments for future needs, just live of the divs), then the best time to get in the market is NOW.

When I say NOW, I dont mean now that the market has dropped (crashed). If you had asked me this question 2 months ago, 2 years ago or 20 years ago; the answer remains the same - Invest NOW. - Why?

Because the reality is that you cannot consistantly time the market, and the fact remains that share prices always reflect the information known by the market (perhaps in a weak form efficient market this may take some time, but after transaction costs and additional risk of getting it wrong, its not worth looking for arbitrage oppurtunities).

Are shares relatively cheaper now than they were 2 months ago? I would say that all shares are priced accordingly - HOWEVER, you may find some companies that are reflecting a 'value' proposition to investors when you compare them to others based on a price to book ratio.



I have not taken into account your personal circumstances and this should not be taken as formal financial advice. Consult with a financial professional before making any financial decision.
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Old 13-11-2008, 10:18 PM   #19
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Sorry but I can't agree - I think the idea that "now" is as good a time as any to invest is a dangerous one. There are very few people who can invest with an unlimited time horizon. I prefer to think of investing simply as trading with a 10 to 20 year time horizon.

Whatever class of asset you invest in, markets are cyclical and there are better times to get involved and worse times.

I wouldn't advise anyone to get into managed funds at the moment is because I believe that we are only part of the way through the downward phase of the current cycle.

It strikes me as a risky strategy for an investor to enter the market now. Personally I don't see much up side for some time yet. Why take the risk of a reduction in the value of your investment when you can put the funds towards your mortgage or something else, and wait for this phase of the cycle to be over?

I'm not talking about trying to pick tops or bottoms here, just taking a step back and understanding that timing can be very important in the sense of what point in the cycle it is that you get on board.

Clearly buying now is better value than buying 6 months ago. Personally, however, I'd wait another 12 or 18 months as world economies do appear to be going into recession and that's not an ideal environment for investing in managed funds.

Then again, I come from a trading background, where dollar cost averaging is a mortal sin :-)
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Old 14-11-2008, 08:09 AM   #20
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Originally Posted by C3PO View Post
Sorry but I can't agree - I think the idea that "now" is as good a time as any to invest is a dangerous one. There are very few people who can invest with an unlimited time horizon. I prefer to think of investing simply as trading with a 10 to 20 year time horizon.

Whatever class of asset you invest in, markets are cyclical and there are better times to get involved and worse times.

I wouldn't advise anyone to get into managed funds at the moment is because I believe that we are only part of the way through the downward phase of the current cycle.

It strikes me as a risky strategy for an investor to enter the market now. Personally I don't see much up side for some time yet. Why take the risk of a reduction in the value of your investment when you can put the funds towards your mortgage or something else, and wait for this phase of the cycle to be over?

I'm not talking about trying to pick tops or bottoms here, just taking a step back and understanding that timing can be very important in the sense of what point in the cycle it is that you get on board.

Clearly buying now is better value than buying 6 months ago. Personally, however, I'd wait another 12 or 18 months as world economies do appear to be going into recession and that's not an ideal environment for investing in managed funds.

Then again, I come from a trading background, where dollar cost averaging is a mortal sin :-)


C3PO, this is a debate that the finance world will continue to have in perpetuity (IMHO). Is it better to time the market and pick stocks (ie active management) or is it better to accept volatility and market returns with a passive approach and a long term view.

Its down to your investment time frame and investment philosophy.

Academic studies have shown that the vast majority (90%+) of returns variance is determined by asset class selection and only a small portion is determined by market timing and security selection.

With this in mind, a long enough time frame and the reassurance of dollar cost averaging, now would be the time to start (or continue) investing in capital markets.

I also agree though that if you have a home debt or are saving for an event within 10 years, you would need to consider volatility.

By stating though that you will wait around for about 12 to 18 months before getting in - that's timing the market my friend.
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