Hi Bjurasz,
Just wanted to make sure I understood that correctly.
Did you mean to say you sold at 50% loss, and then waited out in cash…and then because you waited too long, missed the opportunity to make it up {meaning, in this scenario, it was a wrong decision to sell}
Or did you mean to say, you were late to sell…and the continued fall led your losses to increase to 50%, at which time you had to sell { meaning it was a wrong decision not to have sold it earlier}.
Thanks,
Charlie
The Fed did a U-turn in 2019 under intense political pressure. It was a mistake because the economy wasn’t slowing much and there was no market panic. The political pressure won’t happen again…I hope.
Fed Chair Jerome Powell is laser-focused on reducing inflation even if a recession results from raising the fed funds rate and holding it for a long time. He won’t back down unless there is a financial panic. Nobody expects that because Powell has been so transparent for years that the market won’t be blindsided.
Because of this, the likeliest scenario is a steady prolonged drop in the market. I don’t think it will be as extreme as 1968 to 1982 but it will probably take a year to reach bottom as it did in 2002 (after the 2001 dot-com crash and recession).
You may be too young to remember this.
Wendy
Hi Charlie. It’s definitely painful, to look at the port and see losses.
However, keep track of these “losses”, record the buy, sell, dates, cost basis, etc.
Use these in a “tax loss carry over or carry forward” for your taxes.
Each year, you will be able to count these losses against future or current year gains.
Ie, these losses TODAY can, in part, be recouped, in future years.
The losses aren’t 100% lost.
I hope this information is useful.
As always - consult a tax professional.
Cause my comments are not tax or investing advice.
ralph
Right now I’d avoid any company that has tons of debt. Ordinarily you’d expect new or rapidly growing companies to have more debt than usual, and you can take that in stride–but with growing interest rates, the debt will sink some of them.
I tend to avoid high-priced stocks, but that’s just my style. I like the little plodders that pay dividends. Like I bought Microsoft back when everyone thought it was boring. You have to become an “expert” in something and go with that. Never, ever, follow fads. Remember you are buying a company, not a collectible. And if you can’t afford to lose something, put it somewhere safe, even if you have to give up a dream of quick riches to do that.
And don’t take advice from strangers or fast talkers.
That’s tough to read.
Any advice anyone could give you to hold or sell could be right one month from now, and totally wrong six months from now, or vice versa. That’s the nature of markets.
I think the first step is acceptance. You made mistakes, but it is what it is. The numbers of the past are just that, not your present situation. The odds that these SAAS stocks are going to quadruple within any short or medium term timeframe are exceedingly small.
All or nothing decisions are hard. I remember you posting on the Berkshire board about your situation half a year ago. Didn’t you make a partial adjustment then? If yes and it saved you from at least some losses, congratulations.
This is not optimal (it never is), but faced with the inability to make all or nothing adjustments, sometimes selling a portion and redeploying or holding some cash, can be a strategy to minimize regret.
You could sell half or 2/3, and deploy half of the raised funds into Berkshire and/or the S+P, and leave the rest of the funds in cash until the S&P goes over it’s 200 day average, makes new a 99 day high, or any other timing method.
Whether that will be better or worse than doing nothing, I don’t know, nothing is guaranteed . But it is a plan. What you need is a plan that you can follow and see the market as giving you opportunities, instead of having the market jerk you around like a sick person in a rollercoaster.
Thanks Wendy, Ralph, WilliB, and AguilaAzul. Again very helpful!
I certainly have decisions to do…may be panful, but certainly has to be done and I have to stick with it.
Thanks again for all the helpful suggestions.
Hi AguilaAzul,
Yes, you are absolutely right. And following that, I did sell some of my huge losers and bought some Berkshire ( and those are the only ones which are positive in my portfolio…and I am incredibly thankful to the Berkshire Board members, especially Jim Mungofitch for that…at last,I had a company that was relatively easy to value using the Price to book value even by a Moron like me).
My only regret is that I only sold a small portion and hence could buy only a small portion of Berkshire…
But yes, the Berkshire Board and this board are the only ones I follow…and if I had had the good fortune to know these 2 years back, my situation would have been SO different. But, better late, than never!
At least, my kids will know what NOT to do…and what is the right thing to do! And trust me, I would much rather this awful experience happen to me than anything even remotely like this to them.
Thanks again,
Charlie
Correct. I should have re-invested after moving the assets to Vanguard.
Woof. There is no one on planet Earth who knows the answers to all those questions and even if they did translating into actionable information is a major problem. There is a reason 95% of professional money managers cannot beat the market. And don’t forget Warren Buffett’s $1 million bet that a basket of hedge funds wouldn’t outperform the S&P 500 (he won). They have fancy degrees and all kinds of quant tools and all day to work on this stuff, and they still can’t do it.
One reason is that while it is temping to bail at the first sign of trouble, missing only a few of the best market days a year blows big holes in your returns:
In other words, getting out without getting back in on time is dangerous to your wealth.
On the other hand, if you had bought a nice S&P 500 index fund five years ago, you’d be up 40% today. If you had bought right before the COVID crash in February 2020 (bad time to buy, right?) you’d be up 15% today.
Your pain is irrelevant and a poor advisor!
Investing is about the future. The past is for learning. Sell the stocks that don’t have a future, keep the ones that will bounce back.
The Captain