Anybody Panicing?

techguy

Hi,
I'm 20 years of age now and started investing in the stock market about last August. Since then I have seen my portfolio really suffer. I am currently down 15% on my overall value.

I'm in these for the long term. I don't plan on selling anytime soon. It's just really beginning to piss me off to see my money going down the drain? I am assuming in the current economic state i'm far from alone here..

Is there anybody else out there with the same kind of discomfort?What are you doing to soften the blow(if anything?)

Thanks..

kmick

Yeah yesterdays shenanigans mean the irish holdings in my portfolio have dragged dewn my whole protfolio under water. everything else is holding ok but my irish shares are woeful. Can't sell now have to hold and hope the law of averages will help me out.

PDelux

I think there are probably many people in the same position because people like you and me in our early 20's would not have seen markets like this before.
In the last few years the stock market was seen as a 'dead cert', easy money. Buying and holding for the long term will mean it will recover but when people say this i always think it is a bit simplistic. Because in reality, in 3 or 5 years time you might need money for a house, or family reasons etc. and need to get the cash. There is no certainty that the value will have increased. It's a gamble. Obviously in 10 or 20 years time it would more than likely be worth more but in reality some people cant wait that long. IF you can wait that long, put the money in a pension for the tax advantage.
My pension fund was down 8% for 2007 but i dont care because i wont be touching the money for 40 years!

As for diversity in other markets other than Ireland, you also need to think about the €-£ and €-$ impact.

Minder

Look for a hedged position to help protect against losses in your portfolio. Gold is the traditional inflationary hedge, but is short term over bought. Commodities and energies are set to continue rising and can be used to offset any losses in a stock portfolio.

Or you could become a sophisticated investor and learn how to play both sides of the market. Anyone who invests with access to only the lond side is only playing 50% of the market. With the facility to sell short, you can make money on the way up and an the way down.

techguy

Yeah I had thaught of the likes of gold etc..

Also, I have really been thinking about having the ability to short stocks also..It seems like a very tricky game that would keep you up all night long..

Is PaddyPowerTrader the easiest way to leverage stocks?

ionapaul

techguy wrote: »

Yeah I had thaught of the likes of gold etc..

Also, I have really been thinking about having the ability to short stocks also..It seems like a very tricky game that would keep you up all night long..

Is PaddyPowerTrader the easiest way to leverage stocks?

For the vast majority of 'part-time' investors I think that shorting stocks or spread betting are good ways to lose money! Most people will simply not have the time and dedication needed to stay on top of these options and then end up getting burned trying to time the market and catch a falling knife.

PDelux

For the vast majority of 'part-time' investors I think that shorting stocks or spread betting are good ways to lose money! Most people will simply not have the time and dedication needed to stay on top of these options and then end up getting burned trying to time the market and catch a falling knife.

True. But if you're shorting you want the stock to be falling with the knife
If you're going long, wait for the knife to hit the floor then pick it up.

Just seen Intel pre-market - ouch. Somebody told me to short yesterday! Was hard to considering the run on Monday though.

Idu

think its bad now? wait till they start announcing their level 3 assets.

http://www.themoneyblogs.com/urbandigs/my.blog/level-3-assets-credits-next-concern.html

think a lot of these are due in February. Could be an even more miserable month than usual

Minder

techguy wrote: »

Yeah I had thaught of the likes of gold etc..

Also, I have really been thinking about having the ability to short stocks also..It seems like a very tricky game that would keep you up all night long..

Is PaddyPowerTrader the easiest way to leverage stocks?

Leverage is an easy way to lose money and I'm afraid that I don't know the various merits of the spreadbetting firms.

Would it keep you up all night long? If you have made any trading decision based on full and proper analysis of the trade, you should have in place safeguards that will protect your position. Plan the trade and trade the plan - isn't that the adage?

ionapaul wrote: »

For the vast majority of 'part-time' investors I think that shorting stocks or spread betting are good ways to lose money!

Why is selling a stock short any different to the process of buying a stock long? Unlimited upside is possibly one reason. But how many stocks take a moon shot? The reasons for selling short and the execution of the trade should exactly mirror a long trade.

A Random Walk

techguy wrote: »

I'm in these for the long term. I don't plan on selling anytime soon. It's just really beginning to piss me off to see my money going down the drain?

Why do you feel that, you haven't sold anything? You own the same amount of shares today as you owned yesterday.

If you want to invest sensibly in the stock market, decide on a portfolio (x % in EU shares, x % in US etc) and average your money in (i.e. invest the same amount every month or whatever the period you choose). The next thing to do is not look at prices as you'll stress yourself out.

Ironically these falling prices are great news for anyone who is young and still investing. The same share you could buy a week ago is still the same share but is now cheaper. Once you get it into your head that markets going down are a good thing you'll begin to learn investing. Personally I'd be happy to see a 20% crash in the morning.

Finally, unless you really really know what you're doing avoid investing in something. Shorting shares can be very risky, as can leverage. Technical analysis (looking at charts) is arguably codswallop and personally I've never been able to understand where gold gets its price from.

daveirl

This post has been deleted.

stepbar

Hell I could cope with 15%. I put 7k into a Bloxham high yield equity fund this time last year. Now it's worth 4.2k, a 40% drop in 12 months :eek:

damnyanks

We're hitting tough times. Place I work had it forecast for over a year and reckon it ends 2010.

You shouldnt really worry about any equity stocks short term loss unless you've invested millions.

shnaek

2010 seems to be the opinion going around alright, so we got a few tough years to go. Still, the panic that the OP spoke off will push the market a good bit lower than it needs to go, and there will be excellent opportunities there for those willing to take a risk.

damnyanks

Well really the next few months decide it. Most of the write off's have been shown which are all related to a few areas within banks. If you look at the banks actual earnings most other groups had record or near record years. Paddies time we'll know if we be screwed.

Clytus

Minder wrote: »

Look for a hedged position to help protect against losses in your portfolio. Gold is the traditional inflationary hedge, but is short term over bought. Commodities and energies are set to continue rising and can be used to offset any losses in a stock portfolio.

Or you could become a sophisticated investor and learn how to play both sides of the market. Anyone who invests with access to only the lond side is only playing 50% of the market. With the facility to sell short, you can make money on the way up and an the way down.

Short selling!!.....a tad risky for the casual investor.

OP...try some commodities indecies...mostly agri commods.
Swiss Franc...Chineese Yuan and Jap yen are being marked as good.

Minder

A Random Walk wrote: »

personally I've never been able to understand where gold gets its price from.

Here's one explanation

dunkamania

A Random Walk wrote: »

personally I've never been able to understand where gold gets its price from.

I agree 100% with this, gold has arguably no value, as its not linked to any other measure of value. It has a negative cash flow and the amount used industrially and for jewellry is a small percentage of outstanding bullion.

Commodities and energy prices should decline in recessions so adding exposure their to your portfolio now may not be the best strategy.

In response to the OP question, the time for panicing was 9-12 months ago, why would you panic now? As someone who has just started to invest, you should reap the rewards of historically low stock valuations.

chump

dunkamania wrote: »

In response to the OP question, the time for panicing was 9-12 months ago, why would you panic now? As someone who has just started to invest, you should reap the rewards of historically low stock valuations.

where'd ya pull this nugget from?

portomar

dunkamania wrote: »

I agree 100% with this, gold has arguably no value, as its not linked to any other measure of value. It has a negative cash flow and the amount used industrially and for jewellry is a small percentage of outstanding bullion.

Commodities and energy prices should decline in recessions so adding exposure their to your portfolio now may not be the best strategy.

In response to the OP question, the time for panicing was 9-12 months ago, why would you panic now? As someone who has just started to invest, you should reap the rewards of historically low stock valuations.

Agree with that, stocks are over valued at the moment. medium term i think we might see the current bull market wiped out. i am short at the moment and safely in profit, hopefully another blood bath tomorrow when us opens properly. 5-10 years i could see stocks coming back strongly though... till the bargain basement interest rate policy the us fed is about to embark on again leads to another housing bubble and it all starts again....

portomar

daveirl wrote: »

This post has been deleted.

what bout the currency aspect, have you seen your euro equivalent amount in your account suffer less than youve saved in fees??

in relation to sterlings decline that is.

portomar

the guy in the youtube clip at the start of this certainly is


http://www.uglychart.com/

Minder

"If you don't trust gold, do you trust the logic of taking a pine tree, worth $4,000-$5,000, cutting it up, turning it into pulp, putting some ink on it and then calling it one billion dollars?"

- Kenneth J. Gerbino

The price of gold tells us a lot about ourselves. It holds up a mirror to the way we are governed, our economy and its prospects. It reflects not only the physical dangers of floods, famine, terrorism and war, but also the financial perils of systemic addiction to debt and budgetary incontinence.

Gold has been a store of value for more than 5,000 years "The modern mind dislikes gold," said Joseph Schumpeter, "because it blurts out unpleasant truths." With gold trading at about $900 an ounce - more than 200 per cent higher than it was at the turn of the millennium - today's message from the bullion market is not comforting.

In the eight years since the arrival of the 21st century, the FTSE-100, the London stockmarket's main index, has lost about 15 per cent in value. The shares in companies that comprise "Footsie" usually pay dividends, sometimes more than five per cent a year. Gold pays none: never has, never will.

So why have investors been abandoning conventional assets, such as government bonds and stakes in blue-chip businesses, in favour of a metal that appears to offer no reward for holding it? The answer, I'm afraid, is crumbling faith in the world's central banks, and in particular the US Federal Reserve, where the presses have been working overtime.

Some argue that the soaring gold price has been driven by temporary anxiety over global instability. The metal is a safe haven in troubled times. But answer me this: when was the last time the world felt like a cosy hideaway? Ever since mankind turned up, Planet Earth has never been a safe place.

Wars in Iraq and Afghanistan, a more muscular Iran and the unpredictability of Moscow are contributing to nervousness. But what's really upsetting investors is the speed at which money is being printed by governments, especially America's, that cannot face the problem of funding wild expenditure plans solely from reserves or taxation.

In that sense, the gold price's journey towards $1,000 is a resounding vote of no confidence in authority. It's the market flashing a red light.

This week, the BBC's World Editor, John Simpson, reported under cover from Zimbabwe, where the cost of a meal for himself and some friends in a Harare restaurant was 290,000,000 Zimbabwean dollars. Ever the gentleman, Simpson left a ten-million-dollar tip. In this nightmare state, as Simpson put it, "everyone is a millionaire", yet also, "grindingly poor".

This is an extreme version of what happens when a currency is debauched. Zimbabwe is at the very end of a road down which all excessively wasteful administrations travel. It is a long haul, and not many go all the way like Robert Mugabe. Nevertheless, the price of gold is signalling fears that the US dollar, and to a lesser extent sterling, is on course for painful corrosion.

Currencies come and go, but gold has been a store of value for more than 5,000 years. Gold is rare, but, thanks to Gutenberg, paper money is not. Presented with an opportunity to churn out extra cash at little expense, it takes a special kind of government to resist. Few seem able to do so.

According to former Fed chairman Alan Greenspan: "There is no inherent anchor in a fiat-money regime [a currency not underpinned by gold]. What constitutes its 'normal' inflation rate is a function solely of a country's culture and history." For many, that flexibility has proven ruinous.

Inflation wrecks currencies in the same way that termites destroy wooden houses. The world's two most successful currencies, the US dollar and the British pound, both of which are still used by other nations to hoard wealth, have each lost more than 95 per cent of their value in the past 100 years.

Since 1971, when Richard Nixon broke the dollar's formal link to gold, America has pumped out trillions of new dollars. Money from thin air. China alone is sitting on more than $1,000 billion of reserves, as American consumers pile up debts to buy "essentials" from factories in Shenzhen and Guangdong. No wonder the buck has lost its fizz.

By contrast, there is a finite supply of gold. This keeps it honest. As financial commentator Peter Burshre pointed out: "Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man's suit at the conclusion of the Revolutionary War [American War of Independence], the Civil War, the presidency of Franklin Roosevelt and today."

Gold doesn't always appreciate in price, of course. In 1980, it was selling at more than $800 an ounce. Twenty years later, it had dropped to $275. It is theoretically possible to get rich by betting on fiat currencies and against gold. But the scoring average of all those who try is pretty poor.

Ask Gordon Brown. He achieved what most expert dealers can only dream of. In 1999, he spotted the bottom of the gold market, a 20-year low. The trouble was, Brown's order was "sell". As Chancellor, he told the Bank of England to dump nearly 400 tonnes of British gold reserves, since when the price has shot up. That decision cost the Treasury billions.

Control-freak politicians abhor gold because it ignores them; it won't do what it's told. It defies economists and laughs at central bankers.

Sophisticates claim that, in a world of electronic money, gold is a barbarous relic. But as the sub-prime horror ravages the international banking system, millions of ordinary savers know better. While ministers debate the merits of flooding the global system with liquidity to ease the credit crunch, Delhi taxi drivers are buying gold, accelerating the shift of wealth from west to east.

"Practically all governments of history," said Friedrich von Hayek, "have used their exclusive power to issue money to defraud and plunder the people." Gold stands in the way of this process; it is a protector of property rights.

If you are still not convinced, let me remind you of what Hitler had to say: "Gold is not necessary. I have no interest in gold. We'll build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money."

The Third Reich was supposed to last 1,000 years. It fell apart a long way short of that, but gold is still here.

At some stage, the recent price surge will cool. When? No idea. But I do know that, to equal the last peak of $846, in November 1980, the price today would have to reach $2,500.

PDelux

what bout the currency aspect, have you seen your euro equivalent amount in your account suffer less than youve saved in fees??

in relation to sterlings decline that is.

You can choose to have your account in euro with IG Index. Some bets you can take in euro and some you can take in sterling or US dollars but the currency risk is only for the period of the trade.

PDelux

Quote:
what bout the currency aspect, have you seen your euro equivalent amount in your account suffer less than youve saved in fees??

in relation to sterlings decline that is.

You can choose to have your account in euro with IG Index. Some bets you can take in euro and some you can take in sterling or US dollars but the currency risk is only for the period of the trade.

Just to mention as well that it's not just the charges but the UK companies have a lot more products, shares, ETFs etc.
I've said to Delta that I would use them all the time if they add other products like their competitors.

casey212

As I have told many people before, in times of instability get into currencies.
For the vast majority of inexperienced investors the currency market are often overlooked. I firmly believe that the currency markets are much more predictable than individual stocks. Coming from a macro economic background i may be somewhat biased, however with proper risk management, stop losses and limited leverage i believe its the only game in town. Personally I am playing for some strenght in the Peso versus the dollar in the immediate short term.

Keep the heads up.

democrates

Excellent post minder.

Even assuming a great depression is avoided, investment waters are bound to get a tad choppy over coming decades.

It would seem wise to have some retirement gold in reserve given the macro trends of climate change, population growth, peak oil etc. I'm due to retire in 2032, what will the world look like then I wonder.

So where does one start in Ireland to invest in gold?

casey212

Gold is all well and good, however if you are hungry, can you eat the stuff?

democrates

casey212 wrote: »

Gold is all well and good, however if you are hungry, can you eat the stuff?

As pointed out elsewhere, it's better than promissory notes, so long as we're not into an extreme scenario in which case a supply of food and water and a munitions stockpile would be better.

We're not seriously entertaining that possibility here though, are we?

casey212

democrates wrote: »

As pointed out elsewhere, it's better than promissory notes, so long as we're not into an extreme scenario in which case a supply of food and water and a munitions stockpile would be better.

We're not seriously entertaining that possibility here though, are we?

Of course it is better than fiat currency. I made the point just to make people aware that gold is not the solution to all possible problems.

democrates

casey212 wrote: »

Of course it is better than fiat currency. I made the point just to make people aware that gold is not the solution to all possible problems.

Fair enough, and besides it's not an either/or decision between precious metals or other asset classes, good to have some in reserve as part of the mix.

Minder

democrates wrote: »

As pointed out elsewhere, it's better than promissory notes, so long as we're not into an extreme scenario in which case a supply of food and water and a munitions stockpile would be better.

We're not seriously entertaining that possibility here though, are we?

No, investment in gold is only suggested as a hedge against inflation. Unfortunately gold as a currency alternative has been adopted as a cause by the conspiracy theorist, survivalist brigade. There are plenty of internet forums that purport to discuss precious metal investment, but just end up as a focal point for extremists - mostly white, middle-america, gun toting nutters. It is then difficult to separate fact from fiction in precious metal investment.

As for gold investment in Ireland - ETFs are available in both gold & silver. The other popular alternative is numismatics - coin collectors. In the UK, gold coins are a popular form of investment because coin of the realm is not subject to Capital Gains Tax. Are there similar coins available in Ireland? Guineas?

casey212

I would say that of you are going to invest in gold, by it in the physical form. A certificate is not much use if individual gold ownage is made illegal, as was the case for the United states during much of the 20th century.

tenchi-fan

My bond lost 7% (+ management charges!) since i took it out at the start of December, supposedly at a time when "Irish shares are undervalued."

I expect it to recover in the short-term but if it ever reaches the value I paid in I might cash it in and bung it into a deposit account.

I really don't trust any stock market in medium to long term!

portomar

hang on a sec, is it a bond or a fund you are talking about? As for irish shares being undervalued, though that may prove to be true, why are you suprised to have lost money?them being undervalued and losing value can essentialy be 2 ways of saying the same thing.as for my opinion, davy etc. Have been saying irish shares are undervalued for a few decades now.dnt ask a butcher if meat is good 4 you.

tenchi-fan

portomar wrote: »

hang on a sec, is it a bond or a fund you are talking about? As for irish shares being undervalued, though that may prove to be true, why are you suprised to have lost money?them being undervalued and losing value can essentialy be 2 ways of saying the same thing.as for my opinion, davy etc. Have been saying irish shares are undervalued for a few decades now.dnt ask a butcher if meat is good 4 you.

It's a fund. I meant I have a life assurance investment bond. And when I said undervalued, I meant relative to other European shares. The other way of looking at this is they are overvalued.
I'm not surprised I lost money on it, but I'm a gambler at heart and I won't feel I've lost anything until I've lost everything

portomar

all that said, id hang onto it for a longer period, long term itll probably go up. and i mean long term as in a few years

kaiser sauze

tenchi-fan wrote: »

My bond lost 7% (+ management charges!) since i took it out at the start of December, supposedly at a time when "Irish shares are undervalued."

I expect it to recover in the short-term but if it ever reaches the value I paid in I might cash it in and bung it into a deposit account.

I really don't trust any stock market in medium to long term!

That is your opinion, but you're dead wrong.

Any $1 investment has gained, over any twenty year period, starting from 1921. That's over 100 cycles.

Perfectly fits your long-term statement.

Despite Wall Street crash, despite several wars, despite currency crises[plural?], despite oil crises, despite 9/11 and despite Black Monday. They're the ones that come into my head, there are many more.

Trust me, you'll lose nearly as much, when inflation is factored in, through a deposit account.