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Jumping on the Bandwagon

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  • 14-03-2020 11:02pm
    #1
    inisfree0504
    Registered Users Posts: 71 ✭✭


    Hello all,

    I've been thinking about buying some shares/ investing in a fund for quite a while now as I'm lucky enough to have inherited a nice nest egg. I figure what better time to start than when the markets are at their lowest in some years (and even if they go lower, I'm fine with waiting it all out for a few years).

    I've set up with degiro, and so far am thinking of

    1) NCLH - unless they go completely bust, I figure they'll have to see some recovery over the next few years. (I am a bit worried about the former happening though - Any thoughts?)
    2) Ryanair - I'm thinking of waiting a week until more groundings are put in place (and speculating the price will drop lower), but feel more confident about putting money in this one
    3) Shell/BP(?) - Again it seems like this war will come to some resolution, so seems like buying sooner rather than later isn't a bad idea

    Other than that, I'm not really sure. I'm concerned even post-corona, some sort of Brexit recession is likely so I'm thinking of avoiding (a) boi/aib, (b) any uk based funds and am all round unsure about any other Irish companies.

    I'm very new to this so any thoughts would be appreciated. I'd also appreciate any thoughts on how to spread the money out. Overall, I have about 6k I'm willing to put at any sort of risk (although I'm not suggesting spending it all on the 3 companies I've named at all). I have 50k+ in the bank/state savings and 1.5k in p2p lending, so it's not like I'm putting all my eggs in one basket. I'm also not considering buying a house for several years.

    Thanks, and I'll try to keep this updated!


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    #2
    SnowyMuckish
    Registered Users Posts: 859 ✭✭✭SnowyMuckish


    Been thinking the same myself. I’m holding off though, we’re far from rock bottom yet....


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    #3
    SquireD
    Registered Users Posts: 157 ✭✭SquireD


    Interested on feedback on this as well...


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    #4
    2016
    Registered Users Posts: 101 ✭✭2016


    I'll take the liberty of re-posting something I put on another thread a few days ago. As of 29th Feb I had gone to about 65% cash/short term bonds, gradually from mid-2019. I somewhat fluked the timing, but I'm in the same position of deciding the next step:




    Personally I've been an investor through the dot com bubble and crash (1999-2001) and the Global Financial Crisis (2007-2009), and this is looking like something comparable. I did learn some hard lessons that I would not have learned if I was younger. Amazingly, people who have only been investing in the last 12 years have only seen upward trends and inevitably reckoned they had the Midas touch (I've been there and done that too!) and will now be about to start experiencing their first real tests (many have not experienced it yet, because the huge run up since early 2017 means they may not be under water yet).

    One lesson for example - you have huge volatility (daily swings), far more than you are ever used to, and it turns out they were much less significant (in terms of longer term signals of where things were going and whether to buy or sell) than you'd think on the day.

    For one reason or another, as much luck as strategy, I've had an awful lot of cash on the sidelines in recent months, so I'm also thinking about where I go from here.

    In my opinion:

    1. It's great that you have some spare cash and have the inclination to invest - this will serve you well in the long run if you use it wisely. Also it's great to think of a 5 year horizon (longer ideally - 10 years given where the markets have recently been)
    2. "Stay liquid" was advice that stayed with me from the GFC, so make sure you have enough cash, or equivalent, to see you through losing your job for an extended period, to stop you have to sell the shares at a loss.
    3. Two market cliches to consider:
    - "stocks take the escalator up (i.e. slowly) and the elevator down (i.e. quickly). "
    - "Don't catch a falling knife"

    Basically, time is on your side and there's no need to put (all) your money in now, don't worry about getting in at the exact bottom of the market. There will be plenty of time to get in later.

    4. Picking "2 or more" stocks from any list is adding huge risk to your potential return. You have 4 Technology stocks in your list of 5. That is a huge bet on that one sector, as well as an even larger bet on a tiny number of companies. My advice is don't do it.

    5. Much better to put your money into a low cost index fund (e.g buy an ETF). Less tax efficient currently in Ireland, but much better that buying a tiny number of stocks for the vast majority of investors.

    6. In the long run, there may be little difference in putting in a lump sum in one go as opposed to drip feeding it into the market, but psychologically it's more sustainable so I would do that if I was you. Putting in €1k per month for the next 10 months for example.

    7. I think there is an awful lot of potential downside still, particularly from negative sentiment in the US once cases shoot up and the widespread restrictions bite. The US economy is driven by consumer spending and this will take a huge hit. I can't see a major rally happening during an extended virus-driven lockdown, but can easily see further reductions. Aside from the virus and the effect on consumer spending, you have the collapse in oil prices which is driving US shale oil producers to the verge of bankruptcy, with the inevitable effect on high yield bond markets, US banks etc. Basically a credit event on top of everything else. At the end of the day, the market is still higher than when Trump was elected - we're back to where we were maybe 2.5 years ago (SP500). In the Dot Com bubble, the SP500 regressed 5 years, in the GFC it regressed maybe 7 years (arguably 12 years, right back to 1997-era valuation).

    I'm not at all saying things will get this bad, just there is a lot of downside and don't get fooled by the wild daily swings.


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    #5
    inisfree0504
    Registered Users Posts: 71 ✭✭inisfree0504


    I really appreciate the advice. Great post.

    I think, on some level, I hadn't fully recognized that it is going to take a very long time for things to pick bank up - hence the urgency.

    I bought 2.5k of Shell A yesterday and instantly felt uneasy about it. It looks like current oil prices are a lot less temporary than I envisaged and I'm aware they have a decent amount of debt.

    I definitely would like to get in on Ryanair, but, as you seasoned posters have all mentioned, I'm going to wait a few weeks at the least. Same with a fund, I'm going to wait it out.

    Personally, even if things go down further, it doesn't particularly make a difference if I don't get back to current levels for a few years. I'm still in college and have plenty of other funds for a rainy day. My fears are that even 5+ years down the line, they'll never recover. Any advice on how to spot when you're just catching a falling knife?


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    #6
    Timmaay
    Registered Users Posts: 11,394 ✭✭✭✭Timmaay


    inisfree0504 wrote: »
    I really appreciate the advice. Great post.

    I think, on some level, I hadn't fully recognized that it is going to take a very long time for things to pick bank up - hence the urgency.

    I bought 2.5k of Shell A yesterday and instantly felt uneasy about it. It looks like current oil prices are a lot less temporary than I envisaged and I'm aware they have a decent amount of debt.

    I definitely would like to get in on Ryanair, but, as you seasoned posters have all mentioned, I'm going to wait a few weeks at the least. Same with a fund, I'm going to wait it out.

    Personally, even if things go down further, it doesn't particularly make a difference if I don't get back to current levels for a few years. I'm still in college and have plenty of other funds for a rainy day. My fears are that even 5+ years down the line, they'll never recover. Any advice on how to spot when you're just catching a falling knife?

    Literally for the minute make yourself a hard and fast rule that whatever shares your gonna buy, go and only buy 1/10th of that. And try to let yourself go through the emotional rollercoaster as if it was the full amount. Your money is best off not in your Degiro account at the minute also, too tempting then to go trade (I've withdrawn the most of mine after liquidating alot of my portfolio a week ago.)


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    #7
    Static M.e.
    Registered Users Posts: 3,087 ✭✭✭Static M.e.


    Timmaay wrote: »
    Literally for the minute make yourself a hard and fast rule that whatever shares your gonna buy, go and only buy 1/10th of that. And try to let yourself go through the emotional rollercoaster as if it was the full amount. Your money is best off not in your Degiro account at the minute also, too tempting then to go trade (I've withdrawn the most of mine after liquidating alot of my portfolio a week ago.)

    ahhh Timmaaay!!! I have just spent the last couple of days doing the exact opposite of that. :) Although I have strong feeling we are talking about vastly different sums. I have no skill \ patience with stock investing (although I am ITCHING to try) so I'll stick with my eft and keep plugging away at it for the next few years.


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    #8
    inisfree0504
    Registered Users Posts: 71 ✭✭inisfree0504


    Timmaay wrote: »
    Literally for the minute make yourself a hard and fast rule that whatever shares your gonna buy, go and only buy 1/10th of that. And try to let yourself go through the emotional rollercoaster as if it was the full amount. Your money is best off not in your Degiro account at the minute also, too tempting then to go trade (I've withdrawn the most of mine after liquidating alot of my portfolio a week ago.)


    My issue is not so much with being tempted to buy too many shares - I have a hard limit set on how much money I am willing to risk and it only amounts to 7% of my total savings. And I am also resolute in not touching anything for a few weeks!

    It's more about choosing which companies to put that money in. What are the signs that point to a company never recovering/diluting shares etc? Other than the financial news, what should I be reading up on?


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    #9
    HamSarris
    Registered Users Posts: 109 ✭✭HamSarris


    Those companies are incredibly risky to invest in as a beginner. People see a company half in price and think 'that's really cheap'. What they don't realise is that it's more likely to half again than double, and half again after that etc. - and very quickly you've blown 90% of your trading account. Have a look at some miners to see how a stock can go from $100 to trading at 50 cent. Many oil, airline and cruise companies will head this way.

    Your number one priority should be to invest in a company that will be around in 5 years. Even if you pick the wrong company, inflation can bring you a profit over the long term. This may mean looking at companies showing strength in the current environment - it feels counter-intuitive to do but there's a reason why professional traders are deciding to dump the stocks you reference and hold others.


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    #10
    garrettod
    Registered Users Posts: 2,422 ✭✭✭garrettod


    inisfree0504 wrote: »
    ...

    I bought 2.5k of Shell A yesterday and instantly felt uneasy about it. It looks like current oil prices are a lot less temporary than I envisaged and I'm aware they have a decent amount of debt...

    I like Shell, and believe that they are a good medium to long term share.

    Shell is well managed, has a very good long term dividend payment record, traditionally has strong cashflows and they've been diversifying so not all income is from oil anymore etc.

    Assuming you didn't buy for a quick flip, sit tight and you should see your investment come good in time.

    Suffice to say, this is not financial advice etc. :-)

    Thanks,

    G.



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    #11
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    garrettod wrote: »
    I like Shell, and believe that they are a good medium to long term share.

    Shell is well managed, has a very good long term dividend payment record, traditionally has strong cashflows and they've been diversifying so not all income is from oil anymore etc.

    Assuming you didn't buy for a quick flip, sit tight and you should see your investment come good in time.

    Suffice to say, this is not financial advice etc. :-)

    It's the largest company on the FTSE and has been a staple of British pension funds for generations, shocking collapse of late however, thought 2016 was rough


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    #12
    inisfree0504
    Registered Users Posts: 71 ✭✭inisfree0504


    HamSarris wrote: »
    Your number one priority should be to invest in a company that will be around in 5 years. Even if you pick the wrong company, inflation can bring you a profit over the long term. This may mean looking at companies showing strength in the current environment - it feels counter-intuitive to do but there's a reason why professional traders are deciding to dump the stocks you reference and hold others.

    This has really made me think, thank you.

    Whatever notions I had of buying NCLH, I've put to bed. However, I would be very surprised if Ryanair doesn't pull through and will watch over the coming month(s).

    I like the sound of Kerry and maybe Flutter as safer bets and will turn my attention to them over the next while.


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