Is it time to get out of equities?

[R13...]

I have been advised to get out of my high equity holdings (Satrix and Coronation) and move into less aggressive funds because markets are at a high and overdue for a correction. Anyone else think the same? Prices are really high in most equities except maybe resources (gold is especially low from its high of near $2000).

My coronation top 20 for example is 41% up since I got in last year. Satrix DIVI about 12% up so not so good. I have since got into the INDI at both satrix and coronation. My own head says I should move into property as that has been lowering at lows for a while now so looks slightly cheap but could stay low or even drop lower.

 

[saturnz]

the thing you need to consider is the impact tapering will have on your specific portfolio and then make a judgement

On a macro level, tapering will mean an outflow from emerging markets back into the dollar, so foreigners (and some locals) would sell our local equities and then purchase US financial assets.

This would be a short term correction and if you are interested in timing that then perhaps sell, if you are in it for the long haul I wouldn't worry about it and perhaps just purchase more equities once the fallout happens- which it will.

Your points on property is spot on, its cheap but may take a while to recover.

 

[supersunbird]

So are you trying to time the market?

What is your goal with the investment?

If contributing monthly one just keep going at it through the ups and the downs.

 

[DJ...]

Who advised you on this? That much is critical. Your broker, your gardener, a mate who once did a financial course in college 12 years ago and thinks he knows it all?

The market does look like a correction is a possibility, but it's not a certainty. Hell, people were predicting a correction every year since 1999. Took them 9 years to get their wish and even that wasn't a correction, but a market collapse on the back of a heavily under-regulated aspect of the debt capital market...

 

[DJ...]

So are you trying to time the market?

That's the problem right there. None of us will be right about whether a correction is due or not. There is simply no way of knowing. The market is its own beast, and if you're timing the market based on guesses from others then you should rather have your money in a fixed interest account with your bank, to be frank...

 

[R13...]

So are you trying to time the market?

What is your goal with the investment?

If contributing monthly one just keep going at it through the ups and the downs.

My time goal is at least 10 years. I think I can maintain an aggressive portfolio for 15 years and then start thinking about pulling back into balanced funds and what not.

My opinion is that if there are downs I will simply use them to buy more. I don't contribute monthly at the moment I just make lump-sum deposits a few times a year.

 

[DJ...]

My time goal is at least 10 years. I think I can maintain an aggressive portfolio for 15 years and then start thinking about pulling back into balanced funds and what not.

Well then stop worrying about the short-term. You'd only concern yourself with corrections if you're expecting them to tank the world's economy. There was a recent thread where precisely this was discussed - the possibility of a correction and its impact. Can't recall what it was called now...

 

[DJ...]

Aha, here it is - http://mybroadband.co.za/vb/showthread.php/573061-Billionaires-Dumping-Stocks-Economist-Knows-Why

 

[R13...]

Well then stop worrying about the short-term. You'd only concern yourself with corrections if you're expecting them to tank the world's economy. There was a recent thread where precisely this was discussed - the possibility of a correction and its impact. Can't recall what it was called now...

Yeah this advice I received is very puzzling and I suspect that the people who gave it are just looking to get me out of what I'm into one of their owned promoted funds because one of the funds they recommend is an equity fund in any case.

 

[HavocXphere]

@DJ: Speaking of timing the market...do you think its more feasible to timing individuals stocks than the market as a whole?

 

[DJ...]

Yeah this advice I received is very puzzling and I suspect that the people who gave it are just looking to get me out of what I'm into one of their owned promoted funds because one of the funds they recommend is an equity fund in any case.

Oh, you've met one of the delinquents who calls himself an FA but is just a glorified salesman. There's a difference between a proper FA and someone who was recently employed by the likes of one of Liberty's many off-shoots who recently graduated or moved over from selling tupperware, and has undergone a single course in market basics. You'll find a million job adverts for these types online - they know enough to get them and their clients into trouble - that's about it...

 

[supersunbird]

That's the problem right there. None of us will be right about whether a correction is due or not. There is simply no way of knowing. The market is its own beast, and if you're timing the market based on guesses from others then you should rather have your money in a fixed interest account with your bank, to be frank...

The only way to really protect oneself properly is to have a diversified portfolio and rebalance it every now and then so the ratios remain how you want it to.

R13, I see you just in Satrix Divi and Coronation Top 20. I do think it could be good to go into a Property Fund (ETF or Unit Trust) and then also something international. Coronation Global Managed Fund performed 5% better that the Coronation Industrial Fund which gave an exceptional 39.62% over the past 12 months. Just to show you, you cant predict the market or even the areas it will grow best in. Last year this time nothing touched the performance of industrials.

My personal fund ratios are 50% local equity (2 funds), 25% property (1 fund) and 25% foreign (2 funds). Some of the funds have overlapping shares in them, but they have different targets, like say a top 20/40 fund and a dividend focused fund, so that just means I get the best of both worlds on those shares.

 

[DJ...]

@DJ: Speaking of timing the market...do you think its more feasible to timing individuals stocks than the market as a whole?

Yes, especially if you know the industry and the companies, but it's certainly not for everyone. Becoming an expert on a single stock is actually quite easy with some cursory knowledge of trading. But then you get the likes of the old infamous marco who believes that past performance dictates future performance, and that's the kind of dangerous lack of knowledge that will get you in trouble, no matter how smart you think you are.

Timing the market as a whole is a different ballgame entirely and requires a much deeper understanding of economics than simple watching a specific set of companies over the course of a few years...

 

[R13...]

I am in coronation top 20 and industrial and then satrix divi and industrial. I will probably get out of the coronation industrial for a mix of global and property.

Any good emerging markets recommends?

 

[DJ...]

Any specific reason why you want out of INDI? You have to critically think this sort of thing if you want to become an informed investor. Without critically thinking it, you're just guessing, and that's as dangerous as throwing darts at the business section of the paper...

 

[supersunbird]

My two foreign funds are both with Coronation, Global Managed and Emerging Markets. Both have grown nicely, performing better than the Top 20 or Satrix Divi. Property fund staying stable.

 

[R13...]

Any specific reason why you want out of INDI? You have to critically think this sort of thing if you want to become an informed investor. Without critically thinking it, you're just guessing, and that's as dangerous as throwing darts at the business section of the paper...

I have satrix indi and coronation indi so I want to move the one into something else.

 

[DJ...]

I have satrix indi and coronation indi so I want to move the one into something else.

Fair enough...

 

[AlmightyBender]

Advice:
Buy yourself "The Behavior Gap" by Carl Richards. Will help you better understand your motivation and reasons for wanting to change your strategy and so ultimately make better decisions.

My opinion is that trying to time the market is pretty much gambling. Rather set a financial and life goal and pick investments that will get you to that goal. Then your only reason to change investments is to realign with your goal.

 

[chrisc]

If you are concerned about losses in the equity market, you need something with which to replace it

Is this going to be commercial property, diamonds, gold, rare stamps & coins or something in the venture capital market?