Investing / Holding / Selling / Rebalancing

[Basil]

Nice bounce on the US markets today but I remain cautious.
Average Bear market is 15 months and 31%.  Long way to go before we can say we are out of the woods.
A lot of drivers, (high inflation, massive money printing and stimulus) to name just 2 that suggest this Bear market could be worse than average.
High quality bonds around 5.5% look attractive to me at this point in time.

[Left Field]

Nice bounce in my NZX portfolio (over 10%) for the month of July. Roll on August results.

NZX up to a 3 month high

The New Zealand sharemarket ended the last week of July with a 1.4% surge to a nearly three-month high.

The benchmark S&P/NZX50 index closed up 164 points at 11,492 following a 1.7% jump on Thursday.

"I think the local markets are on the pace of a strong rebound following the US markets' rally that was boosted by the Fed's less aggressive rhetoric," said Tina Teng, CMC Markets analyst.

USA looking good for the first time in many months (see chart below.)

(That said; ..... much depends on Ukraine, Taiwan and China... )

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[Left Field]

Be still my beating heart. Crikey in the last week two companies I hold have been in Trading Halts.

These halts have once again shown me the wisdom of buying your shares in small instalments, ( i.e. not all at once....ie I'm not a fan of backing up the truck....when a small trailer is safer) and constantly working to get your Dollar Cost Average (DCA)  as low as possible.

Two more reflections;

1.) There is an old adage that you shouldn't buy in a down trend. My thinking is different, if you are confident in the long term strength of your company, then buying in what you perceive as 'unrealistic  or emotional down turn'  in order to lower your DCA, can be a smart move. PEB at 40c was arguably such a time.

2.) Sometimes FA gets it wrong. In recent 'down' times we have seen FA guru's say that based on PE multiples ATM's SP was only worth $2 to $3 and FPH's SP worth as low as $15.00 . Perhaps if WW 3 breaks out they might be right, but if such scares recede, then I think their figures have been way too conservative given the long term potential of such companies . FPH around $20 was arguably a  v good opportunity.

Constantly working to improve your portfolio's DCA's makes sense and 'market 'scares'  can provide opportunities for the long term believers.

[Plata]

1.) There is an old adage that you shouldn't buy in a down trend. My thinking is different, if you are confident in the long term strength of your company, then buying in what you perceive as 'unrealistic  or emotional down turn'  in order to lower your DCA, can be a smart move. PEB at 40c was arguably such a time.

The problem with buying in a downtrend is it is often very easy to do. IMO it is very easy to buy a stock at a cheaper price than you first did because it is both "a better deal" and reduces your average price (reducing the feeling of having made a mistake).
The other problem is if you buy something and it starts going down it suggests that the fair value that you perceive is higher than that of other market participants. That may suggest that they have information that you don't or vice versa, or that one of you is simply wrong. I think if you intend to average down you should re-evaluate your investment case, there might be new information available or some you might have missed previously. There is always a reason for the tide changing and it is not always the moon.

[kasper]

The problem with buying in a downtrend is it is often very easy to do. IMO it is very easy to buy a stock at a cheaper price than you first did because it is both "a better deal" and reduces your average price (reducing the feeling of having made a mistake).
The other problem is if you buy something and it starts going down it suggests that the fair value that you perceive is higher than that of other market participants. That may suggest that they have information that you don't or vice versa, or that one of you is simply wrong. I think if you intend to average down you should re-evaluate your investment case, there might be new information available or some you might have missed previously. There is always a reason for the tide changing and it is not always the moon.

There is always a reason the tide is changing and its mostly an irrational and fickle market in the majority of cases, trust the market about as much as you would a bull in a China shop more than 50% of the time.

[Basil]

I have found over 40 years of investing that where you make really serious money is where you really believe in the investment case, e.g. their business model, the management and the metrics (fundamental analysis) and technical analysis also supports your fundamental analysis.

Yes the market is to a large extent driven by fear, greed and sentiment so it can appear irrational at times but in the long run its a weighing machine not a voting machine and earnings really do matter. 
Disc: I am starting to gradually move out of some of the very high cash allocation (70%) I have hoarded since Nov 2021 into high conviction positions which are supported by emerging signs of TA.

[KW]

1.) There is an old adage that you shouldn't buy in a down trend. My thinking is different, if you are confident in the long term strength of your company, then buying in what you perceive as 'unrealistic  or emotional down turn'  in order to lower your DCA, can be a smart move. PEB at 40c was arguably such a time.

No guesses as to what I think about that 

I started selling back in Jan-Feb and have mostly avoided the huge share market meltdown (should have been 100% avoided, but hey, we are all human lol).

I have started buying the last few weeks as the TA trend turns, in particular the healthcare/biotech sector seems to have based and is now bolting out of the blocks, so that's mainly what I'm buying.  Still to see a period of consolidation for tech stocks in general, but I think they will be next up, but I'm not in a hurry to buy them. 

[Left Field]

No guesses as to what I think about that 

I started selling back in Jan-Feb and have mostly avoided the huge share market meltdown (should have been 100% avoided, but hey, we are all human lol)....

Good to see you are human too......90% of the time I agree with you...... but If I divert from the 'trend' and buy in the 'dips' .... then I'm bloody careful. 

[KW]

In the current situation, anchoring to prior prices is a mistake.  Covid prices were simply insane and unconnected to any fundamental valuation principle.  Therefore, buying as they fall may not pay off as companies may take years (if ever) to get back to those prices.  I dont think A2 will ever be $20 again for instance.  And former high fliers like Appen (APX.ASX) have lost 90% of their valuation and still future earnings visibility is unclear.  Some companies just go through natural deaths as they are replaced by more innovative and nimble competitors (which I think Facebook is going through). 

Predicting the future is hard, its much easier to assess current conditions and buy the things that are going up right now.   

[kasper]

In the current situation, anchoring to prior prices is a mistake.  Covid prices were simply insane and unconnected to any fundamental valuation principle.  Therefore, buying as they fall may not pay off as companies may take years (if ever) to get back to those prices.  I dont think A2 will ever be $20 again for instance.  And former high fliers like Appen (APX.ASX) have lost 90% of their valuation and still future earnings visibility is unclear.  Some companies just go through natural deaths as they are replaced by more innovative and nimble competitors (which I think Facebook is going through). 

Predicting the future is hard, its much easier to assess current conditions and buy the things that are going up right now.   

No A2 won't see $20 again but FPH will see $37 again and then some. 

[CG]

Is it really a matter what price for a certain stock will be in a few years time when you are a trader?

[Basil]

In the current situation, anchoring to prior prices is a mistake.  Covid prices were simply insane and unconnected to any fundamental valuation principle.  Therefore, buying as they fall may not pay off as companies may take years (if ever) to get back to those prices.  I dont think A2 will ever be $20 again for instance.  And former high fliers like Appen (APX.ASX) have lost 90% of their valuation and still future earnings visibility is unclear.  Some companies just go through natural deaths as they are replaced by more innovative and nimble competitors (which I think Facebook is going through). 

Predicting the future is hard, its much easier to assess current conditions and buy the things that are going up right now.   

Bingo !!

[Left Field]

.....Disc: I am starting to gradually move out of some of the very high cash allocation (70%) I have hoarded since Nov 2021 into high conviction positions which are supported by emerging signs of TA.

.... I have started buying the last few weeks as the TA trend turns, in particular the healthcare/biotech sector seems to have based and is now bolting out of the blocks, so that's mainly what I'm buying.  Still to see a period of consolidation for tech stocks in general, but I think they will be next up, but I'm not in a hurry to buy them. 

Crikey, nice to see I'm not the only one getting slightly optimistic at the moment.

[KW]

Crikey, nice to see I'm not the only one getting slightly optimistic at the moment.

Cautious optimism is my phrase of the day     When you've been round the block a few times, it all starts to look a bit familiar LOL

I would like to say thanks to Cathie Wood and her ARKK fund.  Its been the best market barometer I have found. I've been watching the stocks within it slowly cruise through their 50 and 200 day MAs.  As more of them did it, I got more optimistic and bought more stocks.  It pays to remember that an index, particularly one that is market cap weighted, is a lagging indicator.  One has to watch what the duck is doing under the water, not above it, to figure out if its going to go anywhere.  High growth stocks like biotech started falling in Feb 2021, so they have been in a long 19 month bear market, and the capital destruction of individual stocks has been 80-90% in many instances.  The Nasdaq is useless now because all it really tracks are Meta/Alphabet/Microsoft/Apple/Amazon/Tesla. By the time it turns, most of the good gains in the smaller stocks will already be done.

[Cod]

Bottoming is a process, not an event.