Follow this thought experiment. If you got a time machine, preset to March 17, 2020, what would you do with your current knowledge? I don’t know why, but yesterday I got lost in this thought for a long time and started taking it so far in my head that I actually got annoyed when I woke up to reality.
My route would go something like this:
Money in. From somewhere, no matter where. A payday loan, an investment loan, whatever.
First purchase: all the money into Neste, for a short hold and 50% profits taken.
Then all assets into Genius Brands, sold at the early June peak.
At this point, the assets have multiplied, so let’s grab Tesla, which rose about 50% at the turn of June-July. That “will do” and money out.
And then, back to the hype and all assets into Kodak. Sell at the peak, yay.
Put the money into Tesla and sell all assets on September 1st.
Wait a couple of days and then all in again on Vow Asa. I would sell everything over the course of this week - the pot would be so big already that it wouldn’t all sell at once.
Profit.
At this point, I would call my boss and thank them for the years. I would live a millionaire’s life as a gentleman of leisure, yet moderately enjoying family life and not squandering my money away.
The thought is completely absurd now, and if this is considered silly, then flag it.
I don’t know if it’s absurd or silly, but it made me laugh.
Yes, I think an essential part of learning is to reflect enough on past events and one’s own actions. I believe that even though every dip is different, there are many things in this corona dip and market behavior that will be diligently studied in the future - and undoubtedly taught to AI as well. One lesson from your post could at least be that some stocks react faster than others - probably both downwards and upwards. And that you didn’t necessarily have to be on the buy button exactly on March 17th, but could have made so-called good deals later as well.
For me, Corona was actually the first big stock market dip in my adulthood and investment experience. Luckily, I was alert and made a few good purchases, but overall I regret being too cautious, even though my investment strategy is otherwise quite reckless and often foolish.
I listened to a lot of podcasts (Rahapodi etc.) which gave me bad influences, uncertainty and fear spread from the media and I took too much of a setback, and in retrospect I should have just followed my intuition and put all my cash in. In March, I got really strong quality companies ridiculously cheap, and I regret most that I didn’t realize to buy American tech giants (Amazon, Microsoft, Tesla) because now my portfolio would be quite nicely in the black..
Luckily, at least somewhere, Finnish defensive quality companies were recommended, so I was able to pick up Fortum and Sampo from the bottom. Another very good purchase in the dip was iShares Global Clean Energy ETF, which has risen quite nicely.
Next time a big crisis comes and the prices fall, I’ll just put all my cash in directly. Common sense should have told me that now you can get Amazon, Microsoft etc. cheap, which will only grow over time.
Yeah. Having seen three stock market dips, they’ve all been different and started for different reasons. You always have to think about what’s essential this time… or do you? Maybe not. I, for one, have come to think that one should always have enough companies “under investigation” so that their underlying quality is clear (sufficiently strong financial position) and, on the other hand, it would perhaps come to mind better and faster how the current crisis affects their operations.
If you’ve seen three crashes, you learn that you don’t really know anything and that you can’t predict the future. In the 2008 crash, people bought too early and got hammered when prices continued to fall, and we stayed low for quite a while. Having learned from this, in the Corona dip, people expected the same thing to happen, and many didn’t buy stocks in March-April because they expected to go even deeper. RobinHood kids beat Warren Buffets because of this. One just has to keep a cool head and start buying, diversifying over time, as soon as it looks “cheap enough.”
Good point. And that’s exactly what I did, making purchases both before and after the bottom. My biggest “mistake” this time was probably underestimating the speed of the recovery, and so I was (in hindsight) too cautious and my purchases were too small. Unusually for previous crashes, I did have some capital free…
The first sentence is the most essential . During the financial crisis, I froze and did nothing. During the corona crisis, I first bought too early, then more from the bottom of the dip (even on the cheapest day). I even ended up using leverage, even though it scared me. But the mistakes of the corona crisis: I only bought on the way down to the dip, practically nothing on the way up. In addition, I got rid of the leverage too early, although I still have a 100% investment rate.
I made a similar mistake, I bought the whole trip in small sums as we went down.
I also hit some buys at the bottom, but stopped buying too early on the way up. Well, I did get some good buys, a lot of experience, and most importantly, learned about myself when the portfolio numbers were blood red. Now I already miss those big negative days and emotions.
Same feelings. I even bought more on the way down in March. April was the hardest month, in my opinion, when it had already risen about 20% from the bottom. The thought began to creep in that I should lighten my holdings, and I did lighten them a bit. I didn’t dare to buy. I had a strong feeling that we might dip back into the pit, and my purchases were on hold. In May, the idea began to clarify that we were going up, and quite fast.
What would I do differently? Just like the starter, I’d go all-in from the bottom, even on Tesla. It’s easy in hindsight. However, one must remember, what if the Fed had delayed and we had dropped another 20-30% from the March lows? A completely possible scenario, so there’s no need to beat oneself up if one didn’t scrape up everything available from the bottom that actually materialized.
My first crash, a corona dip, was also the first one I experienced, and my experience is also that during a crash, you get lost in the conflicting noise around you.
I don’t know if, when the next crash starts, one could thoroughly familiarize themselves with the reasons for the crash and make purchases, perhaps from Fibonacci levels. I do intend to do as was said in previous posts, meaning I will try to first assess the overall picture, after which I will try to assess the winners and losers of the situation.
To add, next time I won’t fuss unnecessarily if there are no genuinely strong reasons.
I’ve had similar experiences myself and could learn from them in the future. Of course, this fits better into the investment mistakes thread.
My brother-in-law lives in Oslo, and in the spring, being a sports guy, he started betting on XXL, buying at around €3.5 and tipping me off. I didn’t dare to buy, but within a few months, you could put a 2 in front of that share price.
Yep, exactly, basically, one couldn’t predict how long the crash would be or predict that central banks would pump money like that, making the crash really short.
However, common sense should have immediately screamed “BUY” specifically into American tech giants because their business wouldn’t melt due to corona, but rather grow, and I understood that in the back of my mind immediately during the drop. + An endless amount of money doesn’t mess up a crisis (Amazon, Microsoft, Facebook, Apple, etc.). I wouldn’t put a single euro into traditional manufacturing or financial companies.
And now that valuations are at an all-time high, I would have sold them off; I believe we’ll still see a small dip in connection with elections or something else, as the valuation levels of tech giants aren’t entirely justified anyway.
Yeah, and it definitely had an effect when there was so much fear-mongering everywhere, and since I had no experience with crashes, I started to get scared too. Next time, I’ll be smarter and follow my own instincts.
This was also well said: “Yeah. Having seen three stock market dips, they’ve all been different and started for different reasons. You should always think about what’s essential this time… or should you? Maybe not.”
Basically, every crash is a buying opportunity for quality companies in megatrend industries, regardless of what caused the crash.
You should also take the Eurojackpot numbers for the coming weeks with you in the time machine ;).
In my opinion, the most important tool for developing in investing is a so-called investment journal, in which I, at least, carefully record what was done when and WHY. I often review my actions and try to learn from my mistakes. Additionally, when prices fall, I seek support for my decisions in my entries. For each company, I record the investment goal, investment period, potential risks, and the justifications for the investment decision.
. During the financial crisis, I froze and did nothing. During the corona crisis, I first bought too early, then more from the bottom of the dip (even on the cheapest day). I even ended up using leverage, even though it scared me. But the mistakes of the corona crisis: I only bought on the way down to the dip, practically nothing on the way up. In addition, I got rid of the leverage too early, although I still have a 100% investment rate.