Aaron the numbers show most people don't actually draw their KiwiSaver straight away , more like into the 70's so they have a little more time to wait it out ....
https://www.stuff.co.nz/business/mon...ng-65-anz-says
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Aaron the numbers show most people don't actually draw their KiwiSaver straight away , more like into the 70's so they have a little more time to wait it out ....
https://www.stuff.co.nz/business/mon...ng-65-anz-says
Also if you change into a cash fund now, there is the risk that you may miss out on a future recovery of bonds and risky assets, locking in your losses. To boot you will also have the effect of the current high inflation rate eroding the value of your KiwiSaver fund, all while the tax is paid on the income the fund earns.
Interesting article from RBNZ on Inflation and the NZ tax system (income tax without inflation allowance, absence of a general capital gains tax)
https://www.rbnz.govt.nz/-/media/pro...r52-1carey.pdf
As per yesterday and as I thought, unconvincing sell volume once again, sharks calmly circulating around picking up scraps from the reef fish activity.
They are probably listening to their Kiwsaver provider whose fee is based on how much they have invested. As Charlie Munger once said show me the incentive and I will show you the outcome. Although he is the other half of the team that invest long term and don't look at stock market fluctuations.
You would hope that a registered financial advisor would be encouraging older clients to reduce their equity exposure as they get older.
I would think don't fight the fed on the way up so don't fight them on the way down as well. That said inflation is probably higher than interest rates so we still have negative real yields, compare that to current capital losses it makes for a tricky investing environment it might be a rough time for a lot of portfolios.
I notice most of my share investments have switched to DRPs so companies are all wanting to hold onto their cash.
Well, as they say on Wall Street. Nobody rings a bell at the top or the bottom of the market.
You can only control how you react to the direction of the market - the market will recover but only in good quality stocks.
So make sure your portfolio is positioned accordingly and then, chill, relax and go with the ride.
About now is the time to clear up some statistical misinformation..I read the other day not to worry about the Bear, it is short lived (av 8 months) and the average drop is -38%..Compared to a long living Bull (av 3-5 years) and average rise of+114%.
OK that sounds like hold strategy is appealing...but is it...The range goes from ~-20% to -83% to get that -38% average..The last big minus number was the 2000 Nasdaq crash..
Wall St History
In 2022, however, the markets began to creep downward. The S&P 500 slipped into an official bear market on June 13, while the Nasdaq entered bear market territory in April 2022.23
Other bear markets, as measured by the S&P 500, include:4
- 2007-2009: down 57% over 1.4 years
- 2000-2002: down 49.1% over 2.5 years
- 1987: down 33.5% over 101 days
- 1980- 1982: down 27.1% over 1.7 years
- 1973-1974: down 48% over 1.7 years
- 1968-1970: down 36.1% over 1.5 years
- 1966: down 22.2% over 240 days
- 1961-1962: down 28.0% over 196 days
- 1957: down 20.7% over 99 days
- 1948-1949: down 20.6$ over 363 days
- 1946: down 26.6% over 133 days
- 1940-1942: down 34.5% over 1.5 years
- 1939-1940: down 31.9% over 229 days
- 1938-1939: down 31.9% over 229 days
- 1937-1938: down 54.5% over 1.1 years
- 1934-1935: down 31.8% over 1.1 years
- 1933: down 29.8% over 95 days
- 1932-1933: down 406% over 173 days
- 1930-1932: down 83.0% over 2.1 years
- 1929: down 44.7% over 67 days
Ref: The Balance.
As you can see most Bear Market Cycles are short lived..Life expectancy of a bear doesn't correlate with the degree of grizzliness. Some are short sharp affairs some are drawn out but more than a couple of years is rare.
The Balance prefers the hold and accumulate strategy ..
I have witnessed 6 this will be the 7th Bear Market cycle and I believe common sense is best..If the fire gets to hot, get out. Over and over again I witness people holding to the point of total despair only to give up and sell near the bottom and vice versa, too afraid to buy after the bottom because of the bad experience + expectancy of more bad things, so they wait and eventually buy FOMO style near the top.
If you are going to Hold you have to have mental fortification and a "steel balls personality" qualities that only a few of us process. You have to expect one of your companies in your portfolio to go bankrupt, managed to survive but permanently damaged or taken over cheaply and delisted.
Have a look back to 2009 - 2010 on the forum sites..I remember buying in and every one else (except Stranger Danger) were crying doom..It was "the first to venture outside after the total destruction got to pick up the gems lying in the street"..That wasn't brave it was buying at low risk /high reward.
If you do hold and all of your company stocks survive post-bear then look at the table below to see the percentage rise your stocks need to return to breakeven. Often on average this can take a couple of year of Bull Market conditions.
Attachment 13898
How bad could this Bear be:
Usually the potential never eventuates but you need to understand Secular Cycles (Bull, Bear very long term trends of the PE(10) ratio) to see the potential which apart from Winner69 I know of very few else on this Forum. However a basic look at the PE(10) ratio (Shiller) over time gives you some sort of perspective of how bad this Bear could be..The quicker the drop the more severe it is..for example if it takes 5years to drop from 30 to 15 it does not necessary suggest a halving of the price of equities (S&P500)..reason being the E in PE(10) is lagging and earnings over the next 5 years not doubt will rise moderating the capital losses..The potential however without earnings growth or a sudden fall is there for all to see..
If a sudden drop occurs (e.g Cyclic Bear market cycle occurring over a period of one year) and the PE(10) falls to match that of the 2010 Great Recession the S&P500 potential fall will be 50% . (see chart below).
Attachment 13897
Note: As the PE(10) is annualised over 10 years (secular) the cyclic Co-vid Bear cycle was too brief and didn't register. However looking at the chart history things are possible to be far worse. Looking further back in history the potential could be far worse than -50%..Looking forward say the next 10 years if the PE(10) ratio keeps trending down (termed a Secular Bear Cycle) the S&P500 will be a poor performer..Fundamentally that means Share price % gains will be less than the % earnings gains..
OK so .. I see what you say..but all this won't affect me..Basically after this Bear Market Cycle the recovery of ones portfolio return to break even could take longer than normal...eg, If the Bear Market wipes out 50% of value it would require a +100% rebound for your portfolio to be at the same value before the Bear and this could take years....the Fundamentals point to a greater risk this time around for those using a holding strategy..As with all predicted risks the outcome is not conclusive, but I would like to use the strategies that have risk/reward odds in my favour.