What did you learn from the post-Brexit bloodbath?

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peterinjapan
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What did you learn from the post-Brexit bloodbath?

Post by peterinjapan » Sat Jun 25, 2016 12:19 pm

Like some, I did my best to see Friday's huge drop as a "sale" and add to my investments, buying things I already wanted to own at their new lower prices (though only a little). Some observations from my end:

A) First, the value of being organized. I've recently switched to Fidelity, which has an excellent website (and iPhone and iPad apps), and I had everything I was interested organized in watch lists. Instead of scrambling for something to buy, I had everything I cared about in a couple of lists I could browse easily, and sort by daily loss (to see what had fallen the most).

B) My personal strategy of never buy all at once but nibble in $10k or $20k chunks over time paid off, as I happened to have a bunch of cash still. Eventually I'll be fully invested, but I tend to take the attitude that "if you don't know if you should buy or not, always buy a little."

C) I own some IVE, iShares Value ETF, and was interested in seeing if it dropped at a less terrible rate than my other investments. Presumably, value (consumer staples heavy) is better in a crash, but it dropped 3.8%, not good at all. I take it "value" isn't worth my time going forward?

D) As expected, the bond ETFs I hold (CRED, BND) all rose instead of fell, bless their hearts. Did they rise because bonds fell, or because the likelihood of a U.S. Interest rate increase was lower? What bond funds do folks here favor? (I tend to choose ETFs over mutual funds because of FIdelity's ridiculously high mutual fund rates.)

E) Likewise, REITs fell only a little, .88% for VNQ for example. Did they fall less because of the improved low interest forecast, or because REITs are somehow better during a stock rout? Is anyone bullish on REITs going forward?

F) I keep thinking I should be putting in limit orders to buy, say, an S&P 500 fund at -500 the current value, in case things really spike low, which is what happened. Does anyone else do that?

So, what did you learn from Friday's trading, that you can share with others?

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Re: What did you learn from the post-Brexit bloodbath?

Post by Sidney » Sat Jun 25, 2016 12:22 pm

Bonds do the job they are supposed to do in my portfolio.
I always wanted to be a procrastinator.

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Re: What did you learn from the post-Brexit bloodbath?

Post by livesoft » Sat Jun 25, 2016 12:24 pm

I learned that Bogleheads.org TLH indicator is alive and well.
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Re: What did you learn from the post-Brexit bloodbath?

Post by LadyGeek » Sat Jun 25, 2016 12:25 pm

See this thread: Brexit: What does Vanguard think?

"Don't just do something, stand there."

This is a good test for "staying the course". If you get uncomfortable because the market is tanking right now (it's not all that much), then change your allocation to hold more bonds.
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Re: What did you learn from the post-Brexit bloodbath?

Post by Tycoon » Sat Jun 25, 2016 12:38 pm

I learned that it wasn't a bloodbath.
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Some are predisposed to consistantly lose money. Don't be a sheep.

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Re: What did you learn from the post-Brexit bloodbath?

Post by jjface » Sat Jun 25, 2016 12:39 pm

peterinjapan wrote:Like some, I did my best to see Friday's huge drop as a "sale" and add to my investments, buying things I already wanted to own at their new lower prices (though only a little). Some observations from my end:

A) First, the value of being organized. I've recently switched to Fidelity, which has an excellent website (and iPhone and iPad apps), and I had everything I was interested organized in watch lists. Instead of scrambling for something to buy, I had everything I cared about in a couple of lists I could browse easily, and sort by daily loss (to see what had fallen the most).

B) My personal strategy of never buy all at once but nibble in $10k or $20k chunks over time paid off, as I happened to have a bunch of cash still. Eventually I'll be fully invested, but I tend to take the attitude that "if you don't know if you should buy or not, always buy a little."

C) I own some IVE, iShares Value ETF, and was interested in seeing if it dropped at a less terrible rate than my other investments. Presumably, value (consumer staples heavy) is better in a crash, but it dropped 3.8%, not good at all. I take it "value" isn't worth my time going forward?

D) As expected, the bond ETFs I hold (CRED, BND) all rose instead of fell, bless their hearts. Did they rise because bonds fell, or because the likelihood of a U.S. Interest rate increase was lower? What bond funds do folks here favor? (I tend to choose ETFs over mutual funds because of FIdelity's ridiculously high mutual fund rates.)

E) Likewise, REITs fell only a little, .88% for VNQ for example. Did they fall less because of the improved low interest forecast, or because REITs are somehow better during a stock rout? Is anyone bullish on REITs going forward?

F) I keep thinking I should be putting in limit orders to buy, say, an S&P 500 fund at -500 the current value, in case things really spike low, which is what happened. Does anyone else do that?

So, what did you learn from Friday's trading, that you can share with others?

B) Prices were this low a month or so ago - so not sure if the nibble strategy pays off.

C) Think long term. Value is a long term strategy and you should try not to interpret anything into the past day. The difference is minimal. I noticed Momentum (Mtum) only dropped 2% but that doesn't mean it will fare as well next time. Drops happen for different reasons and there is too much involved to pick a winning strategy. Think long term.

D) Flight to safety probably - US treasures rose nicely. Note Fidelity have plenty of good mutual funds that rival vanguards and cost nothing (eg FIBAX Intermediate treasuries, FSITX total bond market). Most people like total bond market. Or go with Bogle and have half corporates and half treasuries which I mostly do.

E) Probably more to do with the nature of the event. US real estate is not as related to overseas affairs. International reits were still hit pretty hard due to currency risk.

F) That would be market timing. A 25% drop may warrant buying for those with strong stomachs or who like the idea of tactical asset allocations.

I think what I learned the most was not to do anything when things like this happen. It was a mini practice in case of a much larger crash.

I did have some new money that I put in and learnt that I need more patience as I ended up buying near the high of the day.
Last edited by jjface on Sat Jun 25, 2016 12:48 pm, edited 2 times in total.

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Re: What did you learn from the post-Brexit bloodbath?

Post by saltycaper » Sat Jun 25, 2016 12:40 pm

peterinjapan wrote:
C) I own some IVE, iShares Value ETF, and was interested in seeing if it dropped at a less terrible rate than my other investments. Presumably, value (consumer staples heavy) is better in a crash, but it dropped 3.8%, not good at all. I take it "value" isn't worth my time going forward?
It's a little heavier on financials than the overall market, and financials got hit harder than many other sectors. I hope nobody questions their strategy due to portfolio performance over a few years let alone a single day, but whether the iShares Value ETF is the best way to play value, I don't know, as I'm not familiar with it.
peterinjapan wrote:D) As expected, the bond ETFs I hold (CRED, BND) all rose instead of fell, bless their hearts. Did they rise because bonds fell, or because the likelihood of a U.S. Interest rate increase was lower? What bond funds do folks here favor? (I tend to choose ETFs over mutual funds because of FIdelity's ridiculously high mutual fund rates.)
If bonds fell, the ETFs would fall too. (Unless you meant bond yields fell, which of course they did.) They increased in value because bond prices increased in value, Treasuries in part due to flight to quality, bonds overall in large part due to lower interest rate expectations.
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Re: What did you learn from the post-Brexit bloodbath?

Post by Mrxyz » Sat Jun 25, 2016 12:42 pm

I learnt that there is noise.........
big noise and small noise.........
Brexit is perhaps big noise ..... don't know or care as I do not have to know or care.
Have an IPS and chug along the course.

I also learnt that if you reacted to this so called Brexit bloodbath then you have NOT understood the concept of 'Stay the course' and having an IPS. It serves as a test to see if you can stay calm and do nothing.
Last edited by Mrxyz on Sat Jun 25, 2016 12:53 pm, edited 1 time in total.

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Re: What did you learn from the post-Brexit bloodbath?

Post by quantAndHold » Sat Jun 25, 2016 12:44 pm

I learned that I should do a better job of staying up on current events. Had I done that, I probably would have used some of my discretionary trading money to short the pound. Before the vote, currencies were priced for the vote to be to remain, even though the polling was clearly going the other direction in he last few days.

I also learned that "bloodbath" is a highly overused term in the financial press. While I think there are massive long term implications to the results of the vote, it wasn't exactly a bloodbath in the markets. I'm ready, willing and able to buy bargains (my IPS allows for a certain amount of taking advantage of any low hanging fruit I find in the markets), but didn't really find anything actionable yesterday. Maybe things will get worse next week, and I'll buy something.

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Re: What did you learn from the post-Brexit bloodbath?

Post by oldcomputerguy » Sat Jun 25, 2016 12:51 pm

I learned that I could stay the course during an INTERNATIONAL MELT-DOWN!! (at least that's what all the news said it was). Nothing hit my rebalance bands, I saw nothing that prompted me to take any action. So no change, didn't buy, didn't sell, just stood here.
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Re: What did you learn from the post-Brexit bloodbath?

Post by peterinjapan » Sat Jun 25, 2016 12:54 pm

quantAndHold wrote:I also learned that "bloodbath" is a highly overused term in the financial press.
Touché

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Re: What did you learn from the post-Brexit bloodbath?

Post by frankbrenowitz » Sat Jun 25, 2016 12:57 pm

For a well-diversified portfolio, it is debatable whether Friday's market movement even qualifies as a "really bad day". It confirms for me that the time spent developing an IPS and implementing an appropriate asset allocation for my age and risk profile was indeed time well spent. I am so happy to have found this site.

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Re: What did you learn from the post-Brexit bloodbath?

Post by peterinjapan » Sat Jun 25, 2016 1:02 pm

frankbrenowitz wrote:I am so happy to have found this site.
Absolutely! If only I'd found it years earlier.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Grt2bOutdoors » Sat Jun 25, 2016 1:07 pm

Take John Bogle's advice - "Do not look at your account values, just keep adding money to it and when the time comes, you'll be amazed at what it will be worth".

I did not take ^^^^ that advice, wow, even my highly diversified portfolio received a nice trim :oops:
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Re: What did you learn from the post-Brexit bloodbath?

Post by stevewolfe » Sat Jun 25, 2016 1:07 pm

Tycoon wrote:I learned that it wasn't a bloodbath.
This. Diversification for the win.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Toons » Sat Jun 25, 2016 1:11 pm

Sidney wrote:Bonds do the job they are supposed to do in my portfolio.
+3 :happy
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Re: What did you learn from the post-Brexit bloodbath?

Post by Aptenodytes » Sat Jun 25, 2016 1:11 pm

My experience was almost the exact opposite of yours. My AA was already where I wanted it to be, and I had no cash on the sidelines. Friday's movement didn't even come close to triggering any rebalancing needs.

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Re: What did you learn from the post-Brexit bloodbath?

Post by BHUser27 » Sat Jun 25, 2016 1:14 pm

"What did you learn from the post-Brexit bloodbath?"

I learned my chosen AA is working quite well.

Going to take a nap now.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Phineas J. Whoopee » Sat Jun 25, 2016 1:16 pm

I learned that a week ago my stock allocation had drifted up to 42.5%, above target but well within my tolerance band, and that as of Friday's market close it was 41%, still above target.

Stocks fluctuate, but I already knew that.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Buddtholomew » Sat Jun 25, 2016 1:24 pm

Phineas J. Whoopee wrote:I learned that a week ago my stock allocation had drifted up to 42.5%, above target but well within my tolerance band, and that as of Friday's market close it was 41%, still above target.

Stocks fluctuate, but I already knew that.

PJW
Exact same experience. Thought I had a problem with my calculations, but a 65/35/5 declined only 2% for the day. For the trading week, I was down less than that amount.

Edited to read 65/30/5. Thanks PJW for pointing it out.
Last edited by Buddtholomew on Sat Jun 25, 2016 3:58 pm, edited 1 time in total.
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Re: What did you learn from the post-Brexit bloodbath?

Post by DayOfChange » Sat Jun 25, 2016 1:28 pm

A 3.5% drop is not a "bloodbath". likely the fall is not over. Many panic sell orders by investors in mutual funds or indexes will go through on Monday and Tuesday. I am a big fan of staying the course and will continue my monthly investments, but I think it's folly to think this is a buying opportunity of a lifetime. If/when the S&P 500 hits 1600, that would be a bloodbath. Then I would do what any good boglehead would do, buy more VTSMX.

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Re: What did you learn from the post-Brexit bloodbath?

Post by whodidntante » Sat Jun 25, 2016 1:33 pm

peterinjapan wrote: C) I own some IVE, iShares Value ETF, and was interested in seeing if it dropped at a less terrible rate than my other investments. Presumably, value (consumer staples heavy) is better in a crash, but it dropped 3.8%, not good at all. I take it "value" isn't worth my time going forward?
I expect value stocks to be more volatile than blend or growth stocks. The reason is that value stocks are cheap for a reason. They may have limited growth prospects, the company or the business has fallen out of favor, etc. When shocks come, value stocks get punished disproportionately in the ensuing flight to safety.

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Re: What did you learn from the post-Brexit bloodbath?

Post by whodidntante » Sat Jun 25, 2016 1:42 pm

Certain put options I looked at during the week of the vote seemed mispriced. People were paying a lot for insurance for an unlikely event, it seemed. The polls I saw were close but had significant numbers of undecided, and my thought was the undecided would de facto vote "remain" because that was the choice of inaction.

I almost sold a few put options to take advantage of the Brexit anxiety. And I don't mean I thought about it. I mean I put in an order that simply didn't execute because my price was a little too high. I dodged a bullet on that one.

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Re: What did you learn from the post-Brexit bloodbath?

Post by ruralavalon » Sat Jun 25, 2016 2:25 pm

What bloodbath? Our portfolio lost 2.05%.

October 1987 with a stock market collapse of 22% in one day was a bloodbath.
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Re: What did you learn from the post-Brexit bloodbath?

Post by texas lawdog » Sat Jun 25, 2016 2:35 pm

I was watching the nightly news and they emphasized the +600 point drop and that there was $2T lost in one day.
Looked at it as a good time to accumulate a little additional in my stock funds, but remembering that most were discounts of only 2-3% when I checked.

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Re: What did you learn from the post-Brexit bloodbath?

Post by wilson08 » Sat Jun 25, 2016 2:46 pm

It is a little irritating that 2nd Quarter statements will
have a lot of negatives for stock funds, but 10 years
from now it will be a blip on the chart.
I expect things like this from time to time, does not
affect my investing strategy one iota.


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Re: What did you learn from the post-Brexit bloodbath?

Post by Levett » Sat Jun 25, 2016 2:49 pm

"Huge drop." "Bloodbath." My goodness.

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Re: What did you learn from the post-Brexit bloodbath?

Post by tbradnc » Sat Jun 25, 2016 2:50 pm

It's not a bloodbath until the phrase "catch a falling knife" is used 10 times by talking heads.

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Re: What did you learn from the post-Brexit bloodbath?

Post by anoop » Sat Jun 25, 2016 2:51 pm

I would not consider this as a bloodbath. Stocks dropped 3% and they are < 10% off their all-time highs.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Levett » Sat Jun 25, 2016 2:52 pm

tbradnc--

How silly of me. I must wait for that one.

Meanwhile I live and invest in a sea of "uncertainty."

Oh, dear; oh, dear. :wink:

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Re: What did you learn from the post-Brexit bloodbath?

Post by DetroitRick » Sat Jun 25, 2016 3:06 pm

As others have said, I don't consider it a bloodbath. I also don't think it's over, or close to it. It's not so much just Brexit itself, but a whole slew of complex inter-related factors that have shaken, and will continue to impact, many international markets. Although I didn't expect that vote, many of those factors have concerned me for a while anyway.

Generally speaking, this level of downturn just reinforces things for me:
1)my diversification plan is still "right" for me - I don't foresee any near-term changes.
2)bonds and hard assets can often act as cushions.
3)Experts are seldom good predictors of events that involve human emotion, economics and/or politics
4)For the umpteenth time, I can experience market volatility without significant worry (although, sure, it would be sweet if it never happened again :D )
5)there are way too many idiots in the media yammering (but there are a few coherent voices too, and I appreciate THEM more).
6)Lindsay Lohan's tweets need never influence my investing strategy.

Specific to Friday
1)One small buy, in my smallish stock portfolio, of a British financial stock. Only because I was waiting to do it anyway and I seldom play the lottery or horses. Rest of portfolios, nada. My 35%-ish equity stake in international (mutuals and a few ETF's) is not going to change - if it goes down enough my plan is to rebalance in. Even if things get worse.
2)US bonds of reasonable quality have once again exceeded my expectations and may do even better over the next year or so (as money flows away from negative yields and toward high quality). On the back of the longer recent trend, it just reinforces prior decisions for me. But Friday's events make me see just a bit more potential there now.
Last edited by DetroitRick on Sat Jun 25, 2016 3:24 pm, edited 1 time in total.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Tiekoon » Sat Jun 25, 2016 3:23 pm

Tycoon wrote:I learned that it wasn't a bloodbath.
Ditto +1

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Re: What did you learn from the post-Brexit bloodbath?

Post by Dandy » Sat Jun 25, 2016 3:36 pm

Very pleased with my portfolio performance. Have about 40% equities with only a small allocation to international equities. Fixed income has about 25 years worth of current drawdown in "safe" products a la Dr. Bernstein. Am delaying my SS until age 70 (less than 2 years). So while my heart sank when I saw the US equity plunge and Friday's after market futures which were even worse, I was calm. I checked my portfolio this morning and the fixed income did its job.

I resisted the urge to put some cash to work in equities and decided to wait until next week. I will probably nibble a bit. International equites are getting so slammed they are starting to tempt me. Since there isn't much cash in my TIRA I may have to bite the bullet and sell some of those hot bond funds.

So my "big" learning point is my portfolio seems to fit my risk tolerance and that I have been very lucky.

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Re: What did you learn from the post-Brexit bloodbath?

Post by NMJack » Sat Jun 25, 2016 3:39 pm

I didn't learn anything I hadn't already learned countless times in the past. "Same as it ever was" (different flavor of talking heads). 8-)

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Re: What did you learn from the post-Brexit bloodbath?

Post by expat » Sat Jun 25, 2016 3:41 pm

I learned that people get worked up very easily.

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Re: What did you learn from the post-Brexit bloodbath?

Post by miles monroe » Sat Jun 25, 2016 3:58 pm

don't shoot me but i also own some individual stocks.

i've been watching a couple in particular waiting for a more favorable entry point. i was sure friday was gonna be the day to buy when i saw the news midnight thursday. they were both UP on the day.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Estate_Esq » Sat Jun 25, 2016 4:01 pm

I learned to raise my skeptical antennae even higher whenever listening to hysterical media scum.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Pacific » Sun Jun 26, 2016 7:06 am

The better question is what did George Soros learn from the post-Brexit bloodbath?

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Re: What did you learn from the post-Brexit bloodbath?

Post by Call_Me_Op » Sun Jun 26, 2016 7:08 am

I learned that when your portfolio is large, you should look at sudden drops in percentage terms because looking at them in absolute dollar terms will make you feel ill.
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Re: What did you learn from the post-Brexit bloodbath?

Post by GoldenFinch » Sun Jun 26, 2016 7:14 am

Call_Me_Op wrote:I learned that when your portfolio is large, you should look at sudden drops in percentage terms because looking at them in absolute dollar terms will make you feel ill.
Very true. Another alternative is to focus on the number of shares, although this can be hard when there are big numbers jumping out in red.

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Re: What did you learn from the post-Brexit bloodbath?

Post by carolinaman » Sun Jun 26, 2016 7:21 am

quantAndHold wrote:I learned that I should do a better job of staying up on current events. Had I done that, I probably would have used some of my discretionary trading money to short the pound. Before the vote, currencies were priced for the vote to be to remain, even though the polling was clearly going the other direction in he last few days.
It was simply too close to call the outcome. Cameron thought he had won at 10pm election night and one of Brexit leaders thought they had lost. The polls were not clear cut nor do they have a good track record at prediction outcomes. Any bet for or against was just that, a bet.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Blues » Sun Jun 26, 2016 7:22 am

What did you learn from the post-Brexit bloodbath?
Nothing. I took no action and made no changes to our portfolio or investment plan.
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Re: What did you learn from the post-Brexit bloodbath?

Post by oldcomputerguy » Sun Jun 26, 2016 7:31 am

Pacific wrote:The better question is what did George Soros learn from the post-Brexit bloodbath?
http://www.reuters.com/article/us-brita ... SKCN0ZB0VI
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Re: What did you learn from the post-Brexit bloodbath?

Post by HurdyGurdy » Sun Jun 26, 2016 7:37 am

The situation is not settled yet, but I'm still sleeping very well.

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Re: What did you learn from the post-Brexit bloodbath?

Post by Angst » Sun Jun 26, 2016 7:44 am

I didn't "learn" anything as much as I was simply reminded of what I learned long ago: Don't take polls too seriously.

People seem to always think that "today", the techniques of polling have reached some state of the art such that they are generally very likely to be correct, but be that as it may, polls can and will continue to be on occasion totally wrong.

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Re: What did you learn from the post-Brexit bloodbath?

Post by munemaker » Sun Jun 26, 2016 7:51 am

Blues wrote:
What did you learn from the post-Brexit bloodbath?
Nothing. I took no action and made no changes to our portfolio or investment plan.
I agree completely. Just ignore it.

mcblum
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Joined: Wed Jan 06, 2010 7:46 am
Location: gaithersburg,md

Re: What did you learn from the post-Brexit bloodbath?

Post by mcblum » Sun Jun 26, 2016 7:55 am

I guess that it is a good thing that it happened on the Friday. Gives people two whole days to calm down. I lost about 1.7%. There is the chance that losses will continue but I will be DCAing every month as usual so I am OK.
Marty

Ari
Posts: 534
Joined: Sat May 23, 2015 6:59 am

Re: What did you learn from the post-Brexit bloodbath?

Post by Ari » Sun Jun 26, 2016 8:07 am

Well, the stock market has yet to open after the polls, so my funds are, as of yet, unchanged. I expect them to fall quite a bit, though I'm not sure which will fall the most. I'm guessing my Swedish stocks will take the hardest hit, then the Global, and least the Emerging Markets, perhaps. But I don't know, maybe the EM stocks will be hit hard by this? I'm payed on Monday, so whatever falls the most is what will be replenished the most.
All in, all the time.

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dratkinson
Posts: 4668
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: What did you learn from the post-Brexit bloodbath?

Post by dratkinson » Sun Jun 26, 2016 8:49 am

The market has been lower.

But assuming Friday was a RBD, then planning to TLH (VTIAX --> VFWAX) and buy low (VFWAX) on Monday.

Have changed and now trying livesoft's $500 TLH threshold. Why? Because my one-and-done $3K TLH threshold was leaving money on the table.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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ClevrChico
Posts: 1517
Joined: Tue Apr 03, 2012 8:24 pm

Re: What did you learn from the post-Brexit bloodbath?

Post by ClevrChico » Sun Jun 26, 2016 9:13 am

Tiekoon wrote:
Tycoon wrote:I learned that it wasn't a bloodbath.
Ditto +1
+1

- No tax loss harvesting opportunities for me.
- Not even close to re-balancing trigger of 5%.
- Friday was pay day so extra cash went into international based on asset allocation.

<yawn>

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