I awoke on Tuesday with a feeling of panic. I had only just discovered before going to bed (via a number of tweets on my timeline) that the Dow Jones had dropped heavily. I went to bed without checking my portfolio (head in the sand syndrome!), filled with dread. Not surprisingly, I didn’t sleep well that night.
One of the things that compounded how I felt was the heavy decline in the crypto markets over recent days, which I have a vested interest in. I was honestly thinking “there goes both my option 1 and option 2 FI plan in one fell swoop”.
You see I had only recently completed the transfer of my SIPP (and ISA) from one provider to another. I had deliberately sold my investments before initiating the process so that it was a quicker cash-only transfer (or so I thought). It still took the best part of 2 months before I was fully vested again though.
As such I was keen to get my money working again after this 2 month hiatus. As I had not yet settled on the desired mix for my portfolio, I went all-in (£210K SIPP & £28K ISA) with one particular fund: Vanguard U.S. Equity Index Fund (ISIN GB00B5B71Q71). I had researched this fund previously and it looked a good fit for what I am trying to achieve. Recent year returns have been exceptional.
OK, so I know what you are thinking. Who puts all of their eggs in one basket? It’s risky enough to hold 100% equities – but to have them all in one geography too? You must be crazy, Fork! Well perhaps.
I really did fear that it was the end of the world on Tuesday morning. But things don’t seem so bad just 24 hours later. Yes my portfolio is down 5%, but I’m sure it will recover. I’m just glad I held my nerve and resisted the temptation to panic-sell (for what would inevitably be an even bigger loss). I certainly contemplated it for a short period!
The main lesson to take away from this experience is to understand the feeling of absolute dread that one small market correction had on me. I really thought it was the end of the stock market’s bull run, and I had made the classic mistake of investing at the very peak. I had even just finished reading a book on investing that explained how to average-in with large investments, to avoid exactly this scenario! If that was my response, then I’m clearly not as much of a risk taker as I thought. I will continue working on what my ideal portfolio should look like.