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  • dividendhero
    dividendhero Posts: 2,417 Forumite
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    reeac wrote: »
    I've never seen the FTSE 100 index expressed in units of GBP before. Need to think about that.

    The back pages of the Economist magazine display statistics on all the worlds main stock markets. They quote returns in both local currency and US dollars - on this basis the UK stock market has returned less than half that of the eurozone during 2017. The best performing markets in the world have been Poland and believe it or not Greece
  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
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    Some say is all swings and roundabouts. There may be a roller coaster ride and a House of Fun. You may feel a bit dizzy and nauseous before during and after.

    There is nothing to stop UK investors investing in a global economy if they think the UK will become a septic isle. It is a win/ win for those who trade in fear/uncertainty/doubt.

    J_B.
  • Glen_Clark
    Glen_Clark Posts: 4,397 Forumite
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    Joe_Bloggs wrote: »
    There is nothing to stop UK investors investing in a global economy if they think the UK will become a septic isle.
    Except that other investors have already done that so 'septic isle' is already priced in.
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  • greenglide
    greenglide Posts: 3,301 Forumite
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    edited 23 September 2017 at 11:39PM
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    so 'septic isle' is already priced in
    We keep on being told that this, that or the other has been "priced in".

    To my simple mind "everything" cannot be priced in. Surely what is priced in is the events expected or feared by "the market" whereas if we believe the true outcome is different (better, worse or just plain different) we can gain or lose because of that?

    Of course figuring what "the market" truly has priced in is not going to be practical and neither is identifying when the events have come to pass with the background noise of the markets.
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    My take is what's already priced in is the sum of all knowledge, not the same thing as saying the current price is the sum of all knowledge.

    There's also, as you say, expectation, prediction, speculation etc. all being priced in, as well as the inevitable momentum and inertia.

    I find the whole market timing/prediction malarky unfathomable and that I'm settled on attempting to superimpose a relatively simple, long term investment management discipline over all the endless gyrations.

    Let the market get on and do whatever the heck it is going to do over the next decade or two while I more or less stick to the investment plan and accept it'll be what it will be.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    greenglide wrote: »
    We keep on being told that this, that or the other has been "priced in".

    To my simple mind "everything" cannot be priced in. Surely what is priced in is the events expected or feared by "the market" whereas if we believe the true outcome is different (better, worse or just plain different) we can gain or lose because of that?.

    Absolutely. The market has priced in all the events that it can imagine - and there are not really any events that the market can't imagine. But it weighs up the risks and expectations and so the price is basically a weighted average of what will happen. The "expected value" if we're talking maths and probability.

    But for example, let's say the market thinks there's 70% chance of a particular event happening with a bad outcome and 30% with a good. The price will reflect the weighted average positions taken by everyone. Then the event(s) actually happen and you won't get a 70/30 result - more a binary bad or good. So, if it positioned at 70% bad and it ends up being actually bad, they market will move down, and if it ends up actually being good it will go up.

    So, the market will move one way or the other. It won't stay where it is forever and you *will* make a gain or loss from the current position. But the mistake people make is usually, thinking they know better than the sum of what everyone else thinks. Especially if, like OP, they don't even follow the news. Better to just take the existing price, which is inherently, a "fair" price.
  • darkidoe
    darkidoe Posts: 1,125 Forumite
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    greatkingrat wrote: »
    Even taking into account the weaker pound, UK share prices are still higher than they were pre-referendum.

    How do we know that??

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  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    darkidoe wrote: »
    How do we know that??

    Presumably by looking at the ftse all share, or 100 or other appropriate index, denominated in dollars.
  • Apodemus
    Apodemus Posts: 3,384 Forumite
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    bowlhead99 wrote: »
    Absolutely. The market has priced in all the events that it can imagine - and there are not really any events that the market can't imagine. But it weighs up the risks and expectations and so the price is basically a weighted average of what will happen. The "expected value" if we're talking maths and probability.

    But for example, let's say the market thinks there's 70% chance of a particular event happening with a bad outcome and 30% with a good. The price will reflect the weighted average positions taken by everyone. Then the event(s) actually happen and you won't get a 70/30 result - more a binary bad or good. So, if it positioned at 70% bad and it ends up being actually bad, they market will move down, and if it ends up actually being good it will go up.

    So, the market will move one way or the other. It won't stay where it is forever and you *will* make a gain or loss from the current position. But the mistake people make is usually, thinking they know better than the sum of what everyone else thinks. Especially if, like OP, they don't even follow the news. Better to just take the existing price, which is inherently, a "fair" price.

    I'd vote this "Post of the year"!

    ...and surprisingly succinctly put! ;)
  • Sarastro
    Sarastro Posts: 400 Forumite
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    cashbackproblems wrote: »
    I havent and wouldn't invest a penny in the UK, especially if starting investing now, even a EU tracker will be more profitable imo.

    Well that's just stupid.
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