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  • FIRST POST
    • Jeems
    • By Jeems 15th Sep 17, 6:48 PM
    • 180Posts
    • 106Thanks
    Jeems
    Experiencing my first mini dip as a new(ish) investor
    • #1
    • 15th Sep 17, 6:48 PM
    Experiencing my first mini dip as a new(ish) investor 15th Sep 17 at 6:48 PM
    The numbers are very red and lots of minus signs but I dont feel concerned. I'm still up this year (just about).

    But wow, does the strengthening of the £ and the potential interest rate rise really affect share prices that much? Will things settle down? When the £ was strong and interests rates at 5%+, I imagine share prices didnt tumble daily. How did the market react then?

    What can I expect in the near future with continued £/interest rate rises?
Page 1
    • redmalc
    • By redmalc 15th Sep 17, 7:31 PM
    • 1,256 Posts
    • 477 Thanks
    redmalc
    • #2
    • 15th Sep 17, 7:31 PM
    • #2
    • 15th Sep 17, 7:31 PM
    Get the crystal ball out and give it a big rub and let me know what it says I am sitting with 650 K in the markets and it's been there since 1988 and earnt me a fortune.
    Time will be shortly the right time to invest like I did in 2007, it was definately squeaky bumb time but worked well for me and I have one more recession of investing left before I retire
    • Jeems
    • By Jeems 15th Sep 17, 7:36 PM
    • 180 Posts
    • 106 Thanks
    Jeems
    • #3
    • 15th Sep 17, 7:36 PM
    • #3
    • 15th Sep 17, 7:36 PM
    What were the markets like before during periods of strong £/interest rates? Is this sudden mini drop just a reaction?
    • grandst
    • By grandst 15th Sep 17, 8:08 PM
    • 35 Posts
    • 22 Thanks
    grandst
    • #4
    • 15th Sep 17, 8:08 PM
    • #4
    • 15th Sep 17, 8:08 PM
    I would be worried if you have a large amount of long dated government bonds in your portfolio, there's the potential for large capital losses.
    • darkidoe
    • By darkidoe 15th Sep 17, 8:31 PM
    • 886 Posts
    • 1,008 Thanks
    darkidoe
    • #5
    • 15th Sep 17, 8:31 PM
    • #5
    • 15th Sep 17, 8:31 PM
    The numbers are very red and lots of minus signs but I dont feel concerned. I'm still up this year (just about).

    But wow, does the strengthening of the £ and the potential interest rate rise really affect share prices that much? Will things settle down? When the £ was strong and interests rates at 5%+, I imagine share prices didnt tumble daily. How did the market react then?

    What can I expect in the near future with continued £/interest rate rises?
    Originally posted by Jeems
    From my observations, which hasn't been very long, when the pound weakens, global companies which earn their profits in non-sterling currencies gain a boost in their prices in pounds due to the weak pound. This is reflected in a rise in markets prices. The converse has to be true as well if the pound continues to strengthen against other currencies. Time will tell. I suppose potential interest rate rise will strengthen the pound causing this effect as well.

    With Brexit negotiations has yet to be settled and the volatility of the Korean peninsula, both factors which can weaken the pound are still on the cards. How will these factors come together to make up the recipe is anyone's guess.

    Keep the ship steady in volatile waters, Capt'n.

    Save 12K in 2017 # 9 £11,119.65/15 000 (74%)
    Save 12K in 2016 # 8 £19 721.58/12 000 (164.35%) Achieved!
    • cjv
    • By cjv 15th Sep 17, 8:37 PM
    • 106 Posts
    • 57 Thanks
    cjv
    • #6
    • 15th Sep 17, 8:37 PM
    • #6
    • 15th Sep 17, 8:37 PM
    If I build some cash savings with the intention of putting it into my S&S ISA if there is a market crash, is that a sensible or stupid plan?

    I am not doing this currently, just something I have been wondering as a new investor.
    • Alexland
    • By Alexland 15th Sep 17, 9:13 PM
    • 672 Posts
    • 422 Thanks
    Alexland
    • #7
    • 15th Sep 17, 9:13 PM
    • #7
    • 15th Sep 17, 9:13 PM
    Just take the market dips as a chance to buy more stock fund units if possible to reduce your average cost per unit. That doesn't really apply to bonds which might suffer permanent capital loss.

    The problem with only buying in the crashes is that it is hard to mobilise in the moment judging the market top and bottom and you miss loads of growth in the meantime.
    • BLB53
    • By BLB53 15th Sep 17, 9:25 PM
    • 1,154 Posts
    • 932 Thanks
    BLB53
    • #8
    • 15th Sep 17, 9:25 PM
    • #8
    • 15th Sep 17, 9:25 PM
    What can I expect in the near future with continued £/interest rate rises?
    The markets are very complex and it is difficult for the small investor to work out what effect these things will have so I would not waste much time on it tbh.

    The important thing is to understand that equities can be very volatile at times so you need to be mentally prepared for periods when the markets turn bearish...the past week is merely a blip.

    The best returns come from holding long term but you have to find a way to 'stay in the game'. For me this has meant taking less risk by holding more bonds via the Vanguard Lifestrategy 60 fund.

    Its about finding the right balance between risk/reward. Higher equities offers the potential of bigger returns but only if you stay with it through all the ups and downs.

    Make sure you hold the most appropriate asset allocation for your temperament.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • dividendhero
    • By dividendhero 15th Sep 17, 9:58 PM
    • 103 Posts
    • 84 Thanks
    dividendhero
    • #9
    • 15th Sep 17, 9:58 PM
    • #9
    • 15th Sep 17, 9:58 PM
    Look on the brightside - if you value your portfolio in US Dollars, there won't have been a dip
    • Linton
    • By Linton 15th Sep 17, 10:02 PM
    • 8,495 Posts
    • 8,437 Thanks
    Linton
    If I build some cash savings with the intention of putting it into my S&S ISA if there is a market crash, is that a sensible or stupid plan?

    I am not doing this currently, just something I have been wondering as a new investor.
    Originally posted by cjv

    Consider the lowest point of the 2008/2009 crash when people were afraid the world banking system would collapse. Would you have had the nerve to put all your cash into shares? And of course you wouldnt have known that it was the lowest point until well after the event.

    Since that time there hasnt been a reallyserious crash. Would you be prepared to wait with your money earning zilch in a deposit account for 10 years whilst everyone else's investments have doubled or trebled in value? When the crash eventually comes the lowest point may be higher than current prices.

    All the time you are out of the market you are missing out on dividends which on their own represent a higher return than many bank accounts.

    So no, it's not a good idea. Better to buy when you have the money and ride the roller coaster.
    • bostonerimus
    • By bostonerimus 16th Sep 17, 12:44 AM
    • 1,120 Posts
    • 628 Thanks
    bostonerimus
    The markets are very complex and it is difficult for the small any investor to work out what effect these things will have so I would not waste much time on it tbh.

    .
    Originally posted by BLB53
    Save enough cash to a bank account or S&S ISA for 6 months of spending. Then decide on an asset allocation between equities and bonds and stick to it through the ups and downs rebalancing as you go. I rebalance when my allocation is off by +/-5 %.
    Last edited by bostonerimus; 16-09-2017 at 1:00 AM.
    Misanthrope in search of similar for mutual loathing
    • 2010
    • By 2010 16th Sep 17, 7:38 AM
    • 4,158 Posts
    • 3,326 Thanks
    2010
    In a nutshell.
    The FTSE hit 7000 in Dec 1999 it then started it`s downwards trend and never reached 7000 again until the last year. It`s traded between 7000 and 7400 this year but the trend now is downwards again below the 7000 and beyond.
    • Apodemus
    • By Apodemus 16th Sep 17, 9:23 AM
    • 953 Posts
    • 769 Thanks
    Apodemus
    In a nutshell.
    The FTSE hit 7000 in Dec 1999 it then started it`s downwards trend and never reached 7000 again until the last year. It`s traded between 7000 and 7400 this year but the trend now is downwards again below the 7000 and beyond.
    Originally posted by 2010
    Hmmm.... "Trend" is a mathematical and statistical concept and only makes sense if you define the period of analysis.

    Judging by eye alone, it looks as if you would be correct if you are quoting a 5-day moving average, which is woefully short to be cited with any certainty of longer-term prediction. And that is just for direction, never mind your "below 7000 and beyond" prediction!
    • AlanP
    • By AlanP 16th Sep 17, 10:21 AM
    • 958 Posts
    • 678 Thanks
    AlanP
    In a nutshell.
    The FTSE hit 7000 in Dec 1999 it then started it`s downwards trend and never reached 7000 again until the last year. It`s traded between 7000 and 7400 this year but the trend now is downwards again below the 7000 and beyond.
    Originally posted by 2010
    Sorry, but I don't get the point you are trying to make or how it relates to the OPs question?
    • Jeems
    • By Jeems 16th Sep 17, 10:25 AM
    • 180 Posts
    • 106 Thanks
    Jeems
    Some very interesting replies. Someone above mentioned having long dated govt bonds was a bad thing at this time. Why is this out of interest?

    So this article was helpful - http://uk.businessinsider.com/how-the-ftse-100-performs-when-the-bank-of-england-raises-rates-2015-2

    So basically, sometimes the market rises and sometimes the market dips when there is a rate rise.

    What about currency though? Most of my holdings are overseas (10% UK, of which many are international corporates anyway via a FTSE All Share tracker).

    So while interest rates may or may not affect things, if the £ continues to rise, can I expect to see more red minus signs?
    • ColdIron
    • By ColdIron 16th Sep 17, 11:11 AM
    • 3,568 Posts
    • 4,279 Thanks
    ColdIron
    It`s traded between 7000 and 7400 this year but the trend now is downwards again below the 7000 and beyond.
    Originally posted by 2010
    Odd, I always thought markets were driven by events. You speak as if it is pre-ordained (Thus it is written ...). When do you predict it will hit 0?
    • ChesterDog
    • By ChesterDog 16th Sep 17, 11:15 AM
    • 800 Posts
    • 1,445 Thanks
    ChesterDog
    In a nutshell.
    The FTSE hit 7000 in Dec 1999 it then started it`s downwards trend and never reached 7000 again until the last year. It`s traded between 7000 and 7400 this year but the trend now is downwards again below the 7000 and beyond.
    Originally posted by 2010
    Only true if you suck the dividends out of it.

    [IMG][/IMG]
    I am one of the "Dogs of the Index".
    • dunstonh
    • By dunstonh 16th Sep 17, 11:16 AM
    • 89,566 Posts
    • 56,030 Thanks
    dunstonh
    Will things settle down?
    No. Never.

    There are always things going on that create upward and downward pressures. You then have the irrational element of human behaviour.

    When todays news becomes history, there will be tomorrows news.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ChesterDog
    • By ChesterDog 16th Sep 17, 11:20 AM
    • 800 Posts
    • 1,445 Thanks
    ChesterDog
    The numbers are very red and lots of minus signs but I dont feel concerned. I'm still up this year (just about).

    But wow, does the strengthening of the £ and the potential interest rate rise really affect share prices that much? Will things settle down? When the £ was strong and interests rates at 5%+, I imagine share prices didnt tumble daily. How did the market react then?

    What can I expect in the near future with continued £/interest rate rises?
    Originally posted by Jeems
    Share prices react to surprises, changes, news and so on.

    When conditions are stable (no matter whether that's low interest rates, high interest rates or anything else) markets settle down again.

    So, no, when interest rates were 5% share prices didn't tumble daily. It's only when a change occurs (or becomes expected) that markets move significantly and quickly from their normal trend.

    Edit: As Dunstonh says, settling down is itself a very transitory state at best - something is always coming over the horizon.
    Last edited by ChesterDog; 16-09-2017 at 11:23 AM.
    I am one of the "Dogs of the Index".
    • A_T
    • By A_T 16th Sep 17, 11:34 AM
    • 222 Posts
    • 111 Thanks
    A_T

    So while interest rates may or may not affect things, if the £ continues to rise, can I expect to see more red minus signs?
    Originally posted by Jeems
    Probably yes. The companies in index trackers are largely invested abroad. Unless the growth in those stocks outstrips the rise in sterling.
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