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  • FIRST POST
    • capital0ne
    • By capital0ne 8th Oct 17, 3:01 PM
    • 21Posts
    • 4Thanks
    capital0ne
    Simple Strategy for Beginner
    • #1
    • 8th Oct 17, 3:01 PM
    Simple Strategy for Beginner 8th Oct 17 at 3:01 PM
    I'm thinking of a simple method that's trouble free and cost effective to build up a capital sum over a longish (10+) years.

    I've come up with investing in just one fund, the top fund for returns over the last six months, and then in six months review the top earning fund at the time and swapping if necessary. Then continue the same process every six months.

    I think this will do better than a balanced portfolio, a fund of funds or property even.
Page 1
    • coyrls
    • By coyrls 8th Oct 17, 3:44 PM
    • 886 Posts
    • 912 Thanks
    coyrls
    • #2
    • 8th Oct 17, 3:44 PM
    • #2
    • 8th Oct 17, 3:44 PM
    I think this will do better than a balanced portfolio, a fund of funds or property even.
    Originally posted by capital0ne
    On what basis do you think that?
    • ischofie1
    • By ischofie1 8th Oct 17, 4:08 PM
    • 180 Posts
    • 141 Thanks
    ischofie1
    • #3
    • 8th Oct 17, 4:08 PM
    • #3
    • 8th Oct 17, 4:08 PM
    I think you'll find buying at the top is not the best policy for wealth creation.
    • lpgm
    • By lpgm 8th Oct 17, 4:39 PM
    • 198 Posts
    • 97 Thanks
    lpgm
    • #4
    • 8th Oct 17, 4:39 PM
    • #4
    • 8th Oct 17, 4:39 PM
    The 'top fund for returns' is often likely to be esoteric and volatile, something you'll need to keep a close eye on. This is extreme momentum investing. I don't think it's a particularly simple strategy, for either beginners or non-beginners.
    • bostonerimus
    • By bostonerimus 8th Oct 17, 5:09 PM
    • 966 Posts
    • 495 Thanks
    bostonerimus
    • #5
    • 8th Oct 17, 5:09 PM
    • #5
    • 8th Oct 17, 5:09 PM

    I've come up with investing in just one fund, the top fund for returns over the last six months, and then in six months review the top earning fund at the time and swapping if necessary. Then continue the same process every six months.

    I think this will do better than a balanced portfolio, a fund of funds or property even.
    Originally posted by capital0ne
    What is your criteria for top fund......if an Indonesian Mahogany fund gets the highest return will you buy it? Are you looking at some allocation between stocks and fixed income?

    OK I'll put my 50% US equity index, 25% International Equity Index and 25% US bond index up against your strategy and I'm pretty sure I'll beat you, as would most reasonably constructed portfolios that are broadly based and consider both risk and return.
    Misanthrope in search of similar for mutual loathing
    • grandst
    • By grandst 8th Oct 17, 5:16 PM
    • 32 Posts
    • 20 Thanks
    grandst
    • #6
    • 8th Oct 17, 5:16 PM
    • #6
    • 8th Oct 17, 5:16 PM
    Another curve fitted strategy, if they worked we would all be rich. There are momentum factor ETFs and a momentum multi asset fund by valu trac however I wouldn't bet everything on them.
    • ChesterDog
    • By ChesterDog 8th Oct 17, 5:30 PM
    • 783 Posts
    • 1,365 Thanks
    ChesterDog
    • #7
    • 8th Oct 17, 5:30 PM
    • #7
    • 8th Oct 17, 5:30 PM
    You are, as you say, a beginner to investments.

    Have a think about why you're not finding support for your suggested strategy from those who have been investing for quite a while.

    Lots of beginners will think they have stumbled upon (or have devised for themselves, or have 'seen' that someone somewhere has done well with) some unusual strategy or other.

    There's nothing new under the sun. It's all been tried, and it's all been pretty much abandoned by people with more experience, in favour of well-diversified, balanced, global investments that are held for a long time with minimal messing about except for regular rebalancing of allocations. That is the approach which gives you the best chance at a really good outcome.
    I am one of the "Dogs of the Index".
    • Audaxer
    • By Audaxer 8th Oct 17, 5:44 PM
    • 481 Posts
    • 204 Thanks
    Audaxer
    • #8
    • 8th Oct 17, 5:44 PM
    • #8
    • 8th Oct 17, 5:44 PM
    I've come up with investing in just one fund, the top fund for returns over the last six months, and then in six months review the top earning fund at the time and swapping if necessary. Then continue the same process every six months.
    Originally posted by capital0ne
    This seems to be the same as the 'bonkers' strategy linked in the recent thread below:
    http://forums.moneysavingexpert.com/showthread.php?t=5722876
    • capital0ne
    • By capital0ne 8th Oct 17, 7:18 PM
    • 21 Posts
    • 4 Thanks
    capital0ne
    • #9
    • 8th Oct 17, 7:18 PM
    • #9
    • 8th Oct 17, 7:18 PM
    [QUOTE=Audaxer;73234168]This seems to be the same as the 'bonkers' strategy linked in the recent thread below:
    forums dot moneysavingexpert dot com/showthread.php?t=5722876
    Yep you sussed me out, just trying to get an opinion without referring to that asrticle.

    I think it has some legs, after all the article says it worked over 22 years, 5,662pc cant be sniffed at, worth a go if you ask me.
    • verybigchris
    • By verybigchris 8th Oct 17, 7:22 PM
    • 368 Posts
    • 425 Thanks
    verybigchris
    Yep you sussed me out, just trying to get an opinion without referring to that asrticle.

    I think it has some legs, after all the article says it worked over 22 years, 5,662pc cant be sniffed at, worth a go if you ask me.
    Originally posted by capital0ne
    I suggest you read Malthusian's excellent post in that thread as to why it's not all it seems.
    • bigadaj
    • By bigadaj 9th Oct 17, 1:52 AM
    • 10,318 Posts
    • 6,614 Thanks
    bigadaj
    I'd out a few quid on a strategy based on the worst performing fund being better than that suggested by the OP.

    No guarantees but the whole principle around rebalancing and reversion to mean would work better for the worst performing fund iver a set period than the best.
    • chiang mai
    • By chiang mai 9th Oct 17, 2:38 AM
    • 64 Posts
    • 14 Thanks
    chiang mai
    Investing in the top fund alone is a poor idea, simply, the day after you invest it can easily become one of the worst and there will be no other eggs in your basket. Why not spread your investments both by asset type and geography, devise a mix you're happy with and then check it once a year to make any adjustments. My guess is that a managed Mixed Asset fund or two (equities and bonds) would suit well, you just need to figure out your risk appetite and determine the percentage split.
    • jimjames
    • By jimjames 9th Oct 17, 12:29 PM
    • 12,095 Posts
    • 10,543 Thanks
    jimjames
    I remember an old HL article with 2 fictional characters who either invested in the last year's top performer or the coming year's top performer. The last year's top performer was invariably the worst performer the next year.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Malthusian
    • By Malthusian 9th Oct 17, 12:35 PM
    • 3,066 Posts
    • 4,433 Thanks
    Malthusian
    I think it has some legs, after all the article says it worked over 22 years, 5,662pc cant be sniffed at, worth a go if you ask me.
    Originally posted by capital0ne
    5,662% is a laughably pathetic return for someone who has the benefit of total hindsight.

    An even better strategy would be this: invest all your money in the Turkish stockmarket. Every penny. Then sit back and wait. Over the last 22 years this strategy worked so well it delivered an amazing 41,531% return - minus costs. (MSCI Turkey GR.) And you don't even have to faff about with reviewing the fund performance tables every six months and switching funds.

    What could possibly go wrong? The backtesting is conclusive.

    If you read that thread and my post in it and still can't see why simulated backtesting (past performance's idiot cousin) is worthless, then I have nothing else to say.

    A while ago I did a similar back-testing exercise and looked at the returns someone would have made if they invested all their money in the best-performing sector every year - that is, last year's best-performing sector - since 1994. The answer was 1.5% per annum. Worse than cash.

    Then I looked at the returns someone would have made if they invested in the worst-performing sector every year over the same time period, which delivered a much better return of 4.8%pa. However, this is still terrible compared to the 6-8%+ you would have made in any remotely decent balanced portfolio, especially once you factor in the huge extra risk. The problem with the contrarian strategy is that while markets bounce back, they don't do so at timely intervals - the worst sector one year is often the worst sector next year as well.
    • capital0ne
    • By capital0ne 9th Oct 17, 12:37 PM
    • 21 Posts
    • 4 Thanks
    capital0ne
    I remember an old HL article with 2 fictional characters who either invested in the last year's top performer or the coming year's top performer. The last year's top performer was invariably the worst performer the next year.
    Originally posted by jimjames
    Now if I could only know which was the coming year's top performer..............
    • Biggles
    • By Biggles 17th Oct 17, 8:48 AM
    • 7,436 Posts
    • 4,807 Thanks
    Biggles
    You are, as you say, a beginner to investments.
    Originally posted by ChesterDog
    He said that in this thread.

    Only a week later, he claimed to have 20 years' experience!
    http://forums.moneysavingexpert.com/showthread.php?p=73270737#post73270737
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