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  • username12345678
    username12345678 Posts: 283 Forumite
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    firestone wrote: »
    But there is a trend for people to say with active funds that past performance is not a guarantee of the future but with trackers they say they will go up and down but assume that this will lead to a new high at some point as if it is a given(but not so much on here where people will talk of matching the market)

    For an index tracker not to reach a new high at some point in the future it would mean that the index in question will never reach a new high.

    I find that a difficult concept to grasp (assuming I have interpreted your post correctly).

    I have a mix of actives and passives so i'm not dogmatic about the investment vehicles I use.
  • firestone
    firestone Posts: 520 Forumite
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    Eco_Miser wrote: »
    Why do passives have to sell? They follow the market down, but keep exactly the same number of shares in each company on the index.
    think its more of case that the money going into trackers over the last few years has pushed up the index they are following so money coming out may have the reverse.
    Either way i'm off to do a top up so its bound to go the other way now
  • firestone
    firestone Posts: 520 Forumite
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    username12345678 wrote: »
    For an index tracker not to reach a new high at some point in the future it would mean that the index in question will never reach a new high.

    I find that a difficult concept to grasp (assuming I have interpreted your post correctly).

    I have a mix of actives and passives so i'm not dogmatic about the investment vehicles I use.
    yes that was my point & the fact that its a hard concept to grasp.I could see it happening for a period of time but maybe not forever as you say but only this morning the Japanese index was used as an example so who knows.But i still prefer to use passives for monthly plans as it fills better that way(but i know thats only my feeling)
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    TBC15 wrote: »
    Are you sure about that one?
    So long as there is no net outflow from the tracker.
    If there is, then all the shares get sold in proportion, so not distorting the market.
    In a managed fund, they still have to sell, but the managers could choose to just dump one share.
    Eco Miser
    Saving money for well over half a century
  • Bravepants
    Bravepants Posts: 1,502 Forumite
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    JohnRo wrote: »
    All part of the game imo, big money moves out, media love sensational headlines, sow the seeds of panic, big money waits for the carnage to unfold, then moves back in and profits.

    Bankers have been warning and increasingly positioning for the last couple of months or so. If you're a long term investor just shrug and let them get on with it. Average down if you can.


    It's all based on human evolution and our innate "negativity bias". Even before humans evolved our ancestors would forever be on the look out for threats (predators etc.) and that is how we survived out in the wild. Modern humans still have that built-in instinct for threat detection (for example have you ever woken up with a start in bed thinking you were falling?). This is why negative headlines grab our attention and the media know this, and so that's how they sell newspapers and amass the viewing figures. The trick is to override your negativity bias in such situations as this.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • firestone
    firestone Posts: 520 Forumite
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    it may even knock the weather off the front page of the Express!
  • BananaRepublic
    BananaRepublic Posts: 2,103 Forumite
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    username12345678 wrote: »
    If this turns in to a sustained bear market it will be interesting to see how the active fund managers get on.

    Their argument that passives do very well in rising markets whilst their skill comes in to its own in a falling one will be tested.

    Historical data will tell you what you need to know. When there is an index, most active funds underperform the index and any trackers. However, there are plenty of active funds that consistently outperform the index in a manner that is statistically significant and not explained by chance.
  • username12345678
    username12345678 Posts: 283 Forumite
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    BananaRepublic wrote: »
    Historical data will tell you what you need to know. When there is an index, most active funds underperform the index and any trackers. However, there are plenty of active funds that consistently outperform the index in a manner that is statistically significant and not explained by chance.

    And, of course, the corollary to this being identifying the out-performers prior to the event.
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    username12345678 wrote: »
    And, of course, the corollary to this being identifying the out-performers prior to the event.

    ..and them remaining out-performers in perpetuaity.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • chockydavid1983
    chockydavid1983 Posts: 713 Forumite
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    Uh oh, not another passive v active debate :-/
This discussion has been closed.
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