My first dip into Stocks and Shares has turned sour

wriggly

mark1234567890 wrote: »

Anyway I put £500 into a Legal and General Stocks and Shares fund as part of my ISA allowance. I went for the Pacific Index Trust as I wanted exposure to the emerging “Tiger” economies of China and Russia etc. I had read good things about past growth and alot of the newspaper pundits were predicting that these economies would be relatively unscathed by the Credit Crisis that was engulfing the western markets. :cool:

Over a longer term, this will probably turn out to be a good investment. I have invested my S&S ISA in the L&G index funds. The £500 minimum is per ISA, not per fund, so you could spread the risk a bit more - mind you, they have all dropped recently.

However, did you read the fund information? L&G Pacific Index invests in Australia, NZ, Taiwan, Hong Kong, Korea and Singapore. China Mainland and Russia are not included.

thor

mark1234567890 wrote: »

So what do others think about this situation? Should I cut and run or stick it out?

I think you should get out. Past history is no guide for the short, medium or long term.
We are always being told(by those who have an interest in talking up stocks & shares) that over the long term equities will outperform cash and this may be true so far but with oil running out can anyone say hand on heart that company profits will continue to increase? Until a new source of energy is discovered or renewables get a move on, I view stock market investments as nothing more than a glorified gamble.

RayWolfe

I seem to remember a certain chicken who believed that the sky was falling in.
It wasn't, it was snowing but she had never seen it before. I guess you haven't either.

1echidna

Oh no we not going to have a global warming argument here are we? :cheesy:

dunstonh

We are always being told(by those who have an interest in talking up stocks & shares) that over the long term equities will outperform cash and this may be true

Thats because it is true. Historically, equities have out performed cash over the long term.

but with oil running out

oil has been running out from the very first barrel. However, the general consensus is that we are not at the peak yet. its close but even if it peaks there is still another 20-40 years of it left and then around another 20-40 years after that for gas.

can anyone say hand on heart that company profits will continue to increase?

Shares are part value of a company and part future earnings. Future earnings potential has been a major cause of the recent drops but companies will always make profits by one means or another. We have gone through far worse times than this and we are still here.

The OP has chosen a high risk sector to invest in as a first choice and has almost certainly invested above risk profile. However, it is only £500.

1echidna

dunstonh wrote: »

"Thats because it is true. Historically, equities have out performed cash over the long term." I think your right but that is because the stock market and its acolytes carry more firepower than savers who get shafted in a downturn. The BoE has the power to ensure a somewhat more balanced sharing of pain, maybe they will, because penalising the thrifty and cautious has long term consequences in the way people behave.

cheerfulcat

1echidna wrote: »

"Thats because it is true. Historically, equities have out performed cash over the long term." I think your right but that is because the stock market and its acolytes carry more firepower than savers who get shafted in a downturn. The BoE has the power to ensure a somewhat more balanced sharing of pain, maybe they will, because penalising the thrifty and cautious has long term consequences in the way people behave.

1echidna, I really don't think that it's a question of anyone setting out deliberately to penalise savers. It's just that inflation is built into the system ( and, some might say, is helpful to governments when it comes to repaying debt ), and your best chance of keeping up with it is to invest rather than save. Also, given that most people will not be able to save a meaningful amount of money, some exposure to equities is necessary to increase capital, not just preserve it.

1echidna

Did I say deliberately? I'll make my own choices, thank you, on what I consider the most likely ways I can best preserve/increase the capital I have.

cheerfulcat

I was using " you " in the generic sense. Sorry for any confusion.

1echidna

OK, sorry for being a bit prickly.