Is my M&S stakeholder pension OK?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
39 replies 8.2K views
124»

Replies

  • DiggingOutDiggingOut Forumite
    770 Posts
    There's a huge difference between a pension fund and unallocated cash that makes company executives feel secure.

    If a company has an asset that isn't being used, it should use it or liquidate it to return value to the shareholders.

    Obviously, reserves have an important role to play in good management. But the example I gave is a clear illustration of finding value in the market -- the company was worth far more than the market had valued it.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • Joe_BloggsJoe_Bloggs Forumite
    4.5K Posts
    It illustrates that the vast majority of the players in the market did not have a clue as to the real value of a company.
  • DiggingOutDiggingOut Forumite
    770 Posts
    True. But the information was available.

    In an efficient market the necessary information is widely available. Everyone knows basically the same thing. The difference in perceptions of a company's value arise from differing interpretations of that data by the various participants in the market.

    Arguably the most efficient markets in the world are in government bonds (at least, those of developed countries) and in currencies. In currency markets, particularly, there can be large swings due simply to speculation.

    Before yesterday, in cable (sterling/dollar) there were far more speculators short on the dollar than there were shorts on sterling. Yesterday morning the US consumer confidence report came out at a 2 year high.

    Now everyone knows that the US economy is going well right now, relatively speaking, so the good numbers were not particularly surprising, but a little better than expected. This triggered some selling of sterling/buying of dollars, so the pound began to drop.

    Speculators who had gone short on the dollar had stop/loss orders in to limit their losses, meaning they would close out their short positions if sterling dropped to a certain level. The result was, if they were short on the dollar, that they had to buy dollars and sell sterling -- pushing the pound lower.

    So the pound dropped by about 2 cents on news that everyone had and that has a minimal impact on the actual relative value of the two currencies. The reason for that is speculation, greed, and fear. Speculative greed motivated short positions in the dollar, pushing sterling higher than was warranted. Fear caused it to drop more rapidly than fundamental value would dictate.

    In an efficient market where everyone has basically the same information, the only way you can beat the market is to speculate -- which is also a good way to underperform the market.

    In an inefficient market, research can find good value that others have missed.

    No market is completely efficient, of course. But the main reason I avoid managed funds is because I believe that markets have become much more efficient, information is either generally available or not available at all (for the most part), and so all you gain by paying for someone to manage your funds is his best guess, rather than actual knowledge of good value.

    Good research may help him to have a more informed guess than the rest of the market. And some guys just seem to have an instinct for picking the winners. But I'm not one for betting on that instinct -- Warren Buffett has had some pretty bad years as well as the good ones. Last I heard he was betting against the dollar, and that is one where my instincts don't agree with his.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • Joe_BloggsJoe_Bloggs Forumite
    4.5K Posts
    Thankyou for informative reply. You could always teach economics if you get bored with life.
    On a less vital note, if you purchase shares in a fund what happens to all the discount vouchers and freebies ?
    http://www.moneynet.co.uk/saving/stockmarket/share_perks/index.shtml

    Some even give away chocolate.
    Regards J_B.
  • DiggingOutDiggingOut Forumite
    770 Posts
    I have to say that is a question I've never thought about. :) I would imagine those perks are not available to institutional investors.

    Since every economics lecturer I ever heard was dead boring, I'm not sure whether your comment was a compliment or otherwise. ;D
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • Joe_BloggsJoe_Bloggs Forumite
    4.5K Posts
    It was a double edged compliment that I did not think twice about.
    They do not call fund managers 'fat cats' for just eating chocolate.
    May be a fund with freebies and voting rights regarding the shares in portfolio would be worthwhile.
  • edited 30 June 2010 at 12:21AM
    sansoucisansouci Forumite
    3 Posts
    edited 30 June 2010 at 12:21AM
    You could actively manage your own M&S stakeholder by switching between Cash and UK Bal Equity. Equities have been moving sideways for some time and today 29 June it hit a low point near to several previous lows. Switch from Cash to Equities may see an upturn. You need luck and judgement but switch back to Cash when it nears previous charted highs and sit tight hoping this trend continues!!! Risky but fun!
    Don't try this during a sustained rising or falling trend though or get caught in the wrong fund once a break-out either way occurs! Cautious investor? - No guarantee this latest low might not continue downward of course, so only commit part of your cash now and you will be able to spread the rest at even lower points until the market turns.
  • edited 8 July 2010 at 5:26PM
    sansoucisansouci Forumite
    3 Posts
    edited 8 July 2010 at 5:26PM
    Put my money into UK Bal Equity on 29 June and today switched back to Cash fund. On FT100 index this gained me 3.61%. Could have been better as the following few days index went even lower and switching then would have given 5.94% today!! Cautious about staying exposed for longer as chart is showing new downward trend. If today was a turning point and the new trend is broken, I may be kicking myself in several days time!
    Also of course M&S may up the price of Cash Fund Units today which is a neat little ploy they can use to take advantage of some of my success to enhance their position. Cynical about investment and banking? Maybe but most of us, by now, are!
  • edited 9 July 2010 at 11:13AM
    sansoucisansouci Forumite
    3 Posts
    edited 9 July 2010 at 11:13AM
    In the event the Cash Fund price this time remained the same on exit and the M&S UK Bal Equity fund gave a 3.74% gain for the 9 days exposed to Equity just ahead of what FT100 would have given.
    The machinations of the Cash fund remain a mystery as although your money is safe the percentage annual return is very low. Quite why the cash fund price should go both up and down does make one wonder if these slight variations are not netting M&S a profit. One would expect a "Cash fund" price only to rise even if by derisory amounts. No doubt M&S have a logical explanation and say actually a very small part of the fund is in Gilts. Can anyone enlighten me?
This discussion has been closed.
Latest MSE News and Guides

Reclaim payday loans

Get £100s or £1,000s back for being mis-sold

MSE Guides

25% off Dyson eBay outlet

Selected items, via code

MSE Deals