Advice please for stocks & shares

superscotsman

You're very wise Redux. The lift attendant quote illustrates that when the market is at record highs, there's only one way for the index to go.
The professional portfolio managers can perform little tricks because they can buy and sell literally at the touch of a button. For instance, they can sell in a falling market, then buy back a little later at a lower price - only they now have more shares. Such things are not available to the private investor, and, as you say, it is best to leave the portfolio alone until what you had planned comes to pass.

superscotsman

cloud_dog wrote:

"They", say that 2006 (certainly for the FTSE) is likely to be another good year - views??

I'm looking forward to 2006. There will be more sabre rattling over Iran. There is also a dispute over various territories between China and Japan. Some of these territories contain a three-letter word that begins with o and ends in l. So this dispute could even result in war. If what I think is going to happen happens, the FTSE will be like a roller coaster. If you've got the nerve for bargain hunting, 2006 could "keep you in Scotch whisky and Sullivans" for a long time.

redux

superscotsman wrote:

The professional portfolio managers can perform little tricks because they can buy and sell literally at the touch of a button. For instance, they can sell in a falling market, then buy back a little later at a lower price - only they now have more shares.

I watched a TV programme many years ago about people that even traded on transients as shares moved to different prices on new information becoming available - if you got your analysts to predict the eventual level, there tended to be an overshoot and undershoot or two in the way that engineers might associate with vibrating systems (I can't do a graph, but think of car suspension when the dampers are knackered).

This was some time before the so-called Big Bang. So the professionals with their [then] big computer systems could have advantages over their rivals if they could get their traders on the floor to act fast enough ...

Often the so-called efficient market theory doesn't work. One of the books often suggested for investors is "Extraordinary Popular Delusions & the Madness of Crowds" - mind you, I haven't read it myself yet.

About a year after Big Bang, I read a newspaper article that people had become too used to the market only going in one direction; it crashed a week later.

I thought back to that TV programme, and wondered if all the clever people behind the software with automated buy and sell signals had got slightly wrong, and that now the crowd included the ghosts in the machines as well. An engineer would have told them that the time-constants had changed; what was taking 30 minutes when I saw that programme presumably now happens in seconds.

So our novice investors should get used to not panicking on very short-term setbacks; maybe it's a buy opportunity.

superscotsman

I have heard of the book, but like you I have yet to read it. I agree with you that the notion that a share price is such because the market knows all about it is not correct. If that were the case there wouldn't be any bubbles and it would be impossible for people like Warren Buffett to outperform the market. I run a business myself, and I would say that the accounts are not always an indication as to the health of the company. In my own case, as the end of the fiscal year, we are looking for things to spend money on - translation, artwork, that sort of thing. The reason is to cut down the profit, so as to reduce one's liability for income tax. There are lots of businesses up and down the country that officially break even but are actually doing better than that in reality. Also, it will work the other way: if your company is not doing so well, you can create - legally, in many cases - sums of money out of nowhere, and make the company look better than it is.

MalcBridge

I have come to this discussion a bit late in the day but it doeas appear to have got a bit complex (for an admitted novice) at times. Might I suggest that, as well as the valuable tips about the Motley Fool, you consider a subscription to Money Observer. It costs about £35 p.a. but, over a year, includes some fairly basic stuff about most aspects of investing.

Finally, a general point. Buy Investment Trusts or i-Shares rather than Unit Trusts/OEICs. The charges are much lower and there are other advantages which usually result in superior performance.

grumbler

midlerbet78 wrote:

interesting

Nothing interesting. Just primitive SPAM ...

Jays

Have you reported this grumbler?