FTSE at 3700 and no winners.

Jonbvn

Dithering_Dad wrote: »

True. It kinda makes one wonder what's the point of it all.

We should all club together and buy a farm and create a House Price kibutz.

Tell me you're jesting?

The HP kibbutz would make the Branch Davidians look like Sunday school.;)

neverdespairgirl

Dithering_Dad wrote: »

We should all club together and buy a farm and create a House Price kibutz.

Imagine the arguments over who picks oranges and who washes up!

Laughing_man

Dithering_Dad wrote: »

Sobering words Gen and good advice as usual.

They did mention something similar on Radio 5 this morning, but the Insurance Company concerned said there wasn't a problem and that they had healthy reserves. Hmnn, where have we heard that before.

Would my money be safe within a Cash Fund though in this scenario?

As a 27 year old professional poker player I highly recommend you do this and stop gambling your pension even if you feel like your missing out. I don't really know anything about share trading, but moving from 100% cash to 100% stocks, unhedged, trying to time market volatility seems a very risky thing for an amatuer to do with his pension (I certainly wouldn't do it and I LOVE to gamble).

Just from reading this thread I can see you have had a couple of 8% swings on only a few trades, mistime a few of those and you will be down some serious scratch- which is fine if your playing money you can afford to lose (Rule No.2 of pro gambling) and you have a known positive expectation over a significant number of bets/hands/trades (Rule No. 1).

If you have only a few trades/hands/bets it is impossible to tell what your long term expectation is, because varience (or luck, swings etc.) is very significant in the short term. That seems fine if your winning initially, but for very many people, in poker at least, the temptation to chase losses after an initial good run is too much and leads them to play for much longer with a negative expectation than they would otherwise (think Nick leison and that French bloke). Believe me, this is a psychololgical can of worms you do not want to open- especially with the money you're going to depend on in retirement.

If you have profit at this point my advice is to take it off and play that or 25% of the total, and set a conservative re-entry for the balance and then leave it alone. That way if you end up busting on few bad calls, no harm done- or if you find that you're up after a thousand trades (just pulled that out of the air, in poker it would be at least 50k hands), then you know it will be profitable to expose the rest of your cash to that risk.

Or better yet, invest a few quid in learning poker, a game you can beat significantly without a post graduate qualification in finance that is also alot more fun than sweating the markets.

Dithering_Dad

Laughing_man wrote: »

As a 27 year old professional poker player I highly recommend you do this and stop gambling your pension even if you feel like your missing out. I don't really know anything about share trading, but moving from 100% cash to 100% stocks, unhedged, trying to time market volatility seems a very risky thing for an amateur to do with his pension (I certainly wouldn't do it and I LOVE to gamble).

Hi LM,

I've probably misrepresented what I'm doing. I'm not gambling with my pension pot and I'm not moving 100% from cash to 100% equities.

My pension portfolio is made up of the following:

10% Index Linked
8% Cash
3% UK Recovery Fund
3% Smaller Companies Fund
30% Newton Income
30% Aberdeen Global Growth Ex UK
8% European Equity Index
6% AllianzRMC Global Equity
2% Far East

I have 18% of my portfolio in gilts and cash and the remaining 82% is in equities, with a wide industry mix and the following geographical split:

UK - 46%
EU - 24%
US - 13%
JP - 7%
APAC - 8%
Other - 2%

It's a balanced portfolio and a prudent investment vehicle in 'normal' times.

What I am actually doing is moving it into cash whenever I get the feeling (due to sentiment expressed in the financial and ordinary press ) that the market is in for a correction. When I feel the market has settled, I move the money back into my original funds, though obviously I'm able to buy a lot more units in the fund.

Most people with pensions will have a similar portfolio, but unlike me they will not have moved their money into cash and will therefore have taken a hit in their portfolios.

The real risk I run is not that my funds fall in value when the stockmarket falls (everyone is in the same boat in this circumstance), it's that the stockmarket climbs when my money is in a cash fund and I miss out.

As far as I'm concerned, real stockmarket gambling is where you put all of your money into a single share, a single asset class (like Gold) or a single industry (like banking). I certainly wouldn't be doing that with my pension (aka life savings)! :eek:

sabretoothtigger

Yep I tend to agree with that at least while the possibility of melt down is there. Always bank your profits, if you keep on gambling the total then you risk losing all gains to date which would be a shame when you showed such foresight at 5500




http://www.breakingviews.com/2008/10/28/Financial%20stability.aspx?sg=false

The real risk I run is not that my funds fall in value when the stockmarket falls (everyone is in the same boat in this circumstance), it's that the stockmarket climbs when my money is in a cash fund and I miss out.

The chances of a big gain are smaller then the chance of a big fall. Good portfolio though, sounds like a pretty flexible system. Fund systems I have access to dont really give precise valuations, they update when they feel like and its timed more by the week then the day so juggling like you do isnt that possible because they dont register the gain till days after it happens

Laughing_man

Dithering_Dad wrote: »

Hi LM,

As far as I'm concerned, real stockmarket gambling is where you put all of your money into a single share, a single asset class (like Gold) or a single industry (like banking). I certainly wouldn't be doing that with my pension (aka life savings)! :eek:

I can't really comment on how effective your trading strategy is likely to be, there is a difference, however, between 'real' and 'reckless' gambling. Any time you wager money on an uncertain outcome you are gambling (investing if you're wearing a suit), although how you define your trading activity is up to you.

Do you intend to do this in the long run, or will you switch back to passive investing at some point?

Dithering_Dad

Laughing_man wrote: »

I can't really comment on how effective your trading strategy is likely to be, there is a difference, however, between 'real' and 'reckless' gambling. Any time you wager money on an uncertain outcome you are gambling (investing if you're wearing a suit), although how you define your trading activity is up to you.

Do you intend to do this in the long run, or will you switch back to passive investing at some point?

I'm a bit confused. Which bit of my strategy are you classing as passive - keeping the money in funds or keeping it in Cash?

As far as the gambling part, I pay a set amount each month into my pension. I have no idea if this money will increase or decrease. This fits into your gambling criteria, but if that's the case then just about everyone in the country who has a pension that is based in equities is a gambler.

This may be the case, but I'm not sure how reckless it is. Betting £10k on a 10-1 long shot in the 4:30 at Chepstow is reckless to me because it is highly likely that you could lose it all. Placing £10k in stockmarket funds that are spread across several hundred stocks is not reckless because while the value of your £10k may fluctuate it's highly unlikely that you'll lose it all.

sabretoothtigger

Passive investing would be leaving it in stocks I guess. With such a stong down trend, just cashing up on every up turn and switching into stocks on every hard fall seems too easy to be true but now I think back that would have worked pretty well recently.

The hong kong stock market fell 13% on monday and gained 14% today!

Generali

Passive investing is keeping your money in a fund or maybe several and just ignoring it. It's seen as low risk.

Laughing_man

Dithering_Dad wrote: »

I'm a bit confused. Which bit of my strategy are you classing as passive - keeping the money in funds or keeping it in Cash?

As far as the gambling part, I pay a set amount each month into my pension. I have no idea if this money will increase or decrease. This fits into your gambling criteria, but if that's the case then just about everyone in the country who has a pension that is based in equities is a gambler.

This may be the case, but I'm not sure how reckless it is. Betting £10k on a 10-1 long shot in the 4:30 at Chepstow is reckless to me because it is highly likely that you could lose it all. Placing £10k in stockmarket funds that are spread across several hundred stocks is not reckless because while the value of your £10k may fluctuate it's highly unlikely that you'll lose it all.

I don't think your gambling recklessly but what you're doing is, in my view, real gambling, you defined going 100% on one play as 'real' stock market gambling that is what I would call reckless.

Paying into your pension each month and leaving the fund manager to make the decisions and taking the eventual payout is what I meant by passive.

Trying to improve your expectation by timing market moves exposes you to additional risk as well as reward.

Placing £10k in stockmarket funds that are spread across several hundred stocks is not reckless because while the value of your £10k may fluctuate it's highly unlikely that you'll lose it all

This is quite right if you stay 100% stocks (or cash) your risk of ruin is zero, when you begin trading between the two your potential to generate profit comes at the expense of a risk of ruin greater than zero. If you're experiencing 5K swings on your trades you may easily make 100K in a year or go broke. Whether you actually go completely broke on a downswing depends on whether you set a stop loss and cease playing. This is the reason why I maintain my bankroll seperately from living expenses and savings.

I have no special knowledge of the markets and no idea if you will go broke or show a handsome return. What prompted me to post is that you'd seemed to have recently started treating your life savings much like I treat my bankroll (I'm not a reckless gambler either, and I know what my expectation is) to try and profit from the markets. If you're intending to reach the long run you need to know your expectation, if you're taking a shot until the news says the crunch is over the risk probably isn't worth it.

I'm not trying to tell you to stop playing, but to define a bankroll you can completely bust if things turn against you and keep the balance somewhere safe- i.e with a zero risk of ruin- until you have a better idea of the long term expectation of your decision making.