FTSE at 3700 and no winners.

Realy

DD was that loud kerching the sound of your pension pot expanding.

Ftse Up over 5% already.;)

Dithering_Dad

Generali wrote: »

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

Low risk perhaps, but in the current market, had I taken the 'low risk' and left my money with the fund managers, I would be £13.5k light in my pension pot.

I'm sorry laughing_man but I just don't agree with you. In a normal market I'd say that it was prudent to leave the funds as-is and let the fund managers do their job. However, the fund managers are constrained by their fund types - an overseas equity fund or a European Equity Tracker fund cannot move 100% into cash, even if they believe a large market correction is on the card - their hands are tied by the very nature of their fund types and the best they can do is to buy more rubust stock that might not fall as badly as others and to try and pick up decent bargains once the dust has settled.

My hands, on the other hand are not tied and I can make the choice to temporarily move into a cash fund until the market crashes and then move back to the funds when I think that the market is going to rise after an over-reaction and catch some of these gains. When the rises peter out, then I'm back into cash in case they crash again. I'm not making a fortune doing this, a thousand here and there, but it all adds up, especially when one considers I have over 25 years for these few thousands to compound.

There are two 'bad' things that can happen. 1) I am in my equity funds when the crash happens - but as this is what you are advising me to do anyway(passively manage my funds) then obviously this isn't high risk. 2) I am in cash when the market rises and I miss the rise - however, I don't see the market staging a miraculous recovery any time soon (quite the opposite), so I don;t really see this as a risk.

Again, I have to say that I don't see where I am going to lose everything unless the pension funds go under, and then I won't be alone in this and there isn't really any way to avoid it - even in a cash fund.

If you have the time/inclination I'd be very interested in hearing your 'worst case' scenario.

Anyway, here are today's results:

Closing Price Monday 27th October
£60,564.39 - Amount my pension pot would be if I had left it alone.
£73,537.29 - Amount in my Pensions Pot now (Equities).

Closing Price Tuesday 28th October
£61,307.95 - Amount my pension pot would be if I had left it alone.
£74,892.98 - Amount in my Pensions Pot now (Equities).

Difference between leaving pension alone and actively managing: +£13,585.03

Generali

Dithering_Dad wrote: »

If you have the time/inclination I'd be very interested in hearing your 'worst case' scenario.

Worst case scenario is that the only people that have cash in the world right now (Russians, Arabs and Far East) refuse to lend it to the West/UK.

This is a genuine risk IMO as all have genuine greivances (Cold War residual, Israel, colonialism).

If this happens then we're faced with a pretty stark choice:

1. Governments stop spending
2. Individuals and companies stop borrowing
3. Individuals and companies stop importing more than they export in total.

Governments could continue to spend as they can print money but that has dire consequences. They could also print money to lend but it is self defeating. 3 is not solvable as the Government can only print £££s it can't print foreign currency.

There will be consequences from all of this. These other coutries know full well they have us over a barrel (or at least should). It'll be interesting to see what conditions they apply to lending us money, especially if the House of Saud is overthrown, again a genuine risk. Do you fancy a theocratic state controlling such a huge oil supply and what our Government can spend money on?

This is worst case of course, not a prediction. There are other worst cases too I guess but I fear that there is a genuine chance that foreign powers will only lend to the UK with caveats or refuse to lend at all.

Dithering_Dad

Generali wrote: »

Worst case scenario is that the only people that have cash in the world right now (Russians, Arabs and Far East) refuse to lend it to the West/UK.

This is a genuine risk IMO as all have genuine greivances (Cold War residual, Israel, colonialism).

If this happens then we're faced with a pretty stark choice:

1. Governments stop spending
2. Individuals and companies stop borrowing
3. Individuals and companies stop importing more than they export in total.

Governments could continue to spend as they can print money but that has dire consequences. They could also print money to lend but it is self defeating. 3 is not solvable as the Government can only print £££s it can't print foreign currency.

There will be consequences from all of this. These other coutries know full well they have us over a barrel (or at least should). It'll be interesting to see what conditions they apply to lending us money, especially if the House of Saud is overthrown, again a genuine risk. Do you fancy a theocratic state controlling such a huge oil supply?

All interesting armageddon scenarios, but not sure how these world events can be controlled by little old me and my decisions to move from a cash fund to an equity fund (and back). If the above occurred we'd all be wiped out regardless and so it really makes no difference what I do with my pension, or indeed what anyone else does with theirs.

I was reading about the hedge funds collapsing, huge IMF funds to Pakistan, Iceland and especially Hungary, US consumer sentiment and the latest BoE statements, all of which are a bit more relevent and a bit more 'real world' than worrying about the House of Saud being deposed (I lived in Saudi for a year in 2001 during the Spetember 11 attacks, life went on pretty much as normal). I think it's again time to start battening down the hatches and have now moved both my and Mrs Dither's pensions into cash and will remain there for a good while. I am also going to look at increasing my mortgage overpayments for the remaining 18 month duration of my MFi3 (mortgage free in 3 yrs) challenge.

sabretoothtigger

Your choice to move to cash today, does that basically finalise at the close of business today, 16:30pm

Dithering_Dad

sabretoothtigger wrote: »

Your choice to move to cash today, does that basically finalise at the close of business today, 16:30pm

Yep, for the UK and EU stocks, later tonight for US stocks and then tomorrow for Asia.

Might miss out on rises tomorrow in my pension, but my missus's has a longer lead time and her pension will move into a Cash Fund on Thursday closing prices (and Friday closing prices in Asia). I should know by Friday how I did in my latest 'gamble' when all of the figures have come in. I'm fingers crossed for a large overreaction to US/UK interest rate reductions today/tomorrow.

Dithering_Dad

Interesting article here: http://www.thisismoney.co.uk/investing/article.html?in_article_id=427512&in_page_id=166

It shows what the 'experts' thought the FTSE100 would do in 2008 (article dated Dec 2007). The most bearish seemed to predict a drop to between 6100 and 5900. So much for those theories! :eek:

I was thinking recently that the FTSE100 would bottom at around 3500, but I'm now wondering if things will get bad enough for it to reach 3200?

sabretoothtigger

3200 is the 2003 low so really that isnt so unlikely. I think 3000 is feasible, it really depends how much longer this bank slow motion suicide continues.

The new bank shares in our market are due to hit around the end of the year afaik and the votes are taking place next month.
The rate of decline has started to slow already, you could assume that is the first part of a U turn

StevieJ

This market is going to turn at some time, investors will think it is a Bear Bounce but then it will just carry on. I can see some investors being just as hacked off by missing out as some investors were not moving to cash a while ago.

WTF?_2

StevieJ wrote: »

This market is going to turn at some time, investors will think it is a Bear Bounce but then it will just carry on. I can see some investors being just as hacked off by missing out as some investors were not moving to cash a while ago.

Sure - but I can't see any sort of spectacular or rapid rise in the same way that the collapse so far has been rapid. You could buy into the FTSE 100 today (or tomorrow, now) and still get very good value compared to even one month ago....

One month view:



So not too much danger of missing the boat by too much. On a personal level I'm not too worried about catching the absolute bottom of any market that I was getting in to - I'd prefer to know that the market is in a bull phase for sure even if it meant getting a couple of % less.

Here's the one year view for more perspective: