How to not lose money on ISA

Rollinghome

TH1878 wrote: »

I don't know why you think I'm in the Brown fan-club? I'm just telling you how it is.

The Japanese did nothing for ages; the UK and US governments have acted swiftly. Of course we don't know whether it will work, but even if it doesn't I suspect it will soften the blow when compared to Japan.

Because you seem to have a touching faith that our Gordon's approach will return us to the sunny uplands within 5 years and that the reservations of the Germans and many others are misplaced. So hurrah for wizard Gordon, he's worked it all out, set us on just the right path and no more worries from now on then?

No, you're telling me how you hope it is. As you now say more accurately, you don't know if it will work and you are certainly not alone in that.

Reseachers found that after a (doctored) coin landed tails 3 times in a row that subjects tended to be quite sure it would land heads next time. They thought they were using logic - or what you described as your "educated guess". Education or logic has nothing to do with it, more like superstition. You assume that because shares and bonds have fallen then they surely must next rise. If only it was that simple.

The property market has almost certainly not hit bottom and and no-one knows where unemployment will end up. No one knows what will happen to the global economy down the line. No-one knows when companies might start to make profits again or what else could happen just as unpredicable as the world-wide collapse of the last 18 months. To pretend that everything is now on the up is rather premature.

The reality is that no-one knows where it will go from here or where we might be 5 years down the line and only fools would think they do. The last 18 months should have at least taught them there's a lot more risk out there than they previously thought.

Which was why I wasn't asking for predictions, only for some suggestions for preserving capital within an ISA that I hadn't thought of. Thanks anyway.

TH1878

Rollinghome wrote: »

Because you seem to have a touching faith that our Gordon's approach will return us to the sunny uplands within 5 years and that the reservations of the Germans and many others are misplaced. So hurrah for wizard Gordon, he's worked it all out, set us on just the right path and no more worries from now on then?

No, you're telling me how you hope it is. As you now say more accurately, you don't know if it will work and you are certainly not alone in that.

Reseachers found that after a (doctored) coin landed tails 3 times in a row that subjects tended to be quite sure it would land heads next time. They thought they were using logic - or what you described as your "educated guess". Education or logic has nothing to do with it, more like superstition. You assume that because shares and bonds have fallen then they surely must next rise. If only it was that simple.

The property market has almost certainly not hit bottom and and no-one knows where unemployment will end up. No one knows what will happen to the global economy down the line. No-one knows when companies might start to make profits again or what else could happen just as unpredicable as the world-wide collapse of the last 18 months. To pretend that everything is now on the up is rather premature.

The reality is that no-one knows where it will go from here or where we might be 5 years down the line and only fools would think they do. The last 18 months should have at least taught them there's a lot more risk out there than they previously thought.

Which was why I wasn't asking for predictions, only for some suggestions for preserving capital within an ISA that I hadn't thought of. Thanks anyway.

You're waffling and putting words in my mouth (always the sign of a weak argument). Let me make it simple for you:

Firstly, I think you're talking about Quantitative Easing - something I've not mentioned thus far. I am talking about the rescue package offered to banks. Japan did pretty much naff all and let banks fail leading to a collapse in their stock market, from which it never recovered.

The US, EU (including your beloved Germany) and the UK have all taken measures to stop banks from failing. They (including Germany) saw the devastating effect that letting Bear Sterns fail had on the global markets and I'm pretty certain that they won't let any other major banks fail (the view of many economists).

Regards your original question, in October 2008 we were advising clients (as part of their asset allocation) to go into M&G Strategic Corporate Bond fund. That fund has returned 6.38% over that period, so perhaps it's just your own stock picking that's at fault?

A final thing for you to ponder - the stock market usually prices in what it expects to happen in 12-18 months. In the recessions of the 1970s and 1980s the stockmarket actually rose whilst the economy shrunk.

dunstonh

If you wanted a smart investment 12 months ago, you should have bought index-linked gilts or global bonds.

Or Neptune Japan Opps. But of course Japan never makes any money

TH1878

dunstonh wrote: »

Or Neptune Japan Opps. But of course Japan never makes any money

How much of that is currency related? It's not a fund I'm particularly knowledgeable about but it looks like it had a storming 3 months between 3 and 6 months ago, but has done nothing in the other 9 months year to date. Was the fund manager taking excessive risks to boost his figures? I've also just seen it has 21% exposure to money markets as well

I find the Japanese market flatters to deceive more often than not and I'm sure we'll get the call wrong at some point, but the average Japanese fund has fallen 7.6% over 12 months (which is still good compared to UK equities!). Seven out of 62 funds had positive returns last year which given the strength of the Yen against Sterling is perhaps a little surprising.

It's not a rigid decision to exclude Japan anyway, it's a strategic overlay over Watson Wyatt's suggested asset allocation; the portfolios are recalculated to ensure they remain within the efficient frontier once Japan (& Property at the moment) has been excluded. Our fund reviews are quarterly I'm sure Japan and Property will added again at some point once the overall picture looks better.

dunstonh

How much of that is currency related?

It certainly helped but wasnt the full reason.

Was the fund manager taking excessive risks to boost his figures?

Not excessive but it is a higher risk fund than the typical japanese fund. The manager has successfully hedged in the past and that has a lot to do with it.

I've also just seen it has 21% exposure to money markets as well

Yes, the current manager does seem to move money in and out of money markets a lot. The spread is not consistent. To me that suggests a willingness to go defensive or more agressive at different times.

It's not a rigid decision to exclude Japan anyway, it's a strategic overlay over Watson Wyatt's suggested asset allocation; the portfolios are recalculated to ensure they remain within the efficient frontier once Japan (& Property at the moment) has been excluded. Our fund reviews are quarterly I'm sure Japan and Property will added again at some point once the overall picture looks better.

I understand. I still use it on larger portfolios but on smaller ones I tend to replace it with an asia pacific including japan and make it a pacific region allocation rather than having two individual sector allocations.

I think Japan is a bit marmite in whether you like it or not and whether you get returns or not. If it wasnt for portfolio rebalancing, I wouldnt use it.

Its good to see another adviser using similar strategies.

Rollinghome

TH1878 wrote: »

Regards your original question, in October 2008 we were advising clients (as part of their asset allocation) to go into M&G Strategic Corporate Bond fund. That fund has returned 6.38% over that period, so perhaps it's just your own stock picking that's at fault?

So you're in the trade? If so, shouldn't you make that clear, as does the other poster, and that you clearly have a vested interest in encouraging users of this board to keep investing? Is that cod-science graph you posted from your company?

Are you saying you advised all your clients to invest in just that one fund? I assume not. So isn't it entirely dishonest to refer to the one recommendation that gained and not those that lost?

Would you like to clarify by giving details of how much on average you actually gained or lost for your clients?

If you really had the Midas touch then wouldn't you be better off being a full time investor rather than just working for commission with other people's money? Those that can do, those that can't just give advice.

A final thing for you to ponder - the stock market usually prices in what it expects to happen in 12-18 months. In the recessions of the 1970s and 1980s the stockmarket actually rose whilst the economy shrunk.

Something for you to ponder. The last 12 months should have taught anyone with any sense at all just how unpredictable markets are. Do you seriously think you can predict what will happen from here based on the 70s and 80s? Has it really not dawned on you yet that we're in new territory and almost anything could happen?

If you still haven't learned that much then you sure wouldn't get any of my cash to manage. If you are some kind of advisor then I find that your unawareness of how little you know a little scary.