what the blazes is going on in the markets today and yesterday

baldbloke_2

I am new to all of this and have already invested most of this years £4k ISA allowance in funds to add to last year's investment.

Immediately after I invested last year everything shot up before settling back down again and now I am seeing the other side of the coin.

I am pleased that my ongoing monthly purchase by DD - only £100 unfortunately - will at least buy a few more shares at the lower prices. But for that to happen the overall value of my investments will have to stay low!


It's certainly a different world to the one of savings accounts that I was always used to! I am holding my nerve ... just!

Deemy

moneytroll wrote:

"Buy and hold... works... until it does not work"

Again, doesn't this apply more to market timing? Buy and hold works all the time*, even if in modest proportions, from what past data suggests anyway (past no guide to future, bla bla) Eventually greed will take over at one poiint or another if you try to time things I would have thought.
There are always "freaks"/exceptions of course...
anyway, just a thought.. i am very happy for the people who would prove me wrong and do outplay the market/time it correctly all of the time etc.

*by that i mean over very long term, but you know that

PS: but i am getting the feeling that i will soon be eaten alive for my comments :-), so i better withdraw from the conversation

LOOK !.... You have to have a STOP LOSS.. You can't just buy and hold a stock into oblivion ! There must be a mechanism to get out either to cut your loss or take your profit else the profit will first turn into a loss and then into nothing... it happens all of the time - Look at the dot com ! One minute millionaires next minute BROKE !

Look at marconi, look at the countless companies that are still today worth peanuts of where they once were !

yeh the miners and oils are ridign high ! Smaller ones are highly speculative, not saying it will happen to a Shell, but it COULD ! That is reason enough to NOT buy and hold indefinetly... again you need a mechanism to escape a position even if its a very simple one such as tracking the 200 day moving average.

An investor does need to know when its time to SELL. Its not the same as forecasting, its more reacting to price movements in real time.

There are many simple mechanisms to liquidate a position, you should gear the more aggressive to overextended stocks that pay little dividends and the more lax mechanisms to dull high dividend paying stocks. Each stock needs its own criteria of under what condition you will get out.. for instance Oil companies - to sell when the share price trend moves opposite to the oil price trend !!! Which was clear on many of the price charts of the majors since Jan 06 !

Paul_Herring

Deemy wrote:

An investor does need to know when its time to SELL.

Isn't the whole premise behind HYP that you don't sell - you live off the dividends - you sell (very rarely)when(if) the dividends become crap? The underlying value of the shares generating the dividend are (largely) irrelevent, since you're supposed to hold them for 'life'?

I ask merely out of curiosity since this is something I've looked at, but not yet considered in any seriousness.

moneytroll

"Isn't the whole premise behind HYP that you don't sell - you live off the dividends - you sell (very rarely)when(if) the dividends become crap? The underlying value of the shares generating the dividend are (largely) irrelevent, since you're supposed to hold them for 'life'?"

HYP fanatics, do sell (very rarely) usually when yields fall or when fundamentals change substantially - which is sensible. But it doesn't happen too often with large cap value stocks.
IMO, if one is looking at UK investments, it's definitely worth looking into HYP as you'd probably do better than most UK funds/trackers (i have seen data somewhere on the fool to support this but unfortunately don't remember where exactly), mainly due to the fact that the yearly expenses are almost 2% lower each year which will make a MASSIVE difference over a number of years.
But through funds one has access to "interesting" geographical or specialist sector areas where it's hard to do research properly.

It can be harder to choose a fund than a stock sometimes; too many things to consider, including (and especially) the manager! So putting together a HYP is actually easier than I thought it would be at first...*

*I realized it thanks to Ed, who likes to bring it up on 'rare' occasions :-)

Market timing/momentum investing, spreadbetting, daytrading etc (though entirely separate fields) can be fun, but the risk is (more often than not) way too high for an average investor to enjoy long-term rewards. Another issue is that most people think they are better than "average" and therein lie the dangers. (The same information is available to EVERYONE.)
Of course, one's investment style, has to be suitable for one's character too. If people like walking on thin ice, it's their choice - and it's admirable to some extent.
just thoughts...not trying to criticize anyone's approach...

Deemy

I do some HYP too.... , take UU, buy at £6.20 sell at £6.90, collect the dividend in the middle !

moneytroll

why not holding on to UU + keep collecting/reinvesting divis? It is the 2nd share on my list :-) (I am just asking to be edited out here)

I read somewhere that many fund managers often 'force' themselves to review the funds/stockselection once a year only (those are the guys who get paid 6-7 digit salaries to work once a year for us). While I don't have a problem paying for services generally (on the contrary), this !!!!!! me off a little.. (especially when investments go down, understandably :-)
And some HAVE to trade occasionally just to show on their reports that they are doing something... I don't mean to generalize or be negative about ALL managers + it's not such a bad thing: as the HYP theory goes, doing less is doing more, so their 'lazyness' could save investors money. But then, if we do take a slight interest in investments, we can be lazy too! (some funds are exceptional in longterm performance though)
Anyway, my point is, I suppose, that while different tactics/investment strategies can work advantageously depending on market conditions, the HYP idea is brilliant in a way that it will work reasonably well in most if not all market conditions. Now we need some statistical data here...

Deemy

hey I prefer lazyness too !

Thats why a big chunk of my portfolio is usually in investment trusts as well as individual stocks, since as you know individual stocks carry far more risk and consume more time in tracking.

Mix it up, stocks for dividends, investment trusts and growth stocks. But all are sellable.. nothing is taken as permanent.

moneytroll

IT's gearing aspect makes me nervous somehow (though i suppose it's not much different than a company's debt..) + they are not as cheap as they used to be too...

"Thats why a big chunk of my portfolio is usually in investment trusts as well as individual stocks, since as you know individual stocks carry far more risk and consume more time in tracking."

not so risky if you have 15 stocks (in different sectors), after which (mathematically) the risk/volatility is reduced substantially. ITs/funds will hold sometimes 90+ stocks, which then probably just mimic the index and the fund is "over-diversified" unnecessarily..

Deemy

Well not exactly FTSE index trackers ... I'm talking the likes of Barings Emerging Europe or JII, or BTEM or.......

free4440273

blinko wrote:

what the blazes is going on in the markets today and yesterday

woke up and look at my folio and everything is red AARRGGHHHH is this just a short term correction or a long term one

presently, this is a temporary short-term 'correction'. we will see a pick-up in the markets. but historically speaking, we have seen this pattern before: the market reaching a (near) high; followed by a substantial dip; followed by the market attempting to scale the previous high it never quite reached; followed by the proper and real correction - a bloodbath. also, historically speaking, we might have to wait for october for the bloodbath to occur, which it will.