Your views on locking in Unit Trust gains please

pete80

Hi all,

I re-started some regular monthly UT/OEIC investments back in October 2008 and threw in a little extra lump sum in late March 2009.

Have now accumulated £33k in HL Vantage and was thinking about pulling this out in May and re-investing the lot over a period of say 6 to 9 months, also keeping up my normal monthly payments.

I pulled out some in June last year (and did not reinvest any until December) and of course missed some nice potential gains with the large rally that occurred. It looks to me that this rally could now be running out of steam, just wanted your views folks on whether considering that point, if you would do as I mentioned in the second paragraph or just sit on the fence and go with the flow. I intend to keep up my monthly savings for the next 10 years, I have got used to spread betting but now don't have too much time to devote to that these days.

Thanks in advance for your opinions, cheers

bendix

I don't understand the strategy. You're going to withdraw the £33k in May and then immediately reinvest it over a period of 6-9 months?

What's the point?

dunstonh

I pulled out some in June last year (and did not reinvest any until December) and of course missed some nice potential gains with the large rally that occurred.

Which is always the risk when you try to time something that is impossible to time.

The fact is that no-one knows when a drop is going to occur or when a rise is going to occur. Typically you find that people that try to time the market may get it right sometimes but will get it wrong sometimes. A more typical drop in the markets is around 10%. The larger crashes tend to be closer on average to every 7 years. Now that doesnt really mean anything as we went from 1987 to 1999 before seeing any major decline but then have seen 2 massive ones in the last decade. There is no telling what is to come. However, if you pull out now an the market goes up 20% before losing 10% and then goes up another 5% before you go back in again then you miss out on net growth. That is the risk you take.

Rather than time the markets, why not use a spread of assets over the risk scale and rebalance them periodically. Maybe have the monthly payments higher risk and the pot lower risk.

pete80

bendix wrote: »

I don't understand the strategy. You're going to withdraw the £33k in May and then immediately reinvest it over a period of 6-9 months?

What's the point?

As I mentioned, to me it looks like the huge rally is running out of steam
and I was looking to pull out the £33k, make between 6 to 9 monthly investments and possibly/hopefully buy in at lower prices. A lot has been mentioned on financial websites recently about the chances of another correction this summer.

As you are probably aware of the sell in May and go away strategy, sometimes it works, sometimes it don't. Lost out a bit of the gain last year but swings and roundabouts here and only looking for opinions, no problem

pete80

dunstonh wrote: »

Which is always the risk when you try to time something that is impossible to time.

The fact is that no-one knows when a drop is going to occur or when a rise is going to occur. Typically you find that people that try to time the market may get it right sometimes but will get it wrong sometimes. A more typical drop in the markets is around 10%. The larger crashes tend to be closer on average to every 7 years. Now that doesnt really mean anything as we went from 1987 to 1999 before seeing any major decline but then have seen 2 massive ones in the last decade. There is no telling what is to come. However, if you pull out now an the market goes up 20% before losing 10% and then goes up another 5% before you go back in again then you miss out on net growth. That is the risk you take.

Rather than time the markets, why not use a spread of assets over the risk scale and rebalance them periodically. Maybe have the monthly payments higher risk and the pot lower risk.

Thanks for your input dunstonh, in some ways I can agree with your point about timing the market as in my early days of investing (mid to late 90's) I did keep my funds invested and got a great return. I was just thinking of trying my luck this year as I thought we should see a correction in the region of 10% to 15%.

I did pretty well anyway as 45% of my holdings are in Global Emerging Markets and Asia Pacific, 35% in UK Aggressive Growth and Special Situations and the remaining 20% in CF Junior Oils. I also think a rebase is a good idea from time to time but living out here in SE Asia and travelling around various countries it seems to me that there is room for more growth out here but of course it can't last forever.

I am 50 now but retired so probably should not have such a high risk portfolio, just always been a gambler from football betting then onto shares and the last 3 years financial spread betting...

bendix

It seems like you've made up your mind to do this already, and are just looking for thirdhand support from an anonymous webforum.

If that's what you want, here goes: "Yes, great idea. Do it, but remember I don't really care if you lose money or not."

Does that help?

pete80

bendix wrote: »

It seems like you've made up your mind to do this already, and are just looking for thirdhand support from an anonymous webforum.

If that's what you want, here goes: "Yes, great idea. Do it, but remember I don't really care if you lose money or not."

Does that help?

Not really Bendix, I ain't pulling it out until at least after the election, not looking for thirdhand support and not really fussed about whether or not this had to be asked on an anonymous webforum. Just that in the country where I am right now, there is only 1 investment club which is an hours flight from where I live all the members invest in local stocks so no point asking there.

I hope this coming week turns out to be a little better than your weekend obviously was, or have you got a bad headache or PMT this morning?
:rotfl:

bendix

OK, let's try this again. At the end of the day you are asking if we agree with your proposition that the markets might fall during the summer.

I've consulted widely on this today. I've studied the forums, and i've called half a dozen investment banks on your behalf.

Having weighed the evidence the answer is categorical: We don't know.

Sorted.

pete80

bendix wrote: »

OK, let's try this again. At the end of the day you are asking if we agree with your proposition that the markets might fall during the summer.

I've consulted widely on this today. I've studied the forums, and i've called half a dozen investment banks on your behalf.

Having weighed the evidence the answer is categorical: We don't know.

Sorted.

All I wanted was a simple opinion but you have done an awful lot of work on my behalf there. Thanks Bendix, I should really use you as an IFA, you saved me an awful lot of time there

Cheers

bendix

You couldn't afford me.

This one was probono.

pete80

bendix wrote: »

You couldn't afford me.

This one was probono.

Aah, I knew that there must be some bit of good in you Bendix.

I had better see if George Soros is cheaper next time... have a good day anyway. :beer: