Your views on locking in Unit Trust gains please

Linton

pete80 wrote: »

Linton,

I know that it is only a guessing game with the markets but in Jan 2000 I had my total holdings in Fleming Asian Investment trust warrants and they had almost tripled in less than a year. Subsequently took the gain and reinvested in property, I must admit the main reason for selling was that there were so many warnings about the boom in shares that analysts thought were unsustainable. I mis-timed the market on the way back in and missed some of the gain but still did well till I sold up the houses & stocks and deposited the proceeds into US Dollar accounts. That timing was perfect and has given me a handsome gain so sorry I have not lost overall.

I now hold my cash in 3 different currencies including the country I live in and 2 countries I visit. This reduces my risk as I do currency trades when the time is right (eg to take a profit).

My main reason for this possible strategy was to take my profits and effectively have another gamble by dripping the proceeds back in over 9 months. yes by trying to time the market. Sorry but I can see the reasons why people stay invested for many years but I have this gambling streak in me. If I lost say 25% of that amount it is going to finish me, just learn me a lesson.

I may even do as cloud_dog suggested and pull out a certain percentage and rebase but time will tell, gotta see what happens to Gordon yet!

Cheers

You were lucky, but if you want to gamble and have the spare cash to do it - fine. I guess the important thing is that potential investors with limited means wanting to increase their wealth dont see this approach as good example to follow.

cloud_dog

Linton, at a holistic level (not wanting to go to wacky) you and Pete80 are on the same level, i.e. you have a strategy for investing and exiting. As always no one shoe fits all.

Your exit strategy is to stay invested but to re-balance from good performers in to not so good performers in the expectation/hope you will benefit. Pete80 has a strategy of reducing his (??) exposure to stock markets and then gaining additional value by re-investing at a low.

All investment strategies have risk and an invest and hold strategy is just as risky

The important thing is that we have an exit strategy. People spend so much of their time trying to decide on an investment and none on where/when to exit.

dunstonh

We need an 'ignore' button on MSE.

There is one. Click on the name of the person and you go to their profile page. Then on the right hand side there is a text link to add that person to your ignore list.

jamesd

pete80, if you have unused capital gains tax allowance from this year you might consider selling and rebuying a similar but different fund this week to use that CGT allowance. You can switch back after a month if you want to. That way if you do well in the coming tax year you won't run so much risk of having CGT to pay.

eurochic

pete80 wrote: »

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

If I knew when markets were going to fall or rise I would not be an adviser, I would gamble myself.

This and next years CGT allowance is £10,100. Remember that investing in equities is a medium to long term strategy.

It’s the time in the market, not market timing that counts.

JamesU

eurochic wrote: »

It’s the time in the market, not market timing that counts.

Don't agree. If I hold fund X over X years and it drops/rises/drops/rises etc surely length of time in the market is irrelevant! At some point you need to either extract gains or lock in gains/switch asset class and the market timing for this rebalancing does count.

JamesU

Linton

JamesU wrote: »

Don't agree. If I hold fund X over X years and it drops/rises/drops/rises etc surely length of time in the market is irrelevant! At some point you need to either extract gains or lock in gains/switch asset class and the market timing for this rebalancing does count.

JamesU

I think you should rebalance on a regular basis, say once a year independent of the market conditions - just go with the situation at that time.

The disagreement with relying on market timing is that it is a wonderful thing to do if you can get it right. But if you take the view that short term changes are unknown and unknowable without illegal knowledge, then you are likely to do as much damage as good. And if it leads you to unnecessary trading you have additional costs as well.

In addition there's the stress. With market timing there is the continuous worry about whether the timing is right and the self blame when you get it wrong. Go once a year and all you need worry about is the calendar.


But I guess Cloud Dog is right, its a personal style thing. If you are a natural tinkerer and it keeps you happy how can I object!

JamesU

Linton wrote: »

I think you should rebalance on a regular basis, say once a year independent of the market conditions - just go with the situation at that time.

The disagreement with relying on market timing is that it is a wonderful thing to do if you can get it right. But if you take the view that short term changes are unknown and unknowable without illegal knowledge, then you are likely to do as much damage as good. And if it leads you to unnecessary trading you have additional costs as well.

In addition there's the stress. With market timing there is the continuous worry about whether the timing is right and the self blame when you get it wrong. Go once a year and all you need worry about is the calendar.


But I guess Cloud Dog is right, its a personal style thing. If you are a natural tinkerer and it keeps you happy how can I object!

For sure. But the futility in trying to time the market is one thing, when and how to rebalance is surely quite another. And as CloudDog himself commented so astutely recently on a thread somewhere " Look to protect gains rather than try to maximise gains."

JamesU

artha

eurochic wrote: »

It’s the time in the market, not market timing that counts.

I dont necessarily agree. Tell that to the 10 year passive investors who started in 1999 and had to take their pot in early 2009.

According to statistics the average bull run lasts 1000 days so with that in mind surely the long term active investor should be prepared to either switch in and out of the market and/or move up/down in fund volatility according to their reading of the conditions and warning signs. I do agree however that perfect timing is probably more luck than judgement

Linton

artha wrote: »

I dont necessarily agree. Tell that to the 10 year passive investors who started in 1999 and had to take their pot in early 2009.

According to statistics the average bull run lasts 1000 days so with that in mind surely the long term active investor should be prepared to either switch in and out of the market and/or move up/down in fund volatility according to their reading of the conditions and warning signs. I do agree however that perfect timing is probably more luck than judgement

If you have a fixed end date you should definitely plan over time to adjust your portfolio distribution to less volatile investments. But you can do that on a fixed time basis, not on a guess of market conditions. For example move from 100% aggressive investments to 100% cash by 10% jumps each year (an example, not a recommendation!). This is different to trying take advantage of temporary market conditions.

No one is advocating completely passive investing. If your requirements on the portfolio change as they do by definition when approaching a fixed end date you need to adjust your portfolio.