Innappropriate Investments

sabretoothtigger

Heres a good one

The ugly side of ultra-cheap money
By Bill Gross
Gresham’s law needs a corollary. Not only does “bad money drive out good,” but “cheap” money may as well. Ultra low, zero-bounded central bank policy rates might in fact de-lever instead of relever the financial system, creating contraction instead of expansion in the real economy.

http://www.ft.com/cms/s/0/b5f3af76-2712-11e1-b9ec-00144feabdc0.html#axzz1gvmo1LUW

Bini Smaghi sees role for European QE
A senior European Central Bank policymaker has called for “quantitative easing” to be used to boost the eurozone economy if deflation risks emerge across the 17-country region
http://link.ft.com/r/R5WAEE/QN6SRW/P3Q98/TUHK4L/4CKA9E/VU/h?a1=2011&a2=12&a3=22

darkpool

Meeper wrote: »

My portfolios generally contain 10-14 funds out of several thousand available. Who cares what the majority were doing? They wouldn't be selected if they were under-performing, would they?

Think before you type.

so what is your research before you recommend a unit trust? you just select ones that have done well in the past? I do believe that the bulk of academic evidence suggests that fund outperformance does not last.

even if your theory that fund outperformance was correct, it would raise the question "what value does an IFA add?". all investors would have to do is some basic research and pick funds that have done well.

darkpool

Meeper wrote: »

So, if you really want to look foolish, you have, because the AAA-rated Inv Perp actually hasn't done too bad at all. It had an interesting few years due to Woodford's move to defensives which reduced the volatility of his portfolio, but he is without doubt one of the best fund managers in the UK. You picked the wrong horse to have a jab at here. How strange that you are mistaken. Again.

being an IFA you should really know due to luck alone some unit trusts will outperform their benchmarks. the vast bulk of academic evidence i have seen shows UT outperformance is due to luck.

darkpool

:beer:

Ark_Welder wrote: »

I forgot to add that the TER would be the amount deducted before accounting for any rebates made by the investor's platform. So an investment held via ATS, for instance, which gives a rebate of 0.5% of the AMC, would reduce the TER to 1.19%.

You also forgot to add that your figures do not include the cost of the marketmaker. Or do we just ignore that cost?

"TCF says a UK equity fund with 100 per cent turnover and a TER of 1.7 per cent may have a total cost drag of 3.5 per cent before any returns that the manager can create through their skill.
TCF says a UK equity fund with 100 per cent turnover and a TER of 1.7 per cent may have a total cost drag of 3.5 per cent before any returns that the manager can create through their skill."

above from the investors chronicle.

http://www.investorschronicle.co.uk/2011/11/08/funds-and-etfs/isa-funds/beware-the-isa-fund-cost-monsters-A0818b8VYXrdTnaKuShWJJ/article.html


"The average equity fund manager makes explicit that they are charging about 1.5% a year of the sum invested for their services, but additional hidden expenses average 0.3% a year and trading costs cut a further 1.4% off an investment. And the situation is getting worse, according to the analysis, which found that charges had increased by 9% in the last decade. The presentation added: "If the trend of diminishing returns and increasing costs continues we could soon expect negative returns on average."

above from the guardian

http://www.guardian.co.uk/business/2011/dec/17/treasury-warned-over-traders-fees

AW, i know you will respond to this. but could you do me a favour and ensure the points you make are clear? sometimes you make a post and i have no idea what point you are trying to get over.

darkpool

jamesd wrote: »

With pleasure. Why are those involved in the road industry preaching a more roads agenda when it's better for society to improve public transport including trains and buses instead of spending money on selling more roads to people? Is it because the road builders only make money from building roads not railways or buses?

I'm sure that those in the industry will keep on trying to conceal the hidden costs of road, like the noise, carbon dioxide and other pollution emissions from the vehicles using the roads and the damage to the environment from building new roads and despoiling countryside. Road builders should be forced to disclose all of the costs of their roads, including the cost of fully capturing and sequestering the pollution emitted by the vehicles using the over their lifetime. Then we can have a fair competition between the various ways of traveling instead of one where the biased road builders are just trying to push the products they are able to sell.

i think in the UK the days of mass new road building are over. however i honestly think a new road can be good for the environment. we've all been stuck in stop/ start traffic at 5mph. at that speed cars are not efficient - they are a lot more efficient at say 60mph. if a new bypass increases vehicle speeds it will reduce exhaust/ CO2 emmisions

in the UK roads industry we have made big strides in the environment. we build drainage systems that treat road drainage water/ we use tarmacs that reduce road noise/ we build acoustic fences/ we recycle more materials.

Roads these days are a lot safer as well, each road death costs 1.5m to society. New roads DO safe lifes in better design and safety features

I would argue the tax on fuel compensates society for the negative aspects of road use.

I think the big bias in travel is towards air travel. it's not fair that you pay no fuel taxes when you fill up a 747 but you do pay fuel tax when filling up a moped.

Ark_Welder

darkpool wrote: »

http://www.guardian.co.uk/business/2011/dec/17/treasury-warned-over-traders-fees

AW, i know you will respond to this. but could you do me a favour and ensure the points you make are clear? sometimes you make a post and i have no idea what point you are trying to get over.

You have no interest in clarity when it demonstrates that your assusmptions are in error. Previous posts have shown that trading costs are required reporting in annual reports. If your figures are typical trading costs for funds then it should be very easy for you to pick a fund - almost at random - and show the calculation yourself.

Read the last-but-one comment from the Guardian article, made by Richard Saunders of the IMA.

darkpool

Ark_Welder wrote: »

You have no interest in clarity when it demonstrates that your assusmptions are in error. Previous posts have shown that trading costs are required reporting in annual reports. If your figures are typical trading costs for funds then it should be very easy for you to pick a fund - almost at random - and show the calculation yourself.

Read the last-but-one comment from the Guardian article, made by Richard Saunders of the IMA.

but the costs in the annual report you looked at do not include marketmakers costs?

i really don't know what point you are making? you mean that the article in the guardian about the 3.2% annual fees is wrong and you are right? you mean the article in the investors chronicle about the 3.5% fees is wrong and you are right?

perhaps you should contact these publishers and tell them why they are wrong. perhaps also send a letter to the queen saying how unfair it is that well respected magazines and newspapers are writing things you disagree with.

jem16

darkpool wrote: »

I do believe that the bulk of academic evidence suggests that fund outperformance does not last.

I do believe you still don't know what a tracker is.

darkpool wrote: »

perhaps you should contact these publishers and tell them why they are wrong. .

Seems you didn't read the comment you were directed to.

As Ark Welder says you don't seem to actually want clarity.

sabretoothtigger

I think the big bias in travel is towards air travel. it's not fair that you pay no fuel taxes when you fill up a 747 but you do pay fuel tax when filling up a moped.

Apparently there is something in the Geneva convention about this. You cant charge national taxes on international flights :huh:

They have raised departure fees quite alot though





Not exactly relevant but from my own record, best performers over 10 years compared to 2011 performance. The majority fail to compete with the fallacy of fixed rate bonds at a 0% base rate

darkpool

jem16 wrote: »

Seems you didn't read the comment you were directed to.

As Ark Welder says you don't seem to actually want clarity.

second last point from the article. tbh i agree with it.

PS, nice of you not to mention "perp high income" or even "performance is after fees". appreciated.

"Gareth Thomas, the Labour MP for Harrow West, said he feared that the government was reluctant to clamp down on the City's extravagant charges and practices. He said: "Dithering, out-of-touch ministers don't seem to understand how high the stakes are, or have the will to act. If pension charges were brought down by even a small percentage millions even billions more would end up in people's pension pots helping the next generation of pensioners and the communities they live in to have a safer, more secure future."