The Stock Market Takes Another Dive - Steer Clear ?

1echidna

In view of world situation with regard to Iran I am selling Japan, Asia Pacific and Europe (excluding UK)

Radiantsoul

1echidna wrote: »

In view of world situation with regard to Iran I am selling Japan, Asia Pacific and Europe (excluding UK)

I guess it depends on timescales, but I wonder if Iran will be the same issue in 20 or 30 years time.

1echidna

Radiantsoul wrote: »

I guess it depends on timescales, but I wonder if Iran will be the same issue in 20 or 30 years time.

Well the advice is supposed to be to periodically rebalance portfolios.

Radiantsoul

1echidna wrote: »

Well the advice is supposed to be to periodically rebalance portfolios.

Generally I assumed that is more about returning to a target allocation and risk profile rather than attempting to pick a specific market that will under- or over-perform.

1echidna

Radiantsoul wrote: »

Generally I assumed that is more about returning to a target allocation and risk profile rather than attempting to pick a specific market that will under- or over-perform.

Maybe my approach is too broad brush.

IronWolf

Radiantsoul wrote: »

I guess it depends on timescales, but I wonder if Iran will be the same issue in 20 or 30 years time.

Even if it isn't, there'll be something else to worry about. Anyone remember peak oil in the 80s?

I try and focus on individual businesses and don't get too worried about the macro scene. A good business will do well even in adverse environments and they're the kind of thing I want my money in.

LIB3RTY

Just wait for QE 3 from the USA. They have to do it to keep this charade going. I've made a killing from their stupidity/greed.

fairleads

Guys
Capital growth is an absolute term. It needs little or no further qualification or interpretation. It states that I want my net worth to grow year on year. It is my goal, the be all and end all.
In my quest for capital growth I can use one or more methods, total return being one, and that’s what total return is, a method or strategy. It may or may not increase my net worth. So, if I were to seek advice from an IFA and I were to state, unequivocally, that he or she must use a total return strategy, then I have no cause for complaint if, as a result, my net worth decreased year on year. However, if I were to advise the IFA that I need my capital to grow …………..

MrMalkin

fairleads wrote: »

In my quest for capital growth I can use one or more methods, total return being one, and that’s what total return is, a method or strategy. It may or may not increase my net worth. So, if I were to seek advice from an IFA and I were to state, unequivocally, that he or she must use a total return strategy, then I have no cause for complaint if, as a result, my net worth decreased year on year. However, if I were to advise the IFA that I need my capital to grow …………..

I take it back, you clearly still don't understand the difference between total return and capital growth, or the relationship between them.

Aegis

fairleads wrote: »

Guys
Capital growth is an absolute term. It needs little or no further qualification or interpretation. It states that I want my net worth to grow year on year. It is my goal, the be all and end all.
In my quest for capital growth I can use one or more methods, total return being one, and that’s what total return is, a method or strategy. It may or may not increase my net worth. So, if I were to seek advice from an IFA and I were to state, unequivocally, that he or she must use a total return strategy, then I have no cause for complaint if, as a result, my net worth decreased year on year. However, if I were to advise the IFA that I need my capital to grow …………..

I think you're confusing total return and absolute return. Absolute return is the strategy by which you attempt to achieve positive returns in all market conditions. Total return is the measure of an asset's performance when you include both the capital gains and the income received over the course of the holding period.

To give an example of total return, take the FTSE 100. The standard index simply measures the capitalisation of the 100 largest companies listed on the UK main exchange. This is the capital growth of those companies (with a little bit of swapping of holdings as companies are added and removed from the 100). The FTSE Total Return index is adjusted to include the effect of reinvesting dividends over any given timescale. As such, the FTSE Total Return index grows faster than the FTSE because it includes the effect of dividends every year.

Another description of it, taken from here (first description that came up on Google):

FTSE 100 Total Return Index
The FTSE 100 Total Return Index ("FTSE 100 TR Index") is managed by FTSE International using their standard and publicly available index methodology and calculation procedures. The FTSE 100 TR Index measures the FTSE 100 Index performance, including both price performance and income from dividend payments, in contrast to the FTSE 100 Index which only measures price performance.


Further details of the Index methodology and calculation procedures used in relation to the FTSE 100 TR Index are publicly available and can be found on the FTSE website (www.ftse.com).

I can only imagine that the confusion comes from companies like Ruffer calling their absolute return strategy fund their "Total Return Fund". But that's just a name designed to sound attractive, and I guess they felt Absolute Return sounded too much like a hedge fund.