The Stock Market Takes Another Dive - Steer Clear ?

SnowMan

Linda_Woodall,_Financial_Services_Authority wrote:

We all need to know where our money is going and financial advice should be no different. From talking to investors, I know there can be confusion about paying for advice. However, advice from financial advisers has never been free.

Is it any wonder investors are confused when they are told by those in the financial services industry such as FinancialIntroNut that advice is free

Rollinghome

GeorgeHowell wrote: »

Even in this climate of the politically-motivated daylight robbery caused by supressed interest rates, is putting precious savings at the mercy of the vagaries of the stock market and other capital-risky investments still a step too far for most people ?

As a reminder, let's repeat the old mantra one more time : the FTSE100 is still well below its 1999 peak.

As always, the answer is probably that it depends.

The FTSE100 is below the point reached in 1998. You would need to add the dividends received and deduct the costs to get a better picture. You would also need to make an allowance for inflation.

I'll let someone else do the sums but we can probably assume that, over that period, the returns have been insufficient to keep up with inflation and well below the best returns available on cash.

Would be difficult not to agree with you that financial advisers and the investment industry will always want to talk up the returns available by giving them your money to look after. That's where the profit is.

One of the most dishonest sales lines, frequently seen on this board, is that holding cash suffers from inflation risk. Of course it does, but then so does any investment as demonstrated by the negative relative to inflation return on the FTSE.

So no one except those with a vested interest or pink-cheeked newbies would suggest that equities have been a great investment over the last dozen or so years. But that's just looking at the past. Will the next dozen years be any better, I haven't a clue and everyone will need to make their own judgement.

I do get a bit concerned about those who pop up here with just a few quid, convinced that because the return on savings is so low then putting money into investments must be better, which makes no sense at all. My own position is to be substantially invested but positioned so as not to get too beaten up if it goes wrong.

People need to also take into account that any premium for taking the risk of investing in equities could easily be eaten up by the high costs of retail investment like unit trusts. If your investment costs are high your chances of getting a decent return are't too good.



@FinancialIntroNet. Believe me, you aren't doing yourself or Mr Ahuja any favours using boards in that way. Anyone who now googles your names will find this and be likely to decide you're both to be avoided. You may want to edit your posts accordingly.

DreamerV

I would certainly not trust the financial services or recommendation of someone who does not read the rules (or worse, does not understand or care about the rules) of a forum before posting about a company. I wouldn't trust you would know the ins and out of products, that you had read the small print, that you weren't out just for yourself/your company like the posts suggest (i.e. who cares about the rules, if it benefits me/my friend/my company?).

jimjames

Onawingandaprayer wrote: »

Looks like a buying opportunity to me.

"The skys falling in" - again

Definitely a time to buy then! @OP, clearly share based investments are not suitable for you as the slightest dip seems to be taken as a massive fall. Just because shares were overvalued in 1999 doesn't mean they aren't good value now. And how many people only bought into the FTSE100 at a peak 13 years ago and never before or after - not many I'd suggest.

Very selective quoting of dates when you could equally say that from March 2009 to now you would be sitting on over 50% profit even with the latest fall yesterday which incidentally has already partly been reversed. Even over 10 years you are looking at around a 10% rise without taking dividends into account. This is also just for the UK market, many other ones are showing very big rises.

Suggesting that investment managers are hiding things when even 10 years ago, well before the credit crunch, a fund manager said

'That is something we are all going to have to confront when talking to our clients ' a much higher expectation of losing money on a year-by-year basis. Even so, if, like us, you accept that equities are going to be the best way of investing in the long run, you have to make sure that you don't take fright with a few down years because you will miss out on the benefits of long term investing.'

jem16

Perhaps as all of his posts have been removed, all of those who quoted his details could remove them otherwise he's achieved his objective?

GeorgeHowell

jimjames wrote: »

Very selective quoting of dates when you could equally say that from March 2009 to now you would be sitting on over 50% profit even with the latest fall yesterday which incidentally has already partly been reversed. Even over 10 years you are looking at around a 10% rise without taking dividends into account. This is also just for the UK market, many other ones are showing very big rises.

I think the point is that because of short/medium term volatility, the financial services industry has tended to quote a decade as the appropriate unit of time to give equities a chance of being (what they hold to be) the best, indeed the only, viable long-term investment.

But we have now had a 12 year period where the FTSE100 index -- representing 80%+ of all UK publicly quoted stocks -- is well and truly, substantially, and profoundly down on what it was at the start. This may well be unprecedented. But it may well represent the start of a new era, whereby the old conventional wisdom no longer holds goods.

All the talk of including reinvested dividends (unquantifiable), being selective (trying to pick winners) etc is largely red herring material and no doubt aims to make the uninitiated think that it's all too big and difficult to grapple with unless pseudo-professional advice is sought. (*)

Realistically the FTSE100 trend over 12 years knocks away the very foundations of the hitherto major selling point for equities, along the lines of : "In any given ten year period since 1900 .. etc". But we still hear the propaganda that small investors should put the majority of their funds into equities for the long term. The world may have changed due to computerisation, globalisation, and perhaps other factors that are not even yet fully evident or understood. But the financial services industry is in denial, and it keeps plugging away with the same old same old. It has to do that, because it has nothing else to offer.

Caveat emptor.




Regarding those who have decided to use this forum as an advertisement for specific professional financial advice services :-

- Why did the moderators delete the original post, but not subsequent ones quoting it ?

- Hopefully it will prove counter-productive.

- It probably emanates from naivety and is perhaps less insidious that those who routinely use this forum to plug the alleged benefits of buying relatively complex, capital-risky investments, using IFAs etc, in the guise of being ordinary punters offering friendly advice.



(*) I have great difficulty in accepting the financial advice industry as 'professional' in the true sense. Though there might be some really good, knowledgeable, and customer-oriented ones, they do not have to possess professional qualifications nor experience to anything remotely like the same degree as do the recognised professions.

DreamerV

jem16 wrote: »

Perhaps as all of his posts have been removed, all of those who quoted his details could remove them otherwise he's achieved his objective?

Had realised and done this then saw your post, great minds hehe Sorted. Hopefully all will follow suit.

Credit-Crunched

I bought bp at 356 after the bad news, many sold, now sitting at (BP.) BP
Buy/Sell
443.62 -1.10 (-0.25%)

That to me looks like quite a nice profit.

IF you are going to slam ALL equities please have the decency and grey matter to back up your spurious claims with some sort of an argument and not just pathetic scaremongering.

GeorgeHowell

Credit-Crunched wrote: »

I bought bp at 356 after the bad news, many sold, now sitting at (BP.) BP
Buy/Sell
443.62 -1.10 (-0.25%)

That to me looks like quite a nice profit.

IF you are going to slam ALL equities please have the decency and grey matter to back up your spurious claims with some sort of an argument and not just pathetic scaremongering.

That is like saying to someone, "I've just made £1,500 by putting down £500 on a 3-1 favourite at Ascot, which came in. I recommend that you now pick something out and do the same."

You are the one who needs to come up with some sort of plausible argument, instead of just shooting from the hip.

jimjames

GeorgeHowell wrote: »

I think the point is that because of short/medium term volatility, the financial services industry has tended to quote a decade as the appropriate unit of time to give equities a chance of being (what they hold to be) the best, indeed the only, viable long-term investment.

You seem to be switching arguments to suit your case. On the one hand 10 years is an appropriate unit but on the other 12 years is better as it proves your point more.

If you use 10 years then the FTSE is still 10% above where it was then (without dividends) but again this is only the FTSE index for the UK market. Many other markets are significantly higher than 10 years ago and most advice is to spread your investments so you wouldn't just have an investment in the FTSE100 index.

If we are to exclude dividends because they are unquantifiable then you might as well exclude interest on savings accounts as they are equally variable and unquantified. On that basis even an investment in the FTSE over the last 10 years and all its ups and downs would still have beaten cash in a savings account by 10%. I'd say that was a pretty good reason that equities are worthwhile long term.