The Stock Market Takes Another Dive - Steer Clear ?

pqrdef

IronWolf wrote: »

There's plenty of good opportunities at the moment in the stock market.

There's an opportunity where the professionals with their expensive research reports and ears to the ground are getting it wrong and the amateur knows better. How else can a share be underpriced?

Do your own research, we're told. Joke. The City is full of researchers and analysts, and they charge for their work. The amateur feeds on crumbs from the rich man's table. How do you know what's underpriced when you don't know what information other people are pricing in?

IronWolf

pqrdef wrote: »

There's an opportunity where the professionals with their expensive research reports and ears to the ground are getting it wrong and the amateur knows better. How else can a share be underpriced?

Do your own research, we're told. Joke. The City is full of researchers and analysts, and they charge for their work. The amateur feeds on crumbs from the rich man's table. How do you know what's underpriced when you don't know what information other people are pricing in?

If you look at most brokers and analysts recommendations, and follow them over time, they are wrong a lot of the time and will change their minds almost quarterly.

The industry is very short term focussed, and sometimes misprices stocks that over the long term have very high chances of success. They try and anticipate what the market will do, rather than just buy companies that will produce good returns over long periods of time, with a margin of safety in the price paid.

These opportunities aren't common, or even easy to find, the market is usually quite efficient at pricing but occasionally you can profit when emotions rule logic and reasoning.

DiggerUK

MrMalkin wrote: »

Another load of tripe, since advocates of balanced portfolios have continually addressed both of these points, you just refuse to listen or pay attention.

So explain why the capital value of the FTSE should now be 10300+, if price inflation linked to 1999 values.....and isn't.
..._

MrMalkin

DiggerUK wrote: »

So explain why the capital value of the FTSE should now be 10300+, if price inflation linked to 1999 values.....and isn't.
..._

Well for starters, and as you conveniently ignore yet again, the bare FTSE numbers ignore the dividends earned during that time period so just multiplying it by inflation produces a meaningless number. A more accurate analysis, made using your flawed methodology, shows that the FTSE 100 Total Return starting at 3141 should be worth about 4,200 today to keep up with inflation, when it's actually at 3,900 - therefore not far away, considering we're in the middle of a bear market.

The 1999 peak is just that, the absolute peak. I doubt very many people invested all their holdings at that exact point in time, therefore it's pretty stupid to pin your entire argument on that date. A more sensible investment approach would have involved PCA which would have resulted in higher returns over that time. Whether or not that would be enough to beat inflation depends entirely on the schedule of payments, and how long the person has been investing. Someone who started 5 years before or 5 years after your 1999 date would have seen very different returns.

DiggerUK

GeorgeHowell wrote: »

........is putting..savings at the mercy of the..stock market..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.

DiggerUK wrote: »

Investing dividends back in to winners, would have proved positive for an investor since 1999.
Investing in losers, or putting dividends back in to losers, would have been of no benefit.

MrMalkin wrote: »

....you conveniently ignore yet again..the dividends earned during that time period so just multiplying it by inflation produces a meaningless number. .
.......

The capital value of the FTSE still remains way behind it's 1999 high point when inflation linked. If dividends going back to investors are so good, then investment demand for FTSE and other financial products on offer would keep prices at a level that showed continued growth. Truth is, they don't, so most people will find it a "step too far".
No amount of re-balancing, or diversifying, of portfolios can reverse that trend down.

I'm sure a pensioner drawing their pension today, will not be impressed by the dividends paid in over the years, and underwhelmed by their funds capital growth.
Most likely they will be asking where their money has gone.
..._

DiggerUK

pqrdef wrote: »

.....A statistic would be hard to come by because it would have been necessary to move the money around a bit, not just leave it stuck in one account. Also, it's not clear whether you would compare with fixed-term or instant-access rates. Shares are instant-access, but with the possibility of a big penalty of you have to sell at the wrong time, so it's hard to compare like with like.

As we had most of our savings invested in building societies from 2000, I can tell you, it kept us well ahead of inflation. Don't have the figures around now, but with compounding of interest, we grew by about 1% pa over and above the average rates on offer.
The world then changed a bit in late 2007!!
..._

dunstonh

DiggerUK wrote: »

As we had most of our savings invested in building societies from 2000, I can tell you, it kept us well ahead of inflation. Don't have the figures around now, but with compounding of interest, we grew by about 1% pa over and above the average rates on offer.
The world then changed a bit in late 2007!!
..._

Even a bog standard balanced managed fund beat that.

So, how is it that you criticise investing on the one hand but feel proud that the option you did paid you less than investing in even a simple option?

DiggerUK

dunstonh wrote: »

Even a bog standard balanced managed fund beat that.
So, how is it that you criticise investing on the one hand but feel proud that the option you did paid you less than investing in even a simple option?

And those same funds are doing what now? We played safe and secure, and stayed about 3%+ above inflation.

I don't criticise investing, we did it prior to 2000. It's investing in markets now that is madness.
..._

dunstonh

And those same funds are doing what now? We played safe and secure, and stayed about 3%+ above inflation.

I did a comparison earlier on this thread which is now a few days old. The unit prices are up since then but doesnt really matter in a space of a few days as that timescale is irrelevant when investing.

I don't criticise investing, we did it prior to 2000. It's investing in markets now that is madness.

Why is it madness now? What crystal ball do you have that makes you think that now is a bad time and are you talking about single premiums or regular premiums and what particular investment areas are you talking about?

Biggles

DiggerUK wrote: »

I don't criticise investing, we did it prior to 2000. It's investing in markets now that is madness.
..._

I don't know why. If I didn't get out of shares in 2000, I'm certainly not getting out now.

OK, in 00/01 I lost a small portion of my excellent gains from the tech bubble, but it's been up all the way since then, despite the odd blip in the markets generally. I see no reason why that should change.