investments are for the long term?

bigfreddiel

investments are for the long term, that means 10+ years i believe, certainly no less than 5 years which is probably short term.

so why is it performance charts show results ranging from 1 week, 1 month, 3 months and so on all the way out to 5 years.

other than giving one a rough idea of good vs bad i can't see the point especially when we're told past perfomance is no indication of future performance.

i guess you need to use performance chart along with company/fund/it fundamental data before making any investment choices - but who does that?

fj

Reaper

In less volatile times I would say a 5 years investment would be OK, but as things stand now I think a longer time period is needed. In my opinion I think the stock markets are likely to go sideways for a long time, with unusually large ups and downs along the way.

As for the charts - there are several problems. The first is that past performance is indeed a very poor predictor of future returns. That's not just a legal disclaimer, it really is. The next problem is apart from performance charts there isn't much else to go on. Well... there are charges, the manager's history, investment strategy. But somehow everybody looks at the charts too.

If you are going to look at them them recent performance and long term performance are both worth looking at. Recent good performance coupled with a new manager might mean a change in fortunes. Long term compared to an index might reveal a closest index tracker, or wild swings above and below it might indicate risk taking.

In the end the charts are their because people want them, right or wrong. I don't think 10 year charts are there because too much may have changed in that time in the fund, or maybe just because they don't want to store all that data!

Jegersmart

errrrrrr.....charts are a graphical representation of price discovery. Price discovery happens in real-time every day which is why one can get charts for any time period you may decide to look at. If you are not interested in charts, just invest in any thing you are able to decide is a good investment and then in 10 years time look at a chart and see how you have made out.....

J

droopsnoot

I think short-term charts are used to show how volatile things can be over a short period of time, almost to reinforce the long-term nature of the investment.

srcandas

Certainly you will be interested in short-term volatility (eg comparing trading volumes with price movements). If that volatility is significant then the fund will have cost issues.

They allow you to decide if say investing 20% each month is less risky than jumping in with one purchase.

Even with a 10 year investment a 5% swing up or down at the time of purchase can make a noticeable difference.

The short-term graphs of funds also allow one to compare the fund behaviour with that of short-term component, index or benchmark movements which can be very informative.

The more information available the better IMHO :beer:

utigers

I use the 1&3 month charts to see what has done worst in my portfolio over that period, and then potentially topping up these funds.

talexuser

Funds which last 10 years with the same manager (a true graph of performance) are very few and far between. Most dog funds don't even last 10 years, they get merged, re-named, re-balanced and sector changed etc to get rid of their bad history dragging down their fund house averages. Judging by the number of funds which actually beat trackers and justify their charges I would guess that much more than half would fall into this category, hence the perpetual churning of new fund launches.

gadgetmind

bigfreddiel wrote: »

so why is it performance charts show results ranging from 1 week, 1 month, 3 months and so on all the way out to 5 years.

Yes, it's frustrating, but it's also a sign that you're maybe using the wrong sites and/or investment vehicles. Active funds tend to be a bit fly-by-night, Investment Trusts less so, and major indexes go back to the turn of last century.

I mainly use charts to show other people how useless charts are. There are investment approaches that stand the best chance of being effective and they don't rely on short-term charts.