Time in the market

redbuzzard

It's self evident that its better to buy cheap than dear. What that principle doesn't tell you is how much you will lose by waiting for it to be cheap, and whether it will be worth it.

Remember asset allocation too, which to some extent aims off for the higher price in a mixed portfolio.

atush

My thoughts are, you need a new IFA. They are not supposed to Time the Market.

2, you should drip feed into the markets. This way short term volatility won't kill you, and you can actually profit by it.

Drip feeding/time in the market isn't rubbish, and I have made quite a bit doing it this way. It is also the least stressful way to invest.

Yes, I do time lump sum investments too, but usually just after a correction but I don't sit all in cash waiting for them.

cepheus

competent fund managers

Is that term an oxymoron? To be fair timing for fund managers is difficult since they have to shift large amounts of stock and the market can move fast. This isn't necessarily the case for the smaller investor.

srcandas

I agree with everything sensible offered on this thread

However I've just gone from 7% to 25% cash in 8 days :rotfl:

I don't care about logic: North Korea, bird flu in China, BoJ going crazy, the rise over the last few months, Spain going bankrupt, .......
it's too much for me :wall:


Sorry back to topic

Ark_Welder

srcandas wrote: »

:wall:

Why does this smiley keep signaling 'S'?


But back on topic and given the time of year, how many readers that don't try to time markets subscribe to the saying Sell in May...?

Newbie2saving

Thanks all for the replies, interesting thread. Apologies for the broken response, I don’t know how to multi quote.

I don’t have a mortgage, or debt, so this money is purely for future planning and security after losing my husband a few years ago. Hence I feel very responsible and worry that I am making the right decisions for us (my young son & I). I am in my mid 30’s and won’t need the money for a while.

Re the discussion, sorry for any confusion, I didn’t mean specific funds / ITs / shares advice, just the thought behind the IFAs logic, looks like it has stirred up a bit of a debate….

I didn’t pay my IFA for the particular advice, just in the annual mtg we have, hence he is on commission from the rest of my portfolio and he would have obviously made more money if he had advised further investment. My portfolio isn’t that grand, nor doing remarkably well, up at about 17-20% (recently, which I know a lot of people’s are too), which I am more than happy with.

I like the idea of drip feeding and like everyone says, smooth’s out the peaks and troughs, rather than adding in lump sums.

With regards to DIY, I think it is clear that my nervousness and naivety doesn’t warrant further investment capital J I have just over £20k ISA'd with HL and to me that is money I am learning the S&S business with, anymore would make me anxious!

Thanks again everyone, I am going to read the responses in more detail this evening.

Rollinghome

Linton wrote: »

Timing is vital - if you can get it right. And with a bit of luck you will get it right about 50% of the time.

With a bit of luck I'd assume you'd get right at least 51%. Getting it wrong as often as you get it right doesn't seem very lucky to me. With good luck and a smidgeon of aptitude then you should get it right more often than that.

If you can triple your investment in 10 years, which is quite feasible,

Yes you could do, with luck. And all those amounts you gained from not paying too much will also have tripled in value. Or of course, with less luck and adjusted for inflation, you could be worse off than when you started, especially if you were unlucky with timing such as those who bought 13 years ago in 2000.

Obviously some people aren't psychologically or temperamentally suited to doing that so you're better doing whatever you think works for you.

srcandas wrote: »

But the vast majority of fund managers do not time the markets. Most hold a very consistent level of cash and buy and sell as money flows in and out of the fund. And trackers are the worst example I can think of.

Not all fund managers will just buy a selection of shares and hold them in exactly the same percentage for the life of the fund - or at least none that I would invest invest in.

They'll buy into a company at times when they think it's shares are cheap and reduce their weighting at a time when they're fully priced. They don't retain the same weighting in the same shares throughout. That's timing. Trackers by definition don't time markets, it's what you pay active managers for.

If a manager decided on day 1 what shares and at what weighting they'd hold then just bought or sold to maintain that weighting as units were created or cancelled then a computer could do that job. Different funds will have different portfolio turnover figures but all active funds have some degree of turnover.

There are of course many people who are rubbish at it and can't resist buying and selling with the crowd but it's wrong for them to assume that just because they've found they're useless at it that it's totally impossible for anyone else to do with any degree of success.

redbuzzard

Perhaps timing the markets is what assists more than half of equity fund managers to perform worse than the index.

Rollinghome

redbuzzard wrote: »

Perhaps timing the markets is what assists more than half of equity fund managers to perform worse than the index.

It's costs including their fees that cause the average fund to underperform. Take away the costs and the average fund is like to be around the index, the average, unsurprisingly. They use their skills at timing to try to eliminate the handicap of their own costs. With costs well over 2% pa in a typical managed unit trust then you'd expect the average return to be the index minus 2%.

srcandas

Rollinghome wrote: »

It's costs including their fees that cause the average fund to underperform. Take away the costs and the average fund is like to be around the index, the average, unsurprisingly. They use their skills at timing to try to eliminate the handicap of their own costs. With costs well over 2% pa in a typical managed unit trust then you'd expect the average return to be the index minus 2%.

But you are now talking about timing shares and not timing markets. They are not the same thing.

For example can you see Fidelity Malaysia selling heavily and running to say 80% cash? That would be timing the market.

Despite being able to see that a share may be going sour the fund manager has to find an alternative.

As I posted very resently I like fund managers who can shop globally but as they are part of a multi-fund organisation they can fall back onto very specific research in different geography, sector, etc.

But interesting stuff none the less :beer: