Is the stock market over heating?

StevieJ

Glen_Clark wrote: »

That link illustrates my point perfectly. But I don't accept they are idiots - they just didn't have the benefit of inside information - knowing what the politicians were going to do.
The thing they (and I) failed to predict was the scale of money printing.
If we had known about it in advance, as the politicians who did it must have done, as the BoE staff must have done when they switched their pension fund into index linked bonds before cranking up the printing presses. then we could easily have predicted the fall in the value of the pound and the rise in asset prices.

I think that was well documented at the time wasn't it?

Jegersmart

Certainly in terms of yields, this changes every day which many armchair investors do not necessarily monitor. A lot of the equity income funds that were yielding 4.5% a year ago are now in effect yielding around 2-2.5% or so. Not all, but some.

I am not chasing or increasing equities positions at the moment unless it is in unloved sectors or geographies, I have been cutting back some in general over the last 3 months or so.

J

JohnRo

gadgetmind wrote: »

Their pension fund is managed by Legal and General, and given the scale of QE, they might have been better sticking to fixed interest gilts for much longer.

They also sold all their equity holdings in 2007, who needs a crystal ball eh..

All the BoE top brass have seen their pension pots more than double at, around or soon after the time of the 2008 crash.

gadgetmind

Jegersmart wrote: »

A lot of the equity income funds that were yielding 4.5% a year ago are now in effect yielding around 2-2.5% or so.

As the FTSE 100 yields over 3%, that's quite some yield mandate they've got there! Of course, their 1%+ pa fees have to come from somewhere.

Jegersmart

gadgetmind wrote: »

As the FTSE 100 yields over 3%, that's quite some yield mandate they've got there! Of course, their 1%+ pa fees have to come from somewhere.

Not sure what you are responding to, the point I am making is that yields change - so a lot of people are sitting there thinking they are getting 4% when they may be getting 2.5%.....

J

gadgetmind

I have some companies in my high yield portfolio with yields that are now as low as 2.3%, but if I was running an income fund, I'd have top sliced the massive growth that lowered these yields and bought more yield elsewhere.

Even without these tweaks, I'm still at 4.3% on current capital values and projected yields.

Jegersmart

gadgetmind wrote: »

I have some companies in my high yield portfolio with yields that are now as low as 2.3%, but if I was running an income fund, I'd have top sliced the massive growth that lowered these yields and bought more yield elsewhere.

Even without these tweaks, I'm still at 4.3% on current capital values and projected yields.

Well done, I am just pointing out that in general yields have fallen which perhaps should be borne in mind or monitored by folks who are assuming that the yield they got last year may not be the yield they are getting now.

The main problem at this stage of a stock market and low savings rates is that people are chasing yield and have a tendency to view a 3.5% divi yield as they would a 2.3% savings rate - i.e. with the same level of risk etc - when this of course is absolutely wrong. Divi yields change and of course can also be suspended (FGP?) with very little warning.

You are doing well to be at 4.3% whilst reasonably diversified imho.

J

p.s. I wouldn't put any importance on "projected yields" personally

gadgetmind

Jegersmart wrote: »

You are doing well to be at 4.3% whilst reasonably diversified imho.

26 holdings, no more than 5% of capital nor 6% of income from any one company. Largest sector is "Travel and Leisure", but I'm not sure that Greene King or Compass really belong there.

p.s. I wouldn't put any importance on "projected yields" personally

Yes, I did nearly add a "FWIW" to my comment!

Linton

I am showing a 4.7% dividend return over last 12 months based on current prices. My income portfolio contains 25 investments, a mixture of the usual FTSE100 suspects with 30% FTSE250 shares that have helped considerably (have a look at Chesnara with a 70% price growth AND a >6% dividend based on current prices over the past year) and some unit and investment trusts for a bit of foreign income.

I take all the dividends as income, any new money for investment would normally come from my growth portfolio. However the capital growth (40%) of the income portfolio has greatly exceeded that of my growth portfolio over the past year.

blinko

of couse the market is overheated, just look at the disconnect between earnings and valuations.

But who cares the trend is upward and relatively strong, we continue to ride....until she turns the other way