Is the stock market over heating?

cepheus

gadgetmind wrote: »

True, but also bear in mind that those returns are for a single lump sum at the start of the period. In reality, people nearly always drip-feed, so you'll be looking at a very different return curve, one that actually benefits from those troughs along the way.

Surely drip feeding would have a reduced rate of return relative to a lump sum invested at the start of that period, since your average investment is bought at a much higher price.



Unless you invested a lump sum prior 1998 or in 2002-2004 or late 2008-12 my guess is that your real return per annum would be mediocre, after allowing for costs of say half a percent a annum.

JohnRo

cepheus wrote: »

Surely drip feeding would have a reduced rate of return relative to a lump sum invested at the start of that period, since your average investment is bought at a much higher price.

I'm currently running a finite, real world experiment with a lump sum investment versus a regular monthly contribution from an interest earning bank deposit.

It's early days so nothing meaningful to compare yet, I suspect there might not be a great deal of difference in the short, five and a bit year period i'll be running it, once the regular contributions are complete. The problem with conclusions is that any comparison is only ever relevant to the fluctuations over that period of time to which it applies. It says nothing about which will be the better option in future either way.

Thrugelmir

srcandas wrote: »

Thrugelmir your sig

"The four most dangerous words in investing are 'This time it's different." John Templeton

So past performance is indeed a good ....................... :rotfl:

Then you need to understand the context it is said. Every new generation of investors at some point believes they've found the holy grail to investing. Only for their own self beliefs to be cut down at some point in time.

So I'll happily sit back, watch and wait, and :beer:.

atypical

JohnRo wrote: »

Charles Stanley are the cheapest platform for a single VLS fund with a balance below £9600.

http://monevator.com/compare-uk-cheapest-online-brokers/

Or cheapest if £5,640 in an S&S ISA (e.g. if rest as cash) and less than £13,560 outside. Hargreaves charges £48 for the same ISA + non-ISA arrangement.

sabretoothtigger

A_Flock_Of_Sheep wrote: »

I am yearning for a 30% drop in stocks while I am reading Tim Hales book.

gadgetmind wrote: »

It was close to impossible for an investor to do that.

Trackers were few and far between and had higher fees than they do now. You could have run your own, and had fun doing it, but dealing costs would have been high unless you had a fair few bob to play with.

IG would have tracked the index for you, I guess it was more propriety back then.
This guy shorted 1987 oct FTSE

http://www.marketoracle.co.uk/Article2499.html


Not sure why you'd go with vanguard when other trackers are effectively cheaper. Transfer later when you are a rich git and the percent cost is actually less

trackers vary in efficiency anyway but IG for example would ignore currency changes which can be good or bad.
Some unit trusts do this, holding Japanese stocks but hedged sterling which right now would be good as Yen is weak

Some newspapers look at which trackers are best, I used to use LG which are fine for small amounts Im sure
Right now I'd hold invesco perp as he holds ftse stocks but only ones he likes and they are usually high yield, so instead of cost focus on a nicer percentage

gadgetmind

sabretoothtigger wrote: »

Not sure why you'd go with vanguard when other trackers are effectively cheaper. Transfer later when you are a rich git and the percent cost is actually less

I guess my pension pot makes me officially a rich git as Vanguard works out way better for me than alternatives.

Retiring on a modest/good income requires "rich git" sums in pension/ISA pots unless you have a DB pension.

gadgetmind

cepheus wrote: »

Surely drip feeding would have a reduced rate of return relative to a lump sum invested at the start of that period, since your average investment is bought at a much higher price.

Sorry, I didn't look hard enough and thought we were talking about the "lost decade" since 2000.

sabretoothtigger

gadgetmind wrote: »

Retiring on a modest/good income requires "rich git" sums in pension/ISA pots unless you have a DB pension.

absolutely, even a million is not what it once was. Git status is needed for reasonable security
Annuity payments are now much less now I think (related to QE?) and life expectancy is far longer and rising costs, etc

"lost decade" since 2000.

It wasnt lost, it just wasnt so fab. I was in there from 2001 onwards and it worked if reinvesting dividends.
If someone went in gradually which I unfortunately did not, they'd not be lost at all. [Same applies now I strongly suspect, long term]
Overall it turned a profit over five-ish years from what I saw so long as you didnt sell low, I did 7

My mistake was not cashing in the tracker earlier to switch into SL IPO shares, the allocation process is a pain
They were even better then I thought and really not so risky as commonly perceived (thanks to equitable?)

Old_Slaphead

gadgetmind wrote: »

I guess my pension pot makes me officially a rich git as Vanguard works out way better for me than alternatives.

How much do I need to become a rich git ?

sabretoothtigger

I reckon a pension only stops being small at 250k, the rich part is a joke because of how much is needed to be sure.
This is how much annuity 100k buys, I think the dole pays more then that