Is the stock market over heating?

grey_gym_sock

i don't think NW has been the manager of EDIN for all that period, so it's not entirely comparing like with like.

EDIN has performance fees, so not sure how costs compare overall.

i think leverage is probably the big difference. it does add risk - it makes EDIN likely to outperform when markets rise, but underperform when they fall. if you can live with that, it's not complete madness.

Glen_Clark

grizzly1911 wrote: »

Care to share the better value alternatives?

I have happily held IPHI for some time and been happy with them. i was surprised to see that EDIN It although now having similar top ten holdings seems to have achieved 50%/20% better performance over 5/3 years respectively. Down to the leverage, risk and lower charges?

How much greater is the risk in reality?

I hold FRCL and EUT both of which have lower charges and a discount to NAV, compared to EDIN. Their performance has been mediocre.
EDIN is on a premium to NAV because its fashionable due to Neil Woodford's recent star performance. But this years star performer is often next years dog.

A_Flock_Of_Sheep

The premium was 0.4 something or 0.5 something % when I purchased it is over 3% I think now.

berimbolo80

A lot of the recent rise in stock prices has been the removal of "risk premium". The reason why prices went lower was the market was considering a high chance of a European meltdown. In the last 6 months this has becoming increasing unlikely and recovery seems to be the most likely path.

Result: Bull market

marathonic

I'm not so sure. I can see another couple of turbulent weeks ahead. I feel that recovery, from an economic perspective, is inevitable now but the markets can defy logic (as has been seen when good economic news results in falls recently). The trend is down at the moment and nothing has happened in Europe over the past week that appears likely to change that.

My pension transfer STILL doesn't appear to be showing online - I'm not sure whether it was invested, as promised, on Friday and the online system just hasn't updated yet or whether it hasn't been invested yet. To be honest, I'm not bothered either - there's probably a significantly higher chance that the start of this week will see down markets than there is of the markets turning.

Glen_Clark

berimbolo80 wrote: »

The reason why prices went lower was the market was considering a high chance of a European meltdown. In the last 6 months this has becoming increasing unlikely

Why has it become increasingly unlikely?
Do you have any reason or evidence for that assertion?

Draghi said the ECB will 'do whatever it takes' but as yet has done nothing, and how much can it do?
It cannot repair the increasing budget deficits of Britain, Spain, Portugal etc etc

Glen_Clark

marathonic wrote: »

I feel that recovery, from an economic perspective, is inevitable now

Why?
Or are you just another one who has been lulled into a false sense of security by rising share and house prices caused by money printing and Osborne's sub prime mortgages?

marathonic

Glen_Clark wrote: »

Why?
Or are you just another one who has been lulled into a false sense of security by rising share and house prices caused by money printing and Osborne's sub prime mortgages?

Maybe I shouldn't have included the word 'now'. Recovery is inevitable is what I'm getting at - just maybe not in the short term. Nothing has really happened in recent times that suggests that it's going to be a quick return to normality.

Also, you can be damn sure I haven't been lulled into a false sense of security with rising house prices - I'm from Northern Ireland

Prices are down over 50% in nominal terms here - probably closer to 65% in real terms. I purchased in December, as a FTB, for half of what the house was on the market for in 2007 (it was then taken off the market and rented whilst the owners waited for the upturn that hasn't yet materialised).

marathonic

Glen_Clark wrote: »

Draghi said the ECB will 'do whatever it takes' but as yet has done nothing, and how much can it do?

A lot of the action in the markets is based on confidence. The politicians in Europe, the UK or the US don't necessarily need to do anything to inspire confidence, coming out and saying it is enough.

That being said, the markets and the economy are two different things so, when Draghi says the ECB will 'do whatever it takes', it may cause a spike in the markets over the following few weeks - but it won't necessarily mean that any new jobs will be created or that GDP will improve.

There is a disconnect between the markets and the real economy - but I suppose that disconnect can not last forever.

Thrugelmir

marathonic wrote: »

There is a disconnect between the markets and the real economy - but I suppose that disconnect can not last forever.

Investors need to focus on what they are actually investing in, i.e. the company and it's results, not the market.

The market is little more than a herd of wandering wildebeest.