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FTSE Pessimism
Comments
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grey_gym_sock wrote: »it's unclear whether that's a good strategy in investment. or rather it depends what the rest of your strategy is. without knowing, 1 can't really comment on whether that's a sensible rule to add.
how do you decide who are weak players, and who are just going through a bad patch, but will bounce back even stronger? because the market does overreact sometimes.
there is a difference between selling because a company has fallen - something like a stop loss - and selling because your assessment of the company's merits has changed for the worse. it partly comes back to why you were buying in the first place.
in any case, the tracker strategy is a sound 1 in at least many markets, and you can follow it for very little cost. if the "monkey" had said that, due to the uncertainties of buying 20 stocks, he'd rather buy a tracker, i wouldn't argue with him.
The reference was to the operation of the index not a portfolio or investment decision.
The original point was that index continues to trend upwards. If you only have the strongest players that is more likely than not (ignoring whole catastrophes).
I know the index will move differently to a subset of constituents as you say. The index will also trend differently to a random selection of funds/equities. Just because the index is performing well doesn't mean a selection of equity linked investments will.
If you want to track then, as you say, purchasing a tracker is indeed a good idea."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
gadgetmind wrote: »If the client understands how to invest for themselves, then the value is the square root of Sweet Fanny Adams.
If they are a complete numpty with no idea of the difference between equities, bonds, cash, etc., no idea of risk/volatility, not a clue of how to construct a portfolio, and no understanding of taxation, pensions, ISAs, and much more, then that £2650 will save them from the cruel fate of having to spend £50 on books and 5-6 hours reading them.
So the recommendation would just say invest? What was the original £350 for?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
gadgetmind wrote: »Sorry, the analogies are doing my head in.
What's the argument here?
1) The FTSE index doesn't represent what an investor in the index will experience?
2) Someone buying selected or random stocks will under/out perform the index.
3) Active management will beat the index?
4) Something else?
Whatever the argument is, backtested evidence and/or Monte Carlo modelling will impress me more than hand waving.
Barring castrophe the index is a trended one way ticket that is all."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
That's a fair point I suppose, and reading any book is seldom a waste of time even if you disagree with the authors points along the way.grizzly1911 wrote: »I don't think the book claims to be an in depth research piece more layman's observations with a fair bit of digging. It doesn't mean all of those observations are necessarily incorrect. Moneyweek seems to get mentioned ocassionally though.;)
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However:
"You have a system where you are perpetually measuring the increasing performance of the UK’s fastest - growing companies only. Any company that has below - average performance will soon get relegated and stop dragging the index down and will be
directly replaced by one that is growing. The result: an ever - increasing index over a long period of time." is just incorrect in pretty much every part.
The FTSE 100 is not the UKs fastest growing companies, surely it consists of the 100 largest (MCap) listed on the London Stock Exchange.
Several companies (notably amongst the miners) aren't even UK companies.
It could take many years (decades?) for the big beasts (Shell etc.) to drop off the FTSE100 for below average performance.
New entrants to the FTSE100 aren't always better performers or bigger than those which they replace. Companies leave the FTSE100 for a variety of reasons, merger (Glencore Xstrata), takeover (Cadbury) or even removed because of a demerger of a bigger company (ICI - Zeneca).
I just think that books offering investment advice that are given away free on the internet need to be taken with a large pinch of salt. Especially when they get basic facts about the FTSE wrong.:)0 -
I just think that books offering investment advice that are given away free on the internet need to be taken with a large pinch of salt. Especially when they get basic facts about the FTSE wrong.:)
I think it is a very good book which I would definitely recommend forumites to download, it is just a bit rough around the edges.
The main theme that unless you are very careful, investment charges can stack up to the point that the investor is taking the risk and financial services firms are taking the profit is an important one.
I made the point in this thread about the FTSE100 flawed argument (in my view) directly to the author Pete Comley in this post. Unfortunately it appears that Pete's reply has been removed but I don't remember the reply casting any light on the point he was trying to make.I came, I saw, I melted0 -
I just think that books offering investment advice that are given away free on the internet need to be taken with a large pinch of salt. Especially when they get basic facts about the FTSE wrong.:)
I take your points.
At least he isn't trying to sell us anything;)"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Hello investypeeps!
The FTSE had dropped today after its highest point for ages. Japan's monetary policy remains unchanged with quantitive Niagra still in full flow.
On the upside Amazon have dispatched my Tim Hale book.0 -
A_Flock_Of_Sheep wrote: »Hello investypeeps!
The FTSE had dropped today after its highest point for ages.
I had a big tailwind on my cycle to work this morning; unfortunately I got stopped at a few more red lights than normal, so I was only slightly earlier into work. Means about the same thing.
If I'd missed my turning because I was going too fast, that would have been a correction.
If I'd crashed into a wall because I was going too fast, that would have been a crash.
If I'd stopped for a bacon roll because I was ahead of time, that would have been well tasty.0 -
The truth is no-one really knows what will happen tomorrow (or even later today!) - everyone has to use their own judgement. I have recently taken profits to the tune of about 5% of my portfolio so that I have a war chest ready for whatever correction / plunge we get.
The one thing I know for sure is that, when the drop does come, I will be buying like mad!
Me too but a bit more so, it also has the a positive psychological effect, in that if markets rise or fall there are positives.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Me too but a bit more so, it also has the a positive psychological effect, in that if markets rise or fall there are positives.
My plan at the moment having cashed 5% and leaving 95% invested is, if the market continues to climb, to cash out another 5% or so each month until I am at about 25% cash and 75% invested.
I must say that I slept better last night knowing that I had crystallized at least some of my gains over the past 12 months:)Old dog but always delighted to learn new tricks!0
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