Catch the next wave or diversify?

bowlhead99

im thinking the almost start from scratch option maybe the best, have a proper think about my aims and decide on a plan. I shall get the Tim Hale book as have often read recommendations.

Good conclusion. You have said you are risk averse and your portfolio is very non-risk-averse. As you have admitted it looks nothing like the ideal portfolio for a relatively cautious investor. A volatile mix of funds as every single person here agrees. Start again and build up a balanced portfolio that is not simply following the latest thing that has already gone up a lot. That doesn't mean nothing with potential to go up significantly in value, but it is about balance. You don't have to give up on treats when you are on a diet and exercise plan to improve your lifestyle but moderation is the key. Put no more than a few percent (of your whole portfolio inc BTL) in the crazy stuff.

So, we are all very happy that you have decided to stop chasing things with the biggest risks and the highest (potential) returns.

... two seconds later:

Concerning future punts (at 10-20%), anyone have a feeling which investment types, geographic zones offer most potential?

Dude !!!!!!. Stop it with the 20% in 'future punts'. You are not taking punts any more. You are not looking for something with the most potential and therefore greatest risk.

Start. Again.

benalder284

I'm with gadgetmind above - I think you really need to think about what you are trying to achieve and what level of risk you are prepared to accept. The current portfolio as almost everyone else has pointed out, is high risk and volatile in the extreme.

I don't think that chasing the next trend or wave is a sensible or sustainable investment strategy for most folk and is really more akin to sticking a fortune on a horse because you like the sound of their name.

I'd suggest diversifying with an appropriate and balanced portfolio, go passive and then go and enjoy life rather than attempting to micro-manage.

BarleyGB

Ive just realised (oops)

I have made a massive mistake with my English which no doubt has confused the whole thread.

I meant to say that im NOT risk adverse, i.e. I favour some element of risk, that said it doesn't detract that I need to balance my portfolio, make some significant changes and rebalance what is a very skewed risk at the moment.

Sorry about the misleading sentiment ive been showing

dale_cotterill

BarleyGB wrote: »

Ive just realised (oops)

I have made a massive mistake with my English which no doubt has confused the whole thread.

I meant to say that im NOT risk adverse, i.e. I favour some element of risk, that said it doesn't detract that I need to balance my portfolio, make some significant changes and rebalance what is a very skewed risk at the moment.

Sorry about the misleading sentiment ive been showing

Brilliant!

That said, I'm not risk averse and that made my eyes water as well!

About the next wave, don't bother trying to time the market, anything can, and as we have seen, anything will happen.

Your 5%'s probably aren't that bad, in fact you could probably make them a little larger if you were to diversify your 40% UK SmCos and Bank Stocks a little wider.

On your Risk Adverse point however, you sold out of Japan at a 15% loss, and with looking at the portfolio you have, isn't actually that large. There is certainly the potential to lose maybe double that in a short period of time. So if 15% is considered a large loss which would make you sell, you really need to consider your risk level and has some exposure to large-cap developed market companies/indexes with offer some (very relative!) degree of stability.

DoctorW

With all due respect you remind me a bit of this article.

http://monevator.com/passive-investing-tips/

I'd recommend reading that, absorbing it, reading it again and then taking some huge deep breaths and once you've reworked your portfolio to a more comfortable diversification...leave it the heck alone!

D

atush

I am not risk averse but your portfolio scared me.

And by the time you see a 'Wave' to catch, it will already be close to shore. Chances are you will miss the big profits, see some profits and then have a front seat to view the crash from.

Diversify and start from scratch. Nothing wrong with taking your profits.

tejero23f

The secret to catching the wave is watching your funds very carefully everyday if possible, i have been using this technique for the last 2 years-my most recent make was First state pacific leaders and neptune greater russia which i sold last week after a terrific rise over the last month.
I have switched funds many times-out of uk smaller comps soon as the writing was on the wall onto the rising global, us and asia funds. the market is high just now-not a time to buy except maybe a punt on gold or natural resources.
if you want to buy funds and forget them that's fine but don't moan when they drop and you need the money
If you have time and energy to watch carefully then you can definitely can make gains-it's a fine line

gadgetmind

tejero23f wrote: »

i have been using this technique for the last 2 years

Please remember to report back when you've been using it for 20 years. You need at least a couple of market cycles under your belt, including some mega-panic crashes, before you can make any kind of claim.

bowlhead99

tejero23f wrote: »

The secret to catching the wave is watching your funds very carefully everyday if possible, i have been using this technique for the last 2 years-my most recent make was First state pacific leaders and neptune greater russia which i sold last week after a terrific rise over the last month.
I have switched funds many times-out of uk smaller comps soon as the writing was on the wall onto the rising global, us and asia funds. the market is high just now-not a time to buy except maybe a punt on gold or natural resources.
if you want to buy funds and forget them that's fine but don't moan when they drop and you need the money
If you have time and energy to watch carefully then you can definitely can make gains-it's a fine line

As you've only been investing since April last year (per your previous posts) you have absolutely no idea how this "following momentum" technique will work out in broadly negative markets because generally most mainstream equities have been going up; there has always been something nicely on the rise and this had been the case for four years before you started.

On this thread, you mentioned how your trading in and out onto the momentum had helped you make 5% in 6 months - and then someone else mentioned that their uk index tracker was up over 20% in a year while another pointed out that their Fidelity UK Smaller fund had doubled in 18 months, so you can easily find returns by just staying invested, if you have a reasonable allocation in the first place.

When things are going up (apart from the 3 funds you gave up on because they'd all gone down in price ), we can all make money. You mentioned last November that one of the funds you dumped after 6 months as it wasn't going anywhere fast was Fidelity U.S. special sits. Since October last year it's now up 15%. Going back further it's done 100% in five years, 130% in ten, 800% in 20.

So sure, you can try to dive in and out by "watching your funds very carefully every day". But unless you have a 6th sense, it's somewhat (ok, extraordinarily) tricky to time the market to the extent you outperform the long term buy and hold strategy. If you don't know what to buy, as most will generally admit, buying a bit of everything according your risk tolerance is a reasonable strategy. Hold a mix of assets and periodically rebalance between them (i.e. sell high to buy low and keep your assets in your desired proportions).

The absolute optimum is to buy UK just before that goes up, sell and switch to EM just before that goes up, sell and switch to gold just before that goes up, then U.S., Japan, real estate etc etc., and conveniently exit right at the top of all of them. Of course you get a nice result if you could time that perfectly rather than just holding a bit of everything.

But what you seem to be doing in practice is waiting until you see others making gains, then piling on the bandwagon momentum, and then once you've got bored or it's starting to lose, you exit. So you're never buying at the bottom and you're never exiting at the top.

To be completely honest, I think you're being disingenuous if you say you "switched out of UK Smaller comps as soon as the writing was on the wall". You can tell yourself that you made a smart decision if it massages your ego, but with your less-than-two-years experience, you don't get to see that "the writing is on the wall"for a sector by simply diligently checking your funds prices every day and knowing where they will go next, unless you're some sort of psychic.

Perhaps you mean "saw the writing was on the wall" because so many commentators were also saying that was the case and the small/micro funds, particularly in U.S. and UK were up massively in a short timescale. But many commentators had said they were coming to the end of their run 6 months earlier. Some would say there's still value now they've pulled back. Others that they have further to drop. Anyone can listen to the media or someone on a forum, convince themselves they're right, and get lucky with the timing and declare themselves a genius, but it's generally just pot luck that they didn't listen to a different commentator on the media or a different person on the forum and get the timing completely different.

Frankly your previous comment that your entire strategy was to look at performance tables "from 6 months to 3 years" tells me you don't know enough about what you're investing in and what a manager is likely to do with the portfolio and assets in what market conditions. Your reliance on "buy what's going up" won't help when everything is tanking. I expect you will come back afterwards and tell us that fortunately you saw the writing on the wall, moved all to cash, then have conveniently bought back in at bottom.

We all have our favoured sectors from time to time, but I doubt any of us are as convinced that this strategy is as easy to execute as you clearly think it is - but good luck

tejero23f

Hi Bowlhead,
Thank you for your comprehensive reply to my post, it is very much appreciated, I apologize if I made a claim about momentum buying or knowing any secret- I don't. My choices so far (and luck) have been good, my aim quite simply has always been to make more interest than a bank account. Good luck -Tejero