Are markets expensive and about to crash

Rollinghome

Linton wrote: »

Yes - if one could buy trackers in one's own personal index. My argument against trackers is that I dont like the indexes, the FTSE100 in particular because of its sector (mis)allocation and most trackers in general because there seems little justification for capitalisation weighting.

That's entirely valid.

At the same time without constant rebalancing it's very easy for a small portfolio of shares to become fairly arbitrary too. If the preference is for FTSE250 companies with wide spreads then, with SDRT on top, then rebalancing can be expensive. There's always the risk too that incurring that cost to reduce holdings in a favourite share that has done you proud, like your favourite Chesnara, will influence your decision.

It's often said that 20 or so shares gives a reasonable spread but if there happens to be an RBS or two in there, which gave stunning returns until the party ended in 2007 (100% plus divis from 2000 to 2007 compared with 8% for the FTSE 100), that can be a biggish bump in the road.

So I could easily be persuaded of the sense in getting along without those shareholding - but probably won't for not very good reasons.

Glen_Clark

Rollinghome wrote: »

I'm in a similar position. Wasn't so long ago that funds had hair-curling initial charges that made them horribly expensive so that all my equity investments were directly held but with a large dollop of ITs. Wasn't until c.1992 when L&G introduced their low-cost trackers that I owned a single UT. Became less resistant when discounters like Chelsea Financial and Messrs H&L came along.

I still hold a substantial sum in directly held shares but I suspect I do it largely for the worst of reasons: habit and sentimentality. Like you, my holdings are pretty much a balanced broad range because all the research milarky required to do otherwise became very boring and too much like hard work.

I even found myself suggesting to my sister that she swap her share holdings for a tracker but don't follow my own advice. Perhaps I should.

Pretty much sums me up too
But I have sold the best performing shares each year to use up my CGT allowance, keeping the dogs for a tax loss so that if I needed to sell a large chunk in one go I could do it without incurring CGT
That has left the portfolio somewhat unbalanced.

ffacoffipawb

gadgetmind wrote: »

High yield is in fashion. I'm trying to avoid looking at capital and instead just focus on income growth. In fact, the capital growth is a problem as it makes deploying new cash difficult. I often find myself wishing the FTSE 100 would drop back below 5000 and stay there!

If Miliband wins the next election, you will get your wish, and some!

gadgetmind

ffacoffipawb wrote: »

If Miliband wins the next election, you will get your wish, and some!

Yes, that's for sure, so I guess I need to be careful what I wish for!

TCA

Most bookies have Labour odds-on to win at this point in time. Might be a reason to keep the powder dry and some spare cash handy around May next year.

gadgetmind

TCA wrote: »

Most bookies have Labour odds-on to win at this point in time.

I've survived Labour governmentsin the past, and can probably manage to muddle through another, but it will be a rough ride for everyone.

Thrugelmir

Linton wrote: »

Very different companies. Tesco seems to have lost its way in a highly competitive mainly UK market dominated by price with little brand loyalty. Diageo is a market leader owning a broad range of global brands in a market where price isnt the primary driver. Its these sorts of factors that are of more long term significance than the ups and downs of the annual accounts.

That's what makes markets - opinion.

Wilkins

gadgetmind wrote: »

I often find myself wishing the FTSE 100 would drop back below 5000 and stay there!

Not wishing for it, but prepared to accept it with equanimity. It is for this reason that I find it difficult to let my equity holdings rise much above 50% and my cash holdings fall below 30%. Yes, a 2% return on the latter is not good, but it's a price I am prepared to pay for comfort.

Glen_Clark

gadgetmind wrote: »

I prefer holding around 25 different stocks, but if asked to pick one? Hmmm.

Diageo? Unilever?

N Brown is also very well managed, but perhaps a trifle small for a single holding.

I have a few shillings in Unilever. But its quite expensive, and vulnerable to people switching to unbranded goods from the likes of Aldi