why are all shares generally tanking? FTSE was 6800+ now 6500

IveSeenTheLight

Crashy_Time wrote: »

He bought BTL.


He invested it in BTL. :rotfl:

LOL, my BTL investments provide a very nice retun on my investment (circa 13%), way above the 3.5% FTSE 100 dividends yield

MFW_ASAP

IveSeenTheLight wrote: »

This is what I don't understand and hence I am fearful of shares (My fingers have been burn't before)

Let's take the Royal Mail Shares as an example.

They opened at £4.5500 a share and rose to £6.1551 with the current price being £3.9370.

Anyone who has bought and still holds shares in the Royal Mail has made a loss.

A way of mitigating this risk is to 'profit take'. This is where you cash in shares whenever they rise, maintaining your original investment amount.

For example, if you bought £1000 of RM shares and they went up 10% to £1100, you sell shares to the value of £100 and reduce your holding back to £1000, holding the £100 in cash.

If the market falls then you have less shares and so the loss is not as great as it would have been and you can use the profit you have taken (£100) to buy more shares at a cheaper lever.

The flipside is that if you reduce your number of shares and they continue to rise, you won't make as big a profit if they rise.

IveSeenTheLight

Thrugelmir wrote: »

What did you buy that's diminished in value?

What did you do with the dividend income?

I have not received any dividends.

I invested a some of money in NMT (New Medical Technologies) who at the time were the only company in Britatin developing retractable needles.

At the time, the USA had made it a legal statute to only use retractable needles to diminish needle attacks and it was expected that Briattain were to follow suit which would have put this company in a prime position

http://www.scotland.gov.uk/News/Releases/1998/12/361a8c42-0c5a-4f08-94ce-53d8b765acca

At one point they were about 60p a share and I bought in at 15p a share, they then were bought over by Volvere and now my shares are worth about 5% of what I paid for them.

IveSeenTheLight

MFW_ASAP wrote: »

A way of mitigating this risk is to 'profit take'. This is where you cash in shares whenever they rise, maintaining your original investment amount.

For example, if you bought £1000 of RM shares and they went up 10% to £1100, you sell shares to the value of £100 and reduce your holding back to £1000, holding the £100 in cash.

If the market falls then you have less shares and so the loss is not as great as it would have been and you can use the profit you have taken (£100) to buy more shares at a cheaper lever.

The flipside is that if you reduce your number of shares and they continue to rise, you won't make as big a profit if they rise.

nice theory, but if you buy and then they drop i.e. those that bought a £6.15 a share and now they are at £4.00 a share.

What's your advice for them? Buy more?

Generali

MFW_ASAP wrote: »

A way of mitigating this risk is to 'profit take'. This is where you cash in shares whenever they rise, maintaining your original investment amount.

For example, if you bought £1000 of RM shares and they went up 10% to £1100, you sell shares to the value of £100 and reduce your holding back to £1000, holding the £100 in cash.

If the market falls then you have less shares and so the loss is not as great as it would have been and you can use the profit you have taken (£100) to buy more shares at a cheaper lever.

The flipside is that if you reduce your number of shares and they continue to rise, you won't make as big a profit if they rise.

Top slicing is a mixed blessing. On the one hand, it's necessary to stop your holdings being concentrated in a few names but on the other you are selling the winners and holding the losers which doesn't sound like a winning strategy.

My advice, FWIW, is that for any holding at any price if you want to follow an active strategy you should consider whether you would buy in at the current price. If not, why are you holding this stock vs one you would buy at the current price?

I reckon the best way to invest is to find the cheapest proper trackers you can, e.g. Vanguard S&P500 which charges 7bps on investments, and drip your money in month-by-month and move across to things like cash and direct fixed income holdings as you head towards retirement.

The problem with active management is that it costs you a fortune in buying and selling costs.

wotsthat

IveSeenTheLight wrote: »

nice theory, but if you buy and then they drop i.e. those that bought a £6.15 a share and now they are at £4.00 a share.

What's your advice for them? Buy more?

What would you do if one of your BTL's fell from £615,000 to £400,000? Buy more?

Apart from a few practicalities I see no difference in the approach.

IMO one of the reasons BTL works for investors is it forces a long term approach. Most people don't make money trading shares (apart from brokers) - the illiquidity of property saves people from themselves.

It's why I suspect the best investment most people will make is buying is their own home. The 'millstone' prevents us from getting too clever for our own good.

IronWolf

No one invests solely in the FTSE100.

For example here is a FTSE 250 tracker over the last 10 years



Emerging markets

IveSeenTheLight

wotsthat wrote: »

What would you do if one of your BTL's fell from £615,000 to £400,000? Buy more?

I would be cautious of buying in a falling market but potentially prepare for buying at / near the bottom when we expected the market to turn.

There have been comments on here about buying in a falling market as it gets them more shares which I said I couldn't understand

I do understand that if those that invested when the RM share price was £6.15, that buying the same quantity of shares at £4.00 will mean that they only need the share price to recover to £5.07.

If they invested twice as much at £4.00, then they only need the price to recover to £4.72 to recoup their losses.

Still a gambol though unless you can invest vast sums

Thrugelmir

IveSeenTheLight wrote: »

I have not received any dividends.

I invested a some of money in NMT (New Medical Technologies) who at the time were the only company in Britatin developing retractable needles.

At the time, the USA had made it a legal statute to only use retractable needles to diminish needle attacks and it was expected that Briattain were to follow suit which would have put this company in a prime position

That's the nature of start up businessess. Some succeed and some fail. Holding a single investment means that the odds of failure are extremely high. First rule of investing is don't lose any capital.

chewmylegoff

IveSeenTheLight wrote: »

I understand what you are referring to, but surely it's dependent on the amounts invested and when

Essentially you are saying that if you bought when the price is lower, then you have a paper value increase because the rate has recovered.

Looking at this graph paints a slightly different picture

If we divide Dividends by Price we get the Dividend Yield which is currently 3.5% and can be compared with history below.

I reiterate, arguably, you could have had a better return in a long term ISA

What I'm saying is that if you invested a regular monthly amount throughout the 15 year period you would have done much better at the end than 3.5%.

Sure, if you invested £100k in a fixed rate savings account at the high point of the stock market in 1999 you may have achieved a better return, but who invests like that?

You have obviously convinced yourself that BTL is much better than equity investments so there is little point arguing. The reality is that they are just different ways of investing with different pros and cons which means they are suitable for different people.

For instance I have absolutely zero interest in dealing with tenants or any of the 'active management' elements of being a landlord. I could pay someone else to do that but then my returns would be eroded to the point that the risk wouldn't be worth it as far as I am concerned. I also wouldn't want to own a BTL near where I live as the initial capital investment would be so high that I would have to put all my eggs in one basket. That doesn't mean that BTL is rubbish, it just means it's not suitable for me.