Just for fun...

Ryan_Futuristics

TheTracker wrote: »

Perhaps you misunderstood. Perhaps I wasn't clear. I don't think for one moment the collective wisdom of the financial industry says investors should buy trackers. Rather, my point is the collective wisdom of the financial industry is represented by the current state of the market. I can't imagine that's disputable. I believe in the wisdom of the crowd. I personally invest in that wisdom through trackers. You appear to believe something quite different, perhaps that you can outwit the crowd, where the crowd includes the bulk of the financial industry? Hubris or genius, time will tell.

I sometimes wonder if the person you are actually trying to convince is yourself? It comes across that way sometimes. I'm quite comfortable and relaxed with my investing style.

Collective wisdom of the market?

Here's what the average investor's returned over the past 20 years in the US (where the market is as close to "efficient" as you'll get)



In fact, consensus opinion in the markets tends to be so off, the best returns you can consistently achieve simply involve looking at what the crowd's doing and doing the exact opposite



http://www.millennialinvest.com/blog/2014/10/28/the-contrarian-sociopathic-mindset

Just about every behavioural study on the markets shows the crowd is the worst possible place to be

And I hope I don't come across as aggressively bashing your ideas - all I really want to get across is that there aren't many easy answers answers ... and if you find yourself in agreement with the majority, just know you're probably in bad company

masonic wrote: »

That seems to happen because following you usually requires a leap of faith. And I don't do faith.

No I think it's more that it gets lost in translation

But if you don't do faith, that's ideal

TheTracker

Come on you're smarter than that. The performance of the average investor and the average performance of the market are two entirely different things. Trackers held against each of the classes represented would approximate the average of the blue lines, not the red line. "The crowd" is the sum of the blue not the chumps in the red. In fact advocates of passive investing use the same graph to show that stock picking is a mugs game, don't try to beat the market, instead be the market.

masonic

TrustyOven wrote: »

Would you say the same if we were talking about funds instead of individual shares?

Assuming this £500 is in addition to a cash emergency fund...

With individual shares, you have trading costs and lack of diversification working against you.

With funds, it can be just as economical to invest £500 as £10,000, but if I were approaching it fresh with no knowledge of investing (which I assume is the position the OP is in) I'd at least want to spend several hours researching what I was doing and if I were going down the active managed/IT route I'd need more time to compare and choose a fund. Perhaps over several years the extra returns on £500 would make it worth the time invested, and perhaps it would lead to a regular investment habit that would end up generating significant returns over time.

Nosler

I like Mollins.


about a 6.5% dividend and a PE of about the same


They are world leaders in cigarette making machines

IronWolf

Archi_Bald wrote: »

I agree.

Of course Woodford does need people who believe he will repeat history, as otherwise he won't make any money. It's a bit like a cult. It attracts some and not others.

yeh, I think because the guy is very heavy on the marketing and promotion. I dont think a week goes by without me seeing his name somewhere in the news or on some random article. The guys PR team must be pretty good.

IronWolf

In answer to the original question, I wouldn't take a punt with it, I'd treat it like any other money. At the moment, if I had to use it to buy something, I'd go for either Goldplat plc, or something in the oil sector which has been getting hammered.

Tayus

I've got some shares in Egdon Resources which I'm tempted to increase the amount of.... Everytime I read about them it seems as though they are looking to grow and expand.... next 5-10 years could be good?

Ryan_Futuristics

TheTracker wrote: »

Come on you're smarter than that. The performance of the average investor and the average performance of the market are two entirely different things. Trackers held against each of the classes represented would approximate the average of the blue lines, not the red line. "The crowd" is the sum of the blue not the chumps in the red. In fact advocates of passive investing use the same graph to show that stock picking is a mugs game, don't try to beat the market, instead be the market.

No it's not ... The crowd is actually the median investor (take 100 investors, rank them by return, find who's in the middle); the market is the mean ...

What the chart implies is there are a lot of investors doing poorly (the "crowd") and a smaller number doing very well (which is known ... as ... the 80/20 rule)

I have read articles on efficient market hypothesis using the term "wisdom of the crowds", but I think you could only really make that case if you're talking about crowds of pound coins

Nosler

Ryan_Futuristics wrote: »

No it's not ... The crowd is actually the median investor (take 100 investors, rank them by return, find who's in the middle); the market is the mean ...

What the chart implies is there are a lot of investors doing poorly (the "crowd") and a smaller number doing very well (which is known ... as ... the 80/20 rule)

I have read articles on efficient market hypothesis using the term "wisdom of the crowds", but I think you could only really make that case if you're talking about crowds of pound coins

perhaps you could state your academic qualifications/ investing experience please? I just want to know how much weight to give your opinions.

Ryan_Futuristics

I should say - on the active vs passive debate - while I criticise Vanguard a lot, their own public position since 2013 has been much more in line with mine (but you will have to look at their US site to find it)


Active funds' opportunity

Some advocates of index funds argue for what's known as the "efficient market hypothesis." This is just a fancy way of saying that stocks and bonds are reasonably priced because the markets efficiently distribute information to all investors. Therefore, according to this theory, picking individual stocks and bonds doesn't pay off because there aren't "bargains" for active managers to discover.

However, as with everything in life, the markets aren't perfect. They're reasonably efficient, perhaps, but there are mismatches. And while Vanguard believes there's a very persuasive argument for index investing, that argument doesn't rule out well-executed active management at a reasonable price. By keeping costs low, we believe we increase the chances that our active fund managers can outperform their benchmarks and their peer funds.

https://personal.vanguard.com/us/insights/article/active-index-funds-05042011


And here's where Vanguard's own active and passive funds rank in their sectors



Cheap active funds (from Vanguard and others) even picked at random, will tend to outperform their indexes ... This does not support ideas that markets are random or efficient


Apart from Vanguard's own performance not supporting this position, their former chief executive, John Bogle, was the leading voice in the case for passive investing ... He spread much of the residual doom and gloom about active funds being doomed to mathematical forces and high charges and poor track records

Guess where John Bogle kept his own personal money though? Almost all in active funds, including Vanguard's Windsor fund (and you can Google this)