Anyone else making a loss on all their S&S investments?

TrustyOven

verybigchris wrote: »

When judging the UK stock market, and the UK economy in general, you need to look past the not-fit-for-purpose FTSE 100.

What's so not-fit-for-purpose about the FTSE 100?

Glen_Clark

TrustyOven wrote: »

What's so not-fit-for-purpose about the FTSE 100?

Its heavy on oil, banks, and miners which haven't done well recently..I heard nobody was saying it wasn't fit for purpose when they were doing well.

Glen_Clark

verybigchris wrote: »

When judging the UK stock market, and the UK economy in general, you need to look past the not-fit-for-purpose FTSE 100.

I was looking at the economy in general, not just the FTSE 100 or 250 which is smaller.
UK Government policy has encouraged investment in property speculation at the expense of productive industry.

TrustyOven

Glen_Clark wrote: »

Its heavy on oil, banks, and miners which haven't done well recently..I heard nobody was saying it wasn't fit for purpose when they were doing well.

But surely the next time the index is.. re-indexed (for lack of a better word), the poorly performing companies get pushed out of the 100. So the index is doing the correct thing.

The actual composition of the types of companies shouldn't matter. Which is why it seems very strange to say that the index isn't fit for purpose when the index is doing the correct thing.

enthusiasticsaver

My VGLS60 is about 3% down from the beginning of this year but that is mainly because I invested a lump sum in March and the last six months have seen it decline. I have noticed that now I am building it up further using monthly drip feeds the loss is reducing presumably because units I am buying now are at a lower price.


As others have said 2008 was the peak for shares and for property before the downturn so if you invested a lump sum I can see why your portfolio may be showing a loss. If you are suitably diversified - not just equities but other assets - ie commodities, bonds, property then this should minimise losses. The best way though of not making a loss is not to liquidate when the market is depressed so I would have thought the worst thing you could do is sell right now. Are you in the right sort of fund for your level of risk?

Scarpacci

TrustyOven wrote: »

But surely the next time the index is.. re-indexed (for lack of a better word), the poorly performing companies get pushed out of the 100. So the index is doing the correct thing.

A large badly performing company is still going to be large compared to the rest of the FTSE 100. A Royal Dutch Shell, BP or HSBC will not come close to falling out of the index despite the under-performance of those companies. Inevitably a period of underperformance does still lead to a lower exposure to those companies in the index, but given where they start from it doesn't drastically improve the index as it relates to the UK economy or even the global economy. That's not specific to the FTSE 100 mind, and more a problem of indexes in general, but the FTSE 100's composition undoubtedly makes it worse than some other indexes.

TrustyOven wrote: »

The actual composition of the types of companies shouldn't matter. Which is why it seems very strange to say that the index isn't fit for purpose when the index is doing the correct thing.

True, the FTSE 100 is doing a good job of tracking the 100 biggest companies by market-cap listed in the UK. But as a proxy for the UK economy or a play on a more diversified set of companies, it does a fairly poor job.

dunstonh

The FTSE 100 cant be called "not-fit-for-purpose" as it is a defined measure. However, I get the point being made by verybigchris that the FTSE100 is not an appropriate measure of the UK stockmarket in general and is a poor quality index to track. That is reflected in its long term performance relative to other western economies.

brendon

TrustyOven wrote: »

What's so not-fit-for-purpose about the FTSE 100?

Most people think the FTSE 100 is representative of the UK economy. However, 75% of all revenue is from abroad. The figure is 33% for the S&P 500, by comparison.

Linton

TrustyOven wrote: »

But surely the next time the index is.. re-indexed (for lack of a better word), the poorly performing companies get pushed out of the 100. So the index is doing the correct thing.

The actual composition of the types of companies shouldn't matter. Which is why it seems very strange to say that the index isn't fit for purpose when the index is doing the correct thing.

The problem isnt the construction of the index but rather the nature of the largest companies that happen to have their shares quoted on the London Stock Exchange. There are for example an unusually high number of multinational mining and drilling companies, many of which have little connection to the UK, and an unusually low number of manufacturing and technology companies.

The miners are high because they are usually active in countries whose stock exchange isnt large enough to support them so they choose to have their shares quoted elsewhere. The UK is a good alternative. Conversely multinational manufacturing and technology companies tend to be based in the major economies which do have large stock exchanges. There are very few significant UK manufacturing or technology companies as such work is largely carried out by foreign owned companies quoted in their home country..

The net effect is that the FTSE100 is not as well diversified as Global,US or European indexes and is subject to greater fluctuations. As mining and drilling have had a poor time over the past few years the FTSE100 has performed signicantly worse than other indexes.

The FTSE250 investing in smaller companies is a much better index from this point of view as it more closely matches the broad narure of the real UK economy.

EdGasket

brendon wrote: »

8 years ago was the peak of the market before the crash, so that might have affected performance. It might help to detail what your current holdings are, so we can give feedback on whether your portfolio is suitably diversified.

Well I've got about 90 holdings in the pension; would be boring to list them all but about half by value are individual shares and the other funds. The shares are the sectors I already mentioned and the funds are gold mining, many far-eastern focused ones (was supposed to be a growth area), Europe and World.

The problem is I have been in the wrong areas at the wrong time. e.g. I had a lot of oilies when the chancellor sprung the extra tax on the N. Sea a few years back. I have gold on the back of QE but its just carried on falling. Resources and oil because we keep being told the US and UK are out of recession but resources are way, way down, I have supermarkets as a 'safe' bet; well they aren't any more. I had a lot of asia focused funds that have gone Pete Tong since China's slowdown. I have commercial property shares that are doing OK but not making up for losses elsewhere.

After a number of individual shares went bust (some recommended by the Investor's Chronicle) I started moving away from individual shares and into funds but they have done even worse; all are down apart from a Vanguard global income fund and that only because I bought it recently when it was 'cheap'.

So do I sell all my heavily loss-making funds and shares, take a big hit and try something else (even just stick whats left back in the bank) or just let it ride and see if it recovers? Looks like its all going down more on Monday due to terror attacks in Paris.