Current market carnage - anyone selling or buying?

Sam_J12

A_Flock_Of_Sheep wrote: »

Sorry I think I misread your post as having a pop. Just paranoia. Not sure why I get that in this area of the forum!

I agree that a lot of people on this forum are entirely dismissive of anything other than their own passive approach to investing, despite the wealth of evidence that there are other good and profitable ways to invest in the stock markets.

A_Flock_Of_Sheep

Sam_J12 wrote: »

I agree that a lot of people on this forum are entirely dismissive of anything other than their own passive approach to investing, despite the wealth of evidence that there are other good and profitable ways to invest in the stock markets.

I mainly use CFDs. I'm too old for the long haul as I'm bordering retirement.

crux

As for commodities and related companies - I agree with this FT article

http://www.ft.com/cms/s/0/40c441ca-a26a-11e5-8d70-42b68cfae6e4.html#axzz3wv6FItdB

For those who don't want to follow the link - it's basically about the huge cash flow issue from all the debt the commodity companies took on in the boom time - now as many of their hedges start to expire they are likely going to be forced to keep drilling/pumping/etc - whatever the price just to meet dollar needs.

Basically "It will make the current downturn longer and more severe than normal."

I'm not tempted by BRWM - yet...

crux

Sam_J12 wrote: »

There are lots of momentum metrics (look up "momentum factor" for example) but just the raw stock price turns out not to be a bad one. Total returns including dividend is likely to be a better indicator than just stock price but probably not that different in most cases.

It is just an idea with a decent amount of evidence supporting it - I am not claiming it is some foolproof or divine method that guarantees anything.

Half tempted to take a small tilt towards momentum with - Global Momentum Factor UCITS ETF (VMOM) 0.22% OCF

TheTracker

A_Flock_Of_Sheep wrote: »

I mainly use CFDs. I'm too old for the long haul as I'm bordering retirement.

You know what they call sheep at retirement don't you...

A Tray of Mutton

bowlhead99

While I wouldn't want to be seen as ridiculing you ...

A_Flock_Of_Sheep wrote: »

BRWM has a nice dividend of over 12%

That is a simplistic calculation based on a 21p historic dividend level (including the final dividend paid out of profits earned in 2014, when the asset values were in the 300p-500p range) and comparing it to the current price.

It remains to be seen what level of income will be available for investors buying the shares in 2016. The graph over time of free cash flow yield and dividend yield for mining sector companies which Blackrock have had in their BRWM "investment ideas" microsite since the middle of last year, shows dividend yield among sector companies projected to improve for 2016... to less than 6%.

Nobody buying the trust in 2009,10,11,12,13,14 or '15 has been paid 12% in any one-year period on their investment cost, because to qualify to receive a full year (interim and final) dividend you would have had to have been in the fund before March 2015 and so would have paid between 250 and 810p a share to receive a maximum of 21p annual dividend.

Consequently it is a little disingenuous/ shortsighted / optimistic / call it what you like, to say the dividend is "nice", and is "over 12%". You have no idea what it will be. Dividend cover at BRWM has fallen substantially since 2010.

Blackrock themselves said in the portfolio strategy update published last month:

Looking ahead, the outlook for commodity prices remains subdued, given expectations of further US dollar strength and a modest demand outlook. This pressure will continue to force tough decisions and mining companies are likely to remain in austerity mode. Recent commodity price falls suggest further cuts to analyst earnings will be required

Hardly positive for dividend sustainability.

A_Flock_Of_Sheep wrote: »

BRWM has taken a boulderous tumble of 78% in five years. Not much more scope for falling. Another 20% will take it to near 100%

That's a great piece of optimistic maths to justify "buying on a dip", because 78% lost and 20% lost together makes 98% which is near 100, so there doesn't seem to be space for us to lose much more than 20% from here because you'd run out of space for more losses.

Of course, losing 20% ish of the historic share price, off the current buy price of 170ish, is not a new loss of 20% for today's buyer but a new loss of closer to 94,95,96%.

This is not to suggest that you should avoid the fund because you might lose 96% all in one go. But just to remind that losses are multiplicative rather than additive. As such, it's feasible that you might instead just lose 30%, nine times in a row, and each time thinking it looks like a screaming bargain from here....

After all, the investors in BRWM - losing the 78% of their capital value from 810p - have already lost 30%, five times straight.

Sam_J12

crux wrote: »

Half tempted to take a small tilt towards momentum with - Global Momentum Factor UCITS ETF (VMOM) 0.22% OCF

I've actually been considering the very same ETF! Bear in mind that the various momentum funds that have sprung up recently haven't actually performed that well in general. In the recent bull market of the last few years many momentum strategies seem not to have been particularly effective. I still believe momentum is one of the few reliable ways beat the market in the long term though.

A_Flock_Of_Sheep

bowlhead99 wrote: »

Consequently it is a little disingenuous/ shortsighted / optimistic / call it what you like, to say the dividend is "nice", and is "over 12%". You have no idea what it will be. Dividend cover at BRWM has fallen substantially since 2010.

Exactly. Let that be a keynote for anyone buying shares etc for "income".

A_Flock_Of_Sheep

People think the mining sector is a bit dodgy but I have done alright with Glencore via CFDs.

bowlhead99

A_Flock_Of_Sheep wrote: »

Exactly. Let that be a keynote for anyone buying shares etc for "income".

AFOS: BRWM has a nice income of 12%.
AFOS: BRWM has fallen 80% and there is only 20% left to go. It has a nice income of 12% so I am currently tempted.

BH99: BRWM does not earn or pay income of 12%, it has never paid 12% to anyone. You don't know what it will pay. Also, you could lose another 80% or 95%, not just 20%.

AFOS: Exactly. Let that be a keynote for anyone.

What?????

I suspect that the reason you think people are treating your posts with "ridicule" or are "having a pop", is that you keep posting nonsense, often self-contradictory from one moment to the next, and then when someone calls you out on it, you say yeah, exactly, the exact opposite of what I said was what I meant...

Like the earlier set of posts I picked up from previous threads :

AFOS:"hey the market is tanking, good job i don't have any shares. And you'd be stupid to buy"

"Erm, AFOS are you sure about that, it seems like it would be an opportunity missed, and the market is fine"

AFOS: "Oh yes I will probably buy today then, that's what I meant of course, bargains all round, it is very sensible to buy at such times and then hold"

"Are you sure that's what you meant??"

AFOS: "yes, everyone else here is probably investing above their risk profile but I am fine, look forward to the future".

"Strange, you always come across as one of the most panicky person one could meet on these forums. Good to take a measured approach, you won't go too far wrong with buying well for the long haul."

AFOS: "no I don't use the long haul. I also disregarded the Tim Hale book I used to go on about, and abandoned the equity income funds or investment trusts I once claimed to use, and now mostly just trade CFDs."

"~confuuuuuuused~"