Current market carnage - anyone selling or buying?

grey_gym_sock

Glen_Clark wrote: »

Stay diversified is my advice. If the last by election swing is replicated at the general election Jeremy Corbyn will be in with a strong majority, and he has talked of re nationalising the utility companies. They have also borrowed heavily - not a problem with interest rates currently on the floor, but how long will that last?

my total holding in SSE is only c. 2%-3% of the overall equities (including property companies) portfolio in ISA+taxable.

if SSE can do what they aim to do - keep increasing the dividends in line with RPI - then that would be a great result, starting from a 6% yield. they could fail to do that, and still give an acceptable return. that could include tougher regulation making them less profitable, or even re-nationalization.

i'm not too concerned about debt. utilities have steady enough income that they can get away with more debt than most kinds of businesses.

gadgetmind

HardCoreProgrammer wrote: »

Fund managers cannot do this for you - if you invest in a tracker

Trackers don't need much in the way of managers. They buy when you buy, they sell if you exit, otherwise they hold.

Active fund managers hop in, hop out, weight this, underweight that, hold cash, fully invest, avoid fags, buy oil, realise stuffed up and start again, etc. etc.

Over the long term, the trackers beat the timers and the weighters because it's just as easy to get it wrong as right, and trading+active = lots of fees, which you need to avoid.

Linton

gadgetmind wrote: »

Trackers don't need much in the way of managers. They buy when you buy, they sell if you exit, otherwise they hold.

Active fund managers hop in, hop out, weight this, underweight that, hold cash, fully invest, avoid fags, buy oil, realise stuffed up and start again, etc. etc.

Over the long term, the trackers beat the timers and the weighters because it's just as easy to get it wrong as right, and trading+active = lots of fees, which you need to avoid.

A bit of academic research for you - if you must invest in a tracker dont make it a cap-weighted one. See here

Now where do I get a good range of non cap-weighted trackers from?

Linton

HardCoreProgrammer wrote: »

I am not a perfect at timing, and I have never aimed/claimed to be.
I do not aim to get the top/bottom of a cycle, nor do I dip in/out of the market trying to make little gains.
What I try to do is: pull out when I see things going crazy, and jump in when there is "blood on the street".
.......

Is the blood on the streets yet? Perhaps you will let us know so we can all jump in.

TheTracker

Linton wrote: »

A bit of academic research for you - if you must invest in a tracker dont make it a cap-weighted one. See here

I rather liked EBI's take http://www.evidenceinvestor.co.uk/the-scrabble-index-and-why-it-spells-trouble-for-active-managers/

Says more about the effectiveness of active managers than cap weighted trackers.

Linton

TheTracker wrote: »

I rather liked EBI's take http://www.evidenceinvestor.co.uk/the-scrabble-index-and-why-it-spells-trouble-for-active-managers/

Says more about the effectiveness of active managers than cap weighted trackers.

Suggest that if you follow the references you will find that the morningstar study doesnt support the claims made in the EBI article. The morningstar study said that there was a 1.4% chance of finding a managed fund in the top 10% in all of the 1,3,5 and 10 year performance figures. It doesnt say anything about % of funds beating the index. The top say 45-50% would have done that.

And of course there is a 0% chance of finding a tracker in that top 10% list.

bowlhead99

Yes, it wasn't 1 in 100 it was 1.4%, which is 1 in 70 chance of being in the top decile over one AND three AND five AND ten years. And when you remove the irrelevant "over one year" it moves to 2.5% which is only 1 in 40.

I mean, 1 in 40 isn't particularly likely, but of course it's no surprise to anyone that finding a fund that is in the top few over three years AND over five AND over a decade, is difficult if you are sticking a pin in a phone book haphazardly to find the 36 in 1400 which met the criteria.

But if you were to change the criteria to say you don't need to be in the top 10% in all those time periods but just the top 50% in most of those time periods, the task inevitably gets much much easier. And if you change the task to say you are not sticking a pin in haphazardly but actually researching and casting out those which are crappy... you improve your odds...

And if your active manager of choice employs strategies which the "evidence based investor" observes that Cass found likely to deliver better outcomes, "simply, their bias toward small and value stocks — factors which have been shown to deliver higher returns, albeit with greater volatility, over the long term"... then it should be quite trivial to be able to pay a manager a fee and have him deliver a result better than the cap-weighted index over a long term.

redux

TheTracker wrote: »

I rather liked EBI's take http://www.evidenceinvestor.co.uk/the-scrabble-index-and-why-it-spells-trouble-for-active-managers/

Says more about the effectiveness of active managers than cap weighted trackers.

It observes an interesting phenomenon, and partly explains it, namely that their Scrabble method tends to turn towards smaller companies which historically outperform the largest, but then it leaps towards a conclusion that I see as less safe.

That effect of so-called nearly double in 50 years is a difference of 1.2% per year.

Some fund managers have outperformed an index by on average 2 or 3 per cent per year. But the argument made there would remove them from consideration for the tiny group allowed as successes if they fail to do it all of the time.

For instance, I recently found a fund manager who used to run an investment trust I had a holding in about 15 years ago. The fund she is at now has indeed beaten its benchmark by mainly between 2 to 3 per cent over most recent periods, except that for one year it is 8 per cent better.

Perhaps one reason they can't find many people who outperform over the four time periods might be that not so many people stay in one place for 10 years. Indeed the article seems slightly interchangeable whether it is talking about a fund and a fund manager.

Another odd thing is the Cass study, the one with the 1 in 70 chance, is talking about 1998 to 2008. Did it really take about 5 years to calculate all this, and 2.5 years for the Telegraph to notice since it was published in June 2013?

Kendall80

Japans Nikkei is up nearly 6% at time of writing. Volatility seems to be the name of the game. Stocks go down - sheep all sell (and the automatons) - stocks go down further. A pattern seemingly repeated on the up although the oil price has gone up about 8% these past 2 sessions too.

badger09

Linton wrote: »

Is the blood on the streets yet? Perhaps you will let us know so we can all jump in.

Sorry Linton, I really don't fancy jumping into a blood bath with you:eek: