stockmarkets -are we nearing the bottom or is there further to go ??

Linton

Japanese small companies funds have been among the best performers over the past year way outperforming the large company funds. So Japan is well worth investigating.

bowlhead99

BananaRepublic wrote: »

As I think I've said before, good luck to those who leap in, but I'd rather not be called naive if it is all the same to you.

Perhaps naive is the wrong word.

But for example, if someone said they only invested in Tesco and not any other company because they worked for Tesco and shopped in Tesco and didn't know what any other types of other companies did, you might think their approach to building a diversified investment portfolio was a bit blinkered.

If someone only invested in FTSE100 which is a small percentage of world equities market, regionally and sectorally focused, we might think that was a bit shortsighted.

If they only wanted equities and no bonds at all because they heard equities did better over the last 100 years, we might say that was a bit unsophisticated.

So, likewise if someone will only touch UK, US, and nervously a bit of Europe, and doesn't want Japan because some decades ago he's been there done that, got the T-shirt, lost his money, and is cautious it's going to happen again for some reason; and doesn't want China or India because he thinks it's corrupt and unproven; and doesn't want Hong Kong, Taiwan, Korea, Singapore because he is fearful their proximity to Japan and China might make their returns do a '90s Japan or a 2015 China... so basically he's only going to invest in Western Europe and Northern America and ignore all the rest of the landmass...

Then there is an argument to say this is clearly a man who knows what he wants, and you should never invest in what you don't understand, so he's got his head screwed on properly, stop pestering him to spread his wings. But there is also an argument to say the Tesco man knows what he wants - and really we think he's missing out by ignoring opportunities to build a better diversified portfolio that doesn't ignore huge swathes of the world economy.

BananaRepublic

bowlhead99 wrote: »

Perhaps naive is the wrong word.

But for example, if someone said they only invested in Tesco and not any other company because they worked for Tesco and shopped in Tesco and didn't know what any other types of other companies did, you might think their approach to building a diversified investment portfolio was a bit blinkered.

If someone only invested in FTSE100 which is a small percentage of world equities market, regionally and sectorally focused, we might think that was a bit shortsighted.

If they only wanted equities and no bonds at all because they heard equities did better over the last 100 years, we might say that was a bit unsophisticated.

So, likewise if someone will only touch UK, US, and nervously a bit of Europe, and doesn't want Japan because some decades ago he's been there done that, got the T-shirt, lost his money, and is cautious it's going to happen again for some reason; and doesn't want China or India because he thinks it's corrupt and unproven; and doesn't want Hong Kong, Taiwan, Korea, Singapore because he is fearful their proximity to Japan and China might make their returns do a '90s Japan or a 2015 China... so basically he's only going to invest in Western Europe and Northern America and ignore all the rest of the landmass...

Then there is an argument to say this is clearly a man who knows what he wants, and you should never invest in what you don't understand, so he's got his head screwed on properly, stop pestering him to spread his wings. But there is also an argument to say the Tesco man knows what he wants - and really we think he's missing out by ignoring opportunities to build a better diversified portfolio that doesn't ignore huge swathes of the world economy.

Much of the above is a crude parody of my views, and frankly grossly simplistic. Your comments on Japan ignore the huge volatility in that market over the past few decades, and instead simply seek to make fun of me by attributing to me rather childish thought processes.

I really do not care if I am considered 'sophisticated' or not, that is not my aim.

BananaRepublic

Linton wrote: »

Japanese small companies funds have been among the best performers over the past year way outperforming the large company funds. So Japan is well worth investigating.

I cannot believe you have not looked at the long term behaviour of the Nikkei. Clearly it does not contradict your first sentence, but it puts it into context, and should warn anyone to proceed with caution.

masonic

BananaRepublic wrote: »

I cannot believe you have not looked at the long term behaviour of the Nikkei. Clearly it does not contradict your first sentence, but it puts it into context, and should warn anyone to proceed with caution.

Well, clearly the Nikkei cannot be used as a barometer for Japanese smaller companies any more than the FTSE All share could be used as a barometer for UK smaller companies.

Just looking at the Trustnet riskgrade of a couple of Japanese smaller companies funds, say the Baillie Gifford and M&G funds, they are a little above the FTSE 100, but not significantly so (3 year volatility under 17% and 12% respectively). 10 year annualised returns of 4-5%. Not exactly competition for the likes of Blackrock Gold & General for high volatility.

I'm not sure what you intend to convey by "proceed with caution", but I'd think an allocation somewhere in the region of what one might allocate to Japan based on global cap weighting would not be too spicy for most portfolios.

grey_gym_sock

there's an argument that emerging markets are riskier than developed markets, and that you don't - on average - get any extra return for taking on that extra risk. there are periods (of a decade or more) when you do get significantly higher returns from emerging markets. but there are periods when you get significantly lower returns. and overall, there's no evidence of higher returns from emerging markets: see the graph of 1900-2013 returns in the credit suisse global investment returns yearbook 2014.

OTOH, avoiding some of the developed markets is usually a case of being parochial. if you're from (or just lived in) one (or more) developed markets, that market and similar ones probably seem like the "natural" way to run an economy to you; it's easy to think that different approaches must be a mistake.

if your home country is the USA or UK, this parochialism tends to be reinforced by an economic theory which claims that a certain form of capitalism - based on free international movement of capital, maximizing shareholder value, privatization, low taxes, small government, etc - is the ideal form. but this theory is (to oversimplify) more wrong than right.

why turn down the diversification available from investing in all developed markets? providing the real risks are no higher, then higher volatility should be welcomed, as it leads to rebalancing opportunities.

BananaRepublic

grey_gym_sock wrote: »

why turn down the diversification available from investing in all developed markets? providing the real risks are no higher, then higher volatility should be welcomed, as it leads to rebalancing opportunities.

Why do some people here feel a need to insult those who choose a particular investment style using terms such as naive, unsophisticated and parochial?

No doubt Warren Buffett is naive, unsophisticated and parochial.

Incidentally, when you use the tern 'real risks', what you really mean is the perceived risks, as perceived by you, or whoever.

bigadaj

BananaRepublic wrote: »

Why do some people here feel a need to insult those who choose a particular investment style using terms such as naive, unsophisticated and parochial?

No doubt Warren Buffett is naive, unsophisticated and parochial.

Incidentally, when you use the tern 'real risks', what you really mean is the perceived risks, as perceived by you, or whoever.

Why do some people on a discussion board take general comments so personally. It would seem open discussions and exchange of opinion possibly aren't really for them.

You have an opinion, which is fine, others will disagree and point out the apparent flaws in that approach. You can respond and put your views or the weakness in the argument supplied by others, which they or others may accept or not.

masonic

bigadaj wrote: »

Why do some people on a discussion board take general comments so personally. It would seem open discussions and exchange of opinion possibly aren't really for them.

You have an opinion, which is fine, others will disagree and point out the apparent flaws in that approach. You can respond and put your views or the weakness in the argument supplied by others, which they or others may accept or not.

Well, quite. The key is to understand the difference between criticising a person and criticising an idea or opinion. As far as I can see, the terms "naive", "unsophisticated" and "parochial" have only been used in reference to ideas, not to people.

grey_gym_sock

BananaRepublic wrote: »

Why do some people here feel a need to insult those who choose a particular investment style using terms such as naive, unsophisticated and parochial?

once again, you choose to take offence at specific terms from other people's arguments. meanwhile, when it suits you, you don't bother making an argument and resort to name-calling instead.

No doubt Warren Buffett is naive, unsophisticated and parochial.

imagine warren were reading this. do you think he'd be taking offence?

Incidentally, when you use the tern 'real risks', what you really mean is the perceived risks, as perceived by you, or whoever.

to clarify: by 'real risk', i meant: risk of permanent loss of capital.