How can I invest in FTSE250

fairleads

"If you had adopted that tactic and bought the 250 ETF/tracker at the end of May 2007, it would have gone down a bit, and then after waiting for a while for it to show profit, you would have to wait a little while longer, and a little while longer, and longer, and then it is November 2008 and your loss is over 50%.

By mid March 2009, still 50% down, it would eventually have started to go up again. Once it had gone up a bit from there, to maybe only a 40% loss, you would probably have sold out, because although you were determined not to take the 50% loss, you would have learned your lesson and sure as heck didn't want to hang around to lose half of it again."


But experienced day traders / market timers do not invest when the market is toppy, such as in the example you provide because that is the time to either sell if you're in the market or wait until the market presents a buying opportunity.

bowlhead99

fairleads wrote: »

But experienced day traders / market timers do not invest when the market is toppy, such as in the example you provide because that is the time to either sell if you're in the market or wait until the market presents a buying opportunity.

Well,

1) "experienced day traders" do not invest at all - they trade.

2) the FTSE today at approaching 18000 is pretty much an all-time high, so it is quite possible that when viewed with hindsight it will appear a bit 'toppy', yet the OP is still considering buying in the hope of being able to get out a few days later at a higher price.

3) the OP is not an experienced day trader or investor anyway, so the point is moot. The advice "if you had adopted that tactic on x date" is perfectly valid to give to an inexperienced investor who probably assumes he has found an easy way to make money and that the worst will not happen.

Malthusian

In a way fairleads is correct to say "Experienced day traders do not make bad bets", because once a day trader has made a really bad bet they usually stop gambling, either because they have come to their senses or because they have lost their shirt and have nothing to gamble with. Hence they are no longer day traders.

AnotherJoe

fairleads wrote: »

But experienced day traders / market timers do not invest when the market is toppy, such as in the example you provide because that is the time to either sell if you're in the market or wait until the market presents a buying opportunity.

LOL. What magic system do they have that tells them when the market is 'toppy' and is always right, eg a fall is coming??

fairleads

Timing the market
Everyone who disses market timing as a method of producing market beating returns always base their argument on a false scenario.
(And it has to be said that most if not all of these false scenarios are presented by persons who have vested interests in the financial services industry)
Their example always begins with the investor being invested in the market or an individual share when they are in a toppy / overbought situation.
They compound their mistake by saying that because they are always in the market –long only - they make more money.
But the “money” they make is an illusion because they are confusing value, the value of their investment today, with money, the cash in the bank that is the frequent trader’s profit made by selling a day ago when the market looked to be over bought.
It all boils down to one thing, taking advantage of market volatility.
Interesting is that bear markets, because of the inherently increased volatility, usually present more options for making more profit over the short term than is the case with a similar time frame in a bull market and that individual shares provide far more profitable opportunities than market indexes do.
For example, individual investments (such as ADN,CLIG and HSBA) present far more opportunities for making profits from frequent trading than is the case with market indexes such as a ftse 100 or ftse 250 tracker.
And as for the magic system to highlight toppy /overbought/oversold scenarios /markets – well the tools are out there on one of the most popular financial webs.
And my interpretation of the info provided by those tools tells me this is not a good time to buy a ftse index but rather sell, which i did.

EdGasket

You can indeed look at PE ratios; returns compared to bonds and all sorts of numbers to conclude that by historical standards the market looks expensive. However those historic numbers were around when you could get a return of 5%, 10% or even 15% (around 1981) for cash investments. So although they might show the market 'toppy', you have to also consider the poor returns currently outside the market.

fairleads

EdGasket wrote: »

You can indeed look at PE ratios; returns compared to bonds and all sorts of numbers to conclude that by historical standards the market looks expensive. However those historic numbers were around when you could get a return of 5%, 10% or even 15% (around 1981) for cash investments. So although they might show the market 'toppy', you have to also consider the poor returns currently outside the market.

But if you've made 17.2 % profit so far this year, which is cash in the bank, what is there to worry about?

AnotherJoe

fairleads wrote: »

Timing the market
Everyone who disses market timing as a method of producing market beating returns always base their argument on a false scenario.
(And it has to be said that most if not all of these false scenarios are presented by persons who have vested interests in the financial services industry)
Their example always begins with the investor being invested in the market or an individual share when they are in a toppy / overbought situation.
They compound their mistake by saying that because they are always in the market –long only - they make more money.
But the “money” they make is an illusion because they are confusing value, the value of their investment today, with money, the cash in the bank that is the frequent trader’s profit made by selling a day ago when the market looked to be over bought.
It all boils down to one thing, taking advantage of market volatility.
Interesting is that bear markets, because of the inherently increased volatility, usually present more options for making more profit over the short term than is the case with a similar time frame in a bull market and that individual shares provide far more profitable opportunities than market indexes do.
For example, individual investments (such as ADN,CLIG and HSBA) present far more opportunities for making profits from frequent trading than is the case with market indexes such as a ftse 100 or ftse 250 tracker.
And as for the magic system to highlight toppy /overbought/oversold scenarios /markets – well the tools are out there on one of the most popular financial webs.
And my interpretation of the info provided by those tools tells me this is not a good time to buy a ftse index but rather sell, which i did.

Presumably with this insight into making huge returns you are fabulously wealthy and your butler typed this for you as you are too busy sipping mint juleps as you view your privately owned tropical island from your private villa?

EdGasket

AnotherJoe wrote: »

Presumably with this insight into making huge returns you are fabulously wealthy and your butler typed this for you as you are too busy sipping mint juleps as you view your privately owned tropical island from your private villa?

No need to be sarcastic; it's always good to hear people's views and experience and what 'fairleads' says is correct though as I said in my subsequent post, the traditional methods of calculating if a market is over-bought have to be tempered by the fact that interest rates are abnormally low. The net result, imho, is that equities might not in fact be overpriced in the current environment.

For instance the housebuilder and property shares that fell heavily pre and post Brexit still look good value with PE's of under 10 and dividends of 5% or so such as BVS, PSN, SMP, and UAI which is just above half it's net asset value.

fairleads

EdGasket wrote: »

No need to be sarcastic; it's always good to hear people's views and experience and what 'fairleads' says is correct though as I said in my subsequent post, the traditional methods of calculating if a market is over-bought have to be tempered by the fact that interest rates are abnormally low. The net result, imho, is that equities might not in fact be overpriced in the current environment.

For instance the housebuilder and property shares that fell heavily pre and post Brexit still look good value with PE's of under 10 and dividends of 5% or so such as BVS, PSN, SMP, and UAI which is just above half it's net asset value.

Thanks for the support Ed, wonder if Joe has checked today's ftse250 closing price? :T